Month: May 2017

Politics and Populism Make Us Stupid

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Political ignorance is a topic I’ve been reading up on as of late. It’s a tad depressing, if not all that surprising. A brand new Brookings paper builds off this research to argue the following:

  • Always empirically questionable at best, the populist-progressive idea that more participation will reliably improve either the products or the popularity of governance has taken a pounding in recent years, to the point where it is basically untenable. The populist model assumes that voters are better informed, more rational, and more engaged than is the case—or ever will be.
  • Even implausibly well-informed and rational voters could not approach the level of knowledge and sophistication needed to make the kinds of decisions that routinely confront the government today. Professional and specialist decision making is essential, and those who demonize it as elitist or anti-democratic can offer no plausible alternative to it.
  • Professional intermediaries make democracy more inclusive and more representative than direct participation can do by itself. In complex policy spaces, properly designed intermediary institutions can act more decisively and responsively on behalf of the public than an army of “the people” could do on its own behalf. Intermediated systems are also less likely to be paralyzed by factional disputes and distorted by special-interest manipulation than are systems designed to maximize voter participation and direct input.
  • Nonetheless, the predominant ethos of the political-reform community remains committed to enhancing individual political participation. This is a costly oversight. Some populist reform ideas are better than others, but, as a class, they have eclipsed a more promising reform target: strengthening intermediating actors such as political professionals and party organizations.

They review the literature on political ignorance to reveal the following:

  • Voters are very ignorant, and always have been.
  • Voters are ignorant because they’re rational, not because they’re stupid.
  • Voters are irrationally biased as well as rationally ignorant.
  • Providing more education or information isn’t a solution (though it’s worth doing anyway).
  • Even if voters were deeply informed and meticulously rational, elections still would not reliably tell us what the public thinks or wants.

What’s to be done? GMU law professor Ilya Somin suggests “foot voting“:

Image result for vote with feetIn many situations, the better approach to mitigating political ignorance is not to give up on empowering ordinary people, but to do so in a different way. Instead of putting our faith in political participation, we can instead give people more opportunities to “vote with their feet.”When people vote with their feet in the private sector, or by choosing which jurisdiction to live in within a federal system, they have much better incentives to acquire relevant information and use it wisely. Unlike ballot box voters, foot voters have the opportunity to make individually decisive choices that are likely to make a real difference. If you are like most people, you probably spent more time and effort acquiring information the last time you decided which TV or smartphone to buy than the last time you decided who to support for president or governor. That is likely because you knew that the decision about the smartphone would make a real difference, whereas the one about the presidency had only a miniscule chance of doing so.

We can enhance opportunities for foot voting by limiting government power and devolving it to lower levels. It is cheaper and easier to vote with your feet between states than between countries, and easier still to choose between localities or between competing alternatives in the private sector. There is also much that can be done to make foot voting easier for the poor and disadvantaged. Greater decentralization of power can also help mitigate the partisan bias and polarizatoin that both Rauch and I believe have exacerbated our political pathologies.

…I certainly do not claim that decentralization and foot voting can overcome all the dangers of political ignorance. Probably no one strategy can do that. But I think it can be be a bigger and less risky part of the solution than increasing the role of political professionals, even though there are indeed some situations where we should rely more on the latter. Be that as it may, Wittes and Rauch deserve credit for taking the problem of political ignorance seriously, and for their valuable contribution to the debate over this crucial issue.

Check both pieces out.

Big Data on Minimum Wage

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A brand new working paper looks at 2 million hourly wage workers from over 300 companies in order to determine the effects of minimum wage changes. As reported,

For the first time, a group of researchers at Washington University in St. Louis used a big-data approach to determine the effects of minimum-wage changes on business. Two professors and two doctoral candidates from the Olin Business School processed wage data on more than 2 million hourly workers from across the country over a six-year period. The results? There are winners and losers.

…“We found existing minimum-wage employees benefit from minimum-wage increases,” [co-author Radhakrishnan] Gopalan said. “Their wages go up, and they are no more likely to lose their jobs as compared to their counterparts in adjacent states. But following state minimum-wage hikes, companies are reluctant to hire new low-wage employees. In the one year following the wage hike, they increase the proportion of higher-wage (read: higher-skilled) employees and reduce the proportion of low-wage employees.”

…“For an area experiencing fast growth, having a high minimum wage will be a bad deal for the new entrants as they might have a tougher time finding a job. On the other hand, if you’re in an area whose population is not growing very fast, then raising the minimum wage will definitely benefit your existing low-wage employees, and the number of new employees who are hurt will be a minimum. Optimal policy will also depend on the industry composition of the establishments in the local economy.”

This fits with previous research. It also fits comfortably into what the evidence shows worldwide.

The Trade-Offs of Paid Leave

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With Trump’s budget proposing paid family leave, it’s worth considering the economics behind it. Economist and author Charles Wheelan explains in his fantastic book Naked Economics,

Economists study how we acquire information, what we do with it, and how we make ecisions when all we get to see is a book’s cover. Indeed, the Swedish Academy of Sciences recognized this point in 2001 by awarding the Nobel Prize in Economics to George Akerlof, Michael Spence, and Joseph Stiglitz for their seminal work on the economics of information. Their work explores the problems that arise when rational people are forced to make decisions based on incomplete information, or when one party to a transaction knows more than another.

…Consider a small law firm interviewing two job candidates, one male and one female. Both candidates are…eminently qualified for the position. If the “best” candidate for the job is the one who will earn the most money for the firm…then I will argue that the rational choice is to the hire the man…Women still bear the bulk of child-rearing responsibilities. Demographics suggest that both candidates are likely to start families in the near future. Yet only the female candidate will take paid maternity leave. More important, she may not return to work after having the child, which leaves the firm with the cost of finding, hiring, and training another lawyer.

Is any of this certain? No…The female candidate is punished because the firm has no information on her specific circumstances but good data on broad social trends. Is this fair? No. (And it’s not legal either.) Yet the firm’s logic makes sense (pg. 105-106).[ref]He goes on to point out that professional women that take the paid maternity leave and run impose a cost on other women by making firms more likely to discriminate against women. His solution?: “a generous, but refundable maternity package. Keep it if you want to come back to work, return it if you don’t” (pg. 107).[/ref]

Obviously, Wheelan is not endorsing discrimination, but simply laying out the economic factors that incentivize it. Over at The Week, AEI’s James Pethokoukis lays out some of the evidence for the theory above:

Even the best ideas have downsides, and it’s up to policymakers to deal with them. Paid leave is no different.

A 2017 study, by UC Santa Barbara economist Jenna Stearns, of maternity leave policy in Great Britain found that access increases the probability of women returning to work, while job protection benefits result in higher overall maternal employment rates and longer job tenure. Sounds good! But there’s a tradeoff: Expanding job protected leave benefits led to “fewer women holding management positions and other jobs with the potential for promotion.”

Likewise, a 2013 study by Cornell University’s Francine Blau and Lawrence Kahn found family-friendly policies indeed make it easier to balance work and family. But they also “leave women less likely to be considered for high-level positions. One’s evaluation of such policies must take both of these effects into account.”

Few economists would be surprised at these analyses. In a classic 1983 paper on mandated benefits like paid leave, former Obama economist Lawrence Summers explained businesses would offset higher benefits with lower pay or hiring workers with lower potential benefit costs. You know, tradeoffs.

Paid parental leave obviously has real upsides. But we can’t ignore the downsides either: Lower pay, stingier promotions, and a potential employer favoritism toward the childless.

The trade-offs may very well be worth it. But we need to at least be aware of what they are.

Are Mormon Women Depressed?

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Mormon women deal with depression at higher levels because of the absurd demands placed on them by their faith and culture, right? Maybe not. Jana Riess over at Flunking Sainthood writes,

Overall, about a fifth of currently-identified Mormons say they have taken or are currently taking medication for depression—21%. The numbers are definitely higher for Mormon women than for men. 27% of women say yes, almost twice the number of Mormon men who do (14.5%). 

…[But] the rate of Mormon women suffering from depression may actually be lower than the national average for women. The data on this is inconsistent, though; Timothy Heaton’s research has indeed found that “LDS women are significantly higher in depression than non-LDS women.” So there is no consensus here.

Second, there’s a known “gender gap” between men and women in the United States where mental health is concerned—and not just in Mormonism.

According to a publication of the Harvard Medical School, women “are about twice as likely as men to develop major depression,” based on a combination of genetic, hormonal, and emotional factors (and also the fact that even if men do develop depression, they are idiots about it they are less likely than women to seek the help they need). The World Health Organization has also found that depression is twice as common in women.

Bottom line, then: Mormon women appear to struggle more than Mormon men do with depression, or at least are getting treated for it nearly twice as often. This is not, however, an unusual or Mormon-specific gender dynamic.

But what are the factors that correlate with Mormon women who seek treatment?

  • Age doesn’t matter much: younger women are a little more likely to get treatment than older women.
  • Employment matters a little bit: unemployed women not looking for work–like stay-at-home moms–were a bit more likely to get treatment than full-timers and part-timers.
  • Politics matters: Democrats are more likely to take medication than Republicans.
  • Church activity matters: “very active” members are less likely to take medication than members who are “not active at all.”
  • Beliefs matter: A quarter of women who believe “all or most Mormon teachings” compared to 1/3 of women “who doubt or find some Mormon teachings hard to believe.”
  • Family size matters: “Women who have no children at all are a little more likely to take medication for depression than women who have one, two, or three children. In families of four or more children, women are also a bit more likely take medication. Overall, the women who were least likely to take medication for depression were those with one, two, or three children.”
  • Divorce matters: “Women who were divorced were almost twice as likely as married women to have taken medication for depression (41% vs. 23%). Never-married women fall in the middle at 34%.”

As Riess concludes, “The reality is nuanced and complex.”

Basking in Motivated Ignorance

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Vox covers the unsurprising results of a new study regarding political bias:

If you ever thought, “You couldn’t pay me to listen to Sean Hannity / Rachael Maddow / insert any television pundit you violently disagree with here” — you are not alone.

A study, recently published in the Journal of Experimental and Social Psychology,essentially tested this very question.

Two hundred participants were presented with two options. They could either read and answer questions about an opinion they agreed with — the topic was same-sex marriage — or read the opposing viewpoint.

Here’s the catch: If the participants chose to read the opinion they agreed with, they were entered into a raffle pool to earn $7. If they selected to read opposing opinion, they had a chance to win $10.

And yet,

A majority — 63 percent — of the participants chose to stick with what they already knew, forgoing the chance to win $10. Both people with pro same-sex marriage beliefs and those against it avoided the opinion hostile to their worldview at similar rates.

…This is a key point that many people miss when discussing the “fake news” or “filter bubble” problem in our online media ecosystems. Avoiding facts inconvenient to our worldview isn’t just some passive, unconscious habit we engage in. We do it because we find these facts to be genuinely unpleasant. And as long as this experience remains unpleasant, and easy to avoid, we’re just going to drift further and further apart.

Similarly, the researchers found that “[l]istening to a political opponent isn’t as awful as getting a tooth pulled, but it’s trending in that direction. It’s certainly a lot more awful than taking a leisurely stroll.”

What’s worse is that “partisans were unfamiliar with [the opposing side’s] viewpoints. So it’s not the case that people are avoiding learning about the other side because they’re already familiar. What’s going on here is “motivated ignorance,” as Matt Motyl, one of the study co-authors calls it.” Vox laments,

This is the dark truth that lies at the heart of all partisan politics, and makes me pessimistic that Facebook or any other social networking site can really solve the problem of people filtering into their own content bubbles. We automatically have an easier time remembering information that fits our worldviews. We’re simply quicker to recognize information that confirms what we already know, which makes us blind to facts that discount it. It’s the reason why that — paradoxically — as we learn more about politics and politically charged issues, we tend to become more rigid in our thinking.

Just more evidence that politics makes us mean and dumb. Here are a few useful steps to help you escape your political echo chamber:

 

The Long-Term Impact of Immigrants

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“Immigration is one of the most controversial policy issues in the US and Europe today,” write the authors of a new economics paper.

The debate mostly focuses on the short-run effects of immigration: Do immigrants take jobs away from natives? Do immigrants increase pressure on public goods? Do immigrants increase crime and reduce social capital? Many researchers have attempted to address these questions by providing empirical evidence on the short-run, immediate effects of immigration (e.g. Kerr and Kerr 2016, Peri 2012, Peri and Sparber 2009, Card 2009, 2012). While understanding the short run is important, policymakers should also consider the long-run consequences if the welfare of our children and grandchildren are to matter. And yet, we know very little about the long-run impact of immigration.

In order to study this long-run impact, the researchers

examine migration into the US during America’s Age of Mass Migration (from 1850–1920) and estimate the causal effect of immigrants on economic and social outcomes approximately 100 years later (Nunn et al. 2017). This period of immigration is notable for many reasons. First, this was the period in US history with the highest levels of immigration. Second, the immigrants that arrived during this time were different from previous waves of immigrants. While earlier immigrants were primarily from western Europe, the new wave also included large numbers of immigrants from southern, northern, and eastern Europe who spoke different languages and had different religious practices (Hatton and Williamson 2005: 51, Daniels 2002: 121–137, Abramitzky and Boustan 2015).

In order to measure the effects, the authors developed “an instrumental variable (IV) strategy that exploits two facts about immigration during this period. The first is that after arriving into the US, immigrants tended to use the newly constructed railway to travel inland to their eventual place of residence (Faulkner 1960, Foerster 1969). Therefore, a county’s connection to the railway network affected the number of immigrants that settled in the county. The second fact is that the aggregate inflow of immigrants coming to the US during this period fluctuated greatly from decade to decade.”

Their findings?

We find that higher historical immigration (from 1860–1920) resulted in significantly higher incomes, less poverty, less unemployment, more urbanisation, and higher educational attainment today. The estimates, in addition to being statistically significant, are also economically meaningful. For example, according to the estimates for per capita income, moving a county with no historical immigration (i.e. during 1860–1920) to the 50th percentile of the sample (which is 0.049) results in a 20% increase in average per capita income today.

We also try to shed light on the mechanisms. We find that immigration resulted in an immediate increase in industrialisation.  Immigrants contributed to the establishment of more manufacturing facilities and to the development of larger facilities. We also found that immigrants contributed to increased agricultural productivity in the medium-run and to increased innovation, as measured by patenting rates of both immigrants and the native-born. These findings are consistent with a long-standing narrative in the historical literature suggesting that immigrants benefitted the economy by providing an ample supply of unskilled labour, which was crucial for early industrialisation. A smaller number of immigrants brought with them knowledge, skills, and know-how that were beneficial for industry and increased productivity in agriculture. Thus, by providing a sizeable workforce and a (smaller) number of skilled workers, immigration led to early industrial development and long-run prosperity, which continues to persist until today.

 

Gentle Practicality

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This post is part of the General Conference Odyssey.

In the Sunday morning session of the April 1976 GC, Elder Tanner talked about patriotism and stressed the importance of voting for honorable representatives:

…it is our duty to seek diligently for and support and uphold good, honest, honorable, and wise representatives to govern us.

Next, Elder Marvin J. Ashton spoke about families, and the need to be gentle, non-judgmental, and empathic.

One of the interesting things for me has been seeing the consistent personalities of some of the General Authorities from the 1970s that I never knew in my own lifetime. This wasn’t the first time Elder Tanner had stressed the need to vote based on character and honor, for example. And it was far from the first time that Elder Ashton had promulgated such a gentle, practical gospel. These themes go all the way back to one of the first talks I read in the GCO, his October 1971 talk Love of the Right where he stressed the importance of understanding why our young people are tempted by drugs instead of simply condemning those who become addicted:

If we as parents and friends advise our youth that drugs are bad, evil, and immoral, and yet we do not try to understand why our youth turn to this evil substitute for reality, then the drugs themselves become the issue and not the symptom of the greater issue of unhappiness. We need to know why our loved ones want to run from their present life to the unknown yet dangerous life of addiction. What causes a strong, lovely, vibrant young person to allow a chemical to control his or her behavior? What is there at home, school, work, or church that is so uncomfortable that an escape seems necessary?

This is a much more thoughtful approach than I had expected from a 1970’s era GC talk about drugs. And, in the year of reading since then, Elder Ashton has become one of my favorites. His talk from this session, Family Communications, is definitely worth reading. If we want to have meaningful communication within our families, this is what we must have:

  1. A willingness to sacrifice
  2. A willingness to set the stage
  3. A willingness to listen
  4. A willingness to vocalize feelings
  5. A willingness to avoid judgment
  6. A willingness to maintain confidences
  7. A willingness to practice patience

While explaining the fifth point, Elder Ashton quoted a familiar scripture in a way that was totally new to me. He described a son’s heartache when, moments after his father passed away in a hospital, his mother told him that his father had loved him. Later on, as he cried alone in the hospital room, a nurse tried to console him. The son wanted to tell the nurse:

“‘I’m not crying because my father is dead. I’m crying because my father never told me that he was proud of me. He never told me that he loved me. Of course, I was expected to know these things. I was expected to know the great part I played in his life and the great part I occupied of his heart, but he never told me.’”

Then Elder Ashton quoted Matthew 3:17 in a way I’d never heard before:

How significant are God’s words when he took the time to vocalize his feelings with, “This is my beloved Son,” yes, even the powerful communication, “This is my beloved Son, in whom I am well pleased.”

I always assumed that Heavenly Father’s introduction of His Son was exclusively for our benefit. It never occurred to me, until this moment, that the Father was not only delivering a message to us (“Hey, listen up.”) but also to His Son (“I love you and I appreciate you.”)

That changes things.

And it’s a pretty good example of how I’ve come to love and value Elder Ashton’s unique, gentle, and practical perspective. He became an apostle almost a decade before I was born. He died when I was a young man. I must have heard at least one of his talks in General Conference, but I have no memory of him whatsoever. I’m sad I missed him, but I’m glad I still have his words to read.

One day, when my time here is done, I will thank him in person.

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Check out the other posts from the General Conference Odyssey this week and join our Facebook group to follow along!

What Are the Effects of Housing Constraints on Economic Growth?

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According to a new working paper, the effects are huge:

Image result for housingWe use data from 220 metropolitan areas in the US from 1964 to 2009 to perform two calculations. First, we quantify the effect of spatial misallocation. We find that most of the increased spatial dispersion in the marginal product of labor is due to the growing spatial dispersion in housing prices. In turn, the growing spatial dispersion of housing prices is largely driven by strict zoning laws in cities such as New York and the San Francisco Bay Area with strong productivity growth. We find that the increased spatial misallocation of labor due to housing supply constraints in cities with high productivity growth rates lowered aggregate growth by almost 50% between 1964 and 2009.

Second, we calculate the contribution of each US city to aggregate US growth and compare it to an “accounting” measure based solely on the growth of the city’s GDP. The difference reflects the effect of a city’s growth on the efficiency of labor allocation across cities. While the accounting measure suggests that New York, San Francisco and San Jose’s contribution to aggregate GDP growth between 1964 and 2009 is 12%, viewed through the lenses of our model, these cities were only responsible for 5% of growth. The difference is because the aggregate benefit of TFP growth in New York and Bay Area was in part offset by increased misallocation of labor across cities. In contrast, for Southern cities the accounting and model-based measures are the same. Due to an elastic supply of housing, much of the growth in the South took the form of employment growth, with no effect on misallocation.

We conclude that local land use regulations that restrict housing supply in dynamic labor markets have important externalities on the rest of the country. Incumbent homeowners in high productivity cities have a private incentive to restrict housing supply. By doing so, these voters de facto limit the number of US workers who have access to the most productive of American cities. In general equilibrium, this lowers income and welfare of all US workers (pgs. 2-3; bold mine).

We’ve blasted zoning laws here at Difficult Run several times before. Just one more reason to do so.

A Silent Voice (2016)

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This is part of What I’m Watching.

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Your Name set me on the path for highly-emotional, heart-tugging anime. A Silent Voice (also translated The Shape of Voice) has had some buzz surrounding it[ref]It recently won the Japan Movie Critics Award for Best Picture.[/ref]  and I’ve been waiting excitedly for it to become available. The story follows Ishida, an isolated and (at least briefly) suicidal teenager who is weighed down by remorse for his past bullying of former deaf classmate Nishimiya. His bullying eventually resulted in her transferring schools, leading Ishida’s friends and classmates to ostracize him despite their own participation in the bullying. In an effort to atone, he meets Nishimiya again and offers friendship. This sets them down a path of redemption, exploring themes of loneliness, bullying, friendship, forgiveness, suicide, and the deep-seated need for human connection.

I relish the way many anime enhance (exaggerate?) displays of human emotion. Even more so, I love the way I can be captivated by the most mundane aspects of everyday life and the small moments that build relationships. While there is a slightly romantic vibe in A Silent Voice between Ishida and Nishimiya, that’s not the focus (even though the trailer below makes it look like a teenage romance). At the beginning of the film, Ishida is shown blocking out the faces and voices of others, portrayed through the visible “X”s over people’s faces and the symbolic gesture of covering his ears.

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The film is less about romance and more about the healing between people and allowing oneself to become vulnerable enough to truly see and hear others. While it’s a tad too long and some of the characters remained underdeveloped, I found A Silent Voice incredibly moving. I was a blubbering mess by the end. Definitely worth checking out.

Do Immigrants Assimilate?

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“In the past,” writes one pair of economists,

new immigrants arrived from Southern and Eastern Europe, joining earlier waves of migrants from Britain, Germany and Ireland. Today, many immigrants hail from Latin America and Asia, entering a country that is already more diverse. Are fears that immigrants retain their own cultural practices and fail to fully join American society justified by the data?

In recent work with our co-author Katherine Eriksson, we study the cultural assimilation of immigrants during the Age of Mass Migration (1850-1913), during which 30 million migrants moved from Europe to the US (Abramitzky et al. 2016). We trace out a ‘cultural assimilation profile’ with time spent in the US, using changes in the foreignness of names that immigrant parents selected for their children as a measure of cultural adaptation. Children’s names offer an attractive measure of the assimilation process, both because names carry cultural content and because naming is a pure choice for immigrant parents, unconstrained by financial limitations or by discrimination on the part of natives. In particular, we measure the relative probability that each first name was held by a foreigner versus a native in the 1920 Census, and use this to construct a Foreignness Index, a measure between zero (name only held by natives) and one (name only held by foreigners).

By this measure, we find that recent immigrants gave their children more foreign names than did long-standing immigrants, which we take to be evidence of cultural assimilation with time spent in the US.

This change in names yielded benefits for the children of immigrants:

We link over a million children of immigrants across historical Censuses from their childhood families in 1920 into adulthood in 1940, and find that children with less foreign names completed more years of schooling, earned more and were less likely to be unemployed. Children with less foreign names were also less likely to marry a spouse who was born abroad or who had a very foreign name herself.

To summarize,

Despite arriving with a distinct set of cultural practices (proxied here by name choices), immigrants closed half of their cultural gap with natives after 20 years in the US. By 1930, more than two-thirds of immigrants had applied for US citizenship and almost all reported some ability to speak English. A third of first-generation immigrants who arrived in the US before marrying and more than half of second-generation immigrants married spouses from different origins.

I’m really not all that worried about cultural diversity. But for those who are, looks like you don’t have much to fear from immigrants.