Walker

Walker joined Difficult Run as an editor in August 2013. He graduated from the University of North Texas with an MBA in Strategic Management and a BBA in Organizational Behavior and Human Resource Management. He's currently a grad student in Government at Johns Hopkins University. He has been published in SquareTwo, BYU Studies Quarterly, Dialogue, Graziadio Business Review, and Economic Affairs. He also contributed to Julie Smith's (ed.) 'As Iron Sharpens Iron: Listening to the Various Voices of Scripture'. His other online writing can be found at Worlds Without End and Times & Seasons. He lives in Denton, Texas, with his wife.

2017: Best Year Ever, Pt. 3

January 12, 2018January 12, 2018 by Walker

So, Nicholas Kristof came through again, declaring 2017 as the best year in human history.[ref]See Part 1 and Part 2.[/ref] Don’t believe it? You should:

A smaller share of the world’s people were hungry, impoverished or illiterate than at any time before. A smaller proportion of children died than ever before. The proportion disfigured by leprosy, blinded by diseases like trachoma or suffering from other ailments also fell.

We need some perspective as we watch the circus in Washington, hands over our mouths in horror. We journalists focus on bad news — we cover planes that crash, not those that take off — but the backdrop of global progress may be the most important development in our lifetime.

Every day, the number of people around the world living in extreme poverty (less than about $2 a day) goes down by 217,000, according to calculations by Max Roser, an Oxford University economist who runs a website called Our World in Data. Every day, 325,000 more people gain access to electricity. And 300,000 more gain access to clean drinking water.

Readers often assume that because I cover war, poverty and human rights abuses, I must be gloomy, an Eeyore with a pen. But I’m actually upbeat, because I’ve witnessed transformational change.

As recently as the 1960s, a majority of humans had always been illiterate and lived in extreme poverty. Now fewer than 15 percent are illiterate, and fewer than 10 percent live in extreme poverty. In another 15 years, illiteracy and extreme poverty will be mostly gone. After thousands of generations, they are pretty much disappearing on our watch.

Just since 1990, the lives of more than 100 million children have been saved by vaccinations, diarrhea treatment, breast-feeding promotion and other simple steps.

Kristof cheekily quotes Max Roser, saying, “there was never a headline saying, “The Industrial Revolution Is Happening,” even though that was the most important news of the last 250 years.” He concludes,

So, sure, the world is a dangerous mess; I worry in particular about the risk of a war with North Korea. But I also believe in stepping back once a year or so to take note of genuine progress — just as, a year ago, I wrote that 2016 had been the best year in the history of the world, and a year from now I hope to offer similar good news about 2018. The most important thing happening right now is not a Trump tweet, but children’s lives saved and major gains in health, education and human welfare.

Every other day this year, I promise to tear my hair and weep and scream in outrage at all the things going wrong. But today, let’s not miss what’s going right.

Can Corporate Social Responsibility Backfire?

January 4, 2018 by Walker

In my Graziadio Business Review article, I mention how

corporate social responsibility (CSR) activities can lead to higher future productivity…These findings complement previous research that finds “that firms can strategically engage in socially responsible activities to increase private profits. Given that the firm’s stakeholders may value the firm’s social efforts, the firm can obtain additional benefits from these activities, including: enhancing the firm’s reputation and the ability to generate profits by differentiating its product, the ability to attract more highly qualified personnel or the ability to extract a premium for its products.”

It’s important to emphasize that companies must “strategically engage” in CSR activities in order for them to be beneficial. In other words, not all CSR activities are created equal and, as should be clear from the bulk of the article, what truly helps society is managing well. In fact, recent research suggests that CSR activities can lead to employee misconduct:

In this paper, we explore another supply-side channel through which CSR can affect profitability: the impact on employee misbehavior on the job. Employee misbehavior is a common and costly problem facing businesses and organizations. It has been estimated that companies lose about 5% of their annual revenues to various forms of internal fraud (Association of Certified Fraud Examiners, 2016). A survey from the National Retail Federation (NRF) reports that in the retail industry alone, employee theft amounted to $15 billion (over a third of the total inventory shrinkage) in 2014 (NRF, 2015). Another survey reports that in 2015, one in every 38 employees in the retail industry was apprehended for theft from their employers (pg. 2).

They explore the possible effects of CSR through two channels:

“First, [CSR] can serve as a social incentive tool for motivating workers to reduce unethical and counterproductive behavior on the job. Previous studies have shown that, consistent with the standard gift-exchange model, workers reciprocate a higher wage from their employer by reducing misbehavior on the job that hurts the employer (Flory, Liebbrandt, & List, 2016; Ockenfels, Sliwka, & Werner, 2015). Similar to how monetary-incentives reduce worker misbehavior through a gift-exchange mechanism, social incentives in the form of CSR may reduce misbehavior, by triggering reciprocity towards the employer. CSR may thus reduce worker misbehavior through the gift-exchange channel” (pgs. 2-3).
“A second channel is that CSR can increase worker misbehavior through moral-licensing. Prosocial behavior is motivated in part, by self- (and social-) image motives: people act prosocially, in part to signal to themselves (and to others) that they are good and moral individuals (Benabou and Tirole 2006, 2011). While prosocial deeds can boost individual self-image, unethical behavior can damage it. As our moral standards are constantly challenged in multiple dimensions, good behavior in one domain may liberate us to behave unethically in another domain. Such a dynamic of moral licensing in individual behavior has been documented in the social psychology literature” (pg. 3).

“To shed empirical evidence into our theory,” the authors write,

we conduct a natural field experiment with over 3000 workers who we hired ourselves. In this manner, we served as the employer of an online labor market platform (Amazon Mechanical Turk) and invited interested workers to our website to perform a short transcription task for payment. The task and the payment structure were designed in a manner that provided opportunities for workers to misbehave. For example, all workers in our experiment received 10% of their total payment upfront, and immediately upon accepting the contract, and received the remaining 90% of their wage, once they completed the task. Receiving a percentage of the wage upfront creates an incentive for workers to accept the contract without actually working on, or completing the task. To provide the necessary variation to identify the critical pieces of the model, we randomized workers’ into one of the 6 treatments, across which we varied wage, CSR incentive, and the framing and timing of the CSR message (pg. 3).

Their results?

Overall, our results suggest that our usage of CSR increased cheating. First, the share of workers who shirk their primary job duty increases significantly –by roughly 20%– from the baseline to our CSR treatments. Indeed, CSR not only increases the number of people who misbehave, it also increases the level of shirking: the average level of cheating by workers increases by 11%. Second, consistent with the moral-licensing effect of CSR, we find the share of cheaters to be the highest when we frame CSR as a prosocial act on behalf of workers. While CSR increases cheating, we do not find any effect on the average quality of work after accounting for the cheating. We also do not find any differences in cheating behavior across workers who could and could not sort themselves into the CSR job. We argue that our inability to document any selection effect may be due to the relatively high rate of accepting the contract by our workers in all treatments.

…As we decrease the wage and increase the expenditure on CSR, we find the share of cheaters to increase considerably. In other words, we find that substituting just about 5% of the wage with CSR increases the share of cheaters by 25%, while substituting 28% of wage with CSR increases the share of cheaters by over 50%. Likewise, the intensity of cheating per worker increases as well (pg. 4).

In short,

our results reveal a potential dark side to the supply-side effect of CSR. We find that CSR can increase worker misbehavior on the job by generating a moral-licensing effect. Our findings also have important implications on how employers should communicate CSR initiatives to their employees. Importantly, we find some suggestive evidence that the way CSR is communicated to workers can play an important role in the extent to which it leads to moral licensing. When communicated to the employees as a benevolent act that the employer engages in, on workers’ behalf, CSR is (marginally insignificantly) more likely to exploit workers self-image and to lead to less moral choices in the future. This result is consistent with the findings of Kouchaki and Jami (2016) who document a higher level of moral-licensing, when consumers are exposed to a CSR message that praises the consumers compared to a message that praised the company for CSR (pg. 4).

This is why my GBR article focused on good management. This does far more good than image-boosting CSR activities. As business ethicist Chris MacDonald explains, businesses contribute to society by making useful products or providing useful services, providing employment, providing investment opportunities for investors, obeying laws and regulations, and paying taxes. CSR, according to MacDonald, misunderstands capitalism, acts as a smokescreen, and squanders public/activist/media attention:

The central tenet of CSR — namely that the best way for business to contribute socially is through good works — is faulty, and implies a misunderstanding of the basic wealth-and-welfare generating function of markets. Businesses contribute by producing things we want; they facilitate voluntary exchanges of goods and services that, when conducted honestly, leave all concerned better off. (Ask yourself: when did Bill Gates start contributing to society? Was it in 1994, when he founded the Bill & Melinda Gates Foundation? Or was it in, say, 1975, when Gates founded the firm — Microsoft — that would help put the power of computers in of millions of offices and homes?

…When business leaders start bragging about their CSR activities, we should smile politely, and then enquire how their companies are doing in terms of honest advertising, corporate governance and regulatory compliance.

In the face of corporate scandals and economic instability, what we ought to be asking of business executives is that they focus on doing their job honestly and diligently. In any given week, millions of dollars are being spent on academic and industry conferences, round-tables, and dinners to talk about the importance of CSR. In any given week, newspaper stories are being drafted about which companies are doing well, or badly, in their CSR efforts. And in any given week, activists are staging protests, writing letters, and educating the public about the failures of companies to be “socially responsible.” What would happen, I wonder, if all of that money and effort were redirected to the simple idea of getting more people, in more businesses, to behave more consistently according to basic rules of honesty and integrity?

I think this fits pretty well with the overall theme of my article: do your job. And do it well.

Image result for do your job gif

2017: Best Year Ever, Pt. 2

December 28, 2017 by Walker

I know I already made this claim about halfway through the year, but the Council on Foreign Relations provides 10 more reasons to shout it from the rooftops:

“The World Health Organization reports in October that global measles deaths have decreased by more than 80 percent since 2000 to an estimated ninety thousand last year.”
“Colombia’s largest Marxist rebel group, the Revolutionary Armed Forces of Colombia (FARC), completes its disarmament process in June, six months after it reached a peace agreement with the government, bringing to a close Latin America’s oldest and bloodiest civil conflict. The second-largest rebel group, the National Liberation Army (ELN), agrees to a temporary cease-fire in September.”
“The hole in the earth’s ozone layer is the smallest it has been since 1988, NASA and the National Oceanic and Atmospheric Administration reports in October.”
“Women’s rights advance in several Arab countries with the passage of legal reforms[.]“
“Eight countries adopt legal protections against discrimination based on sexual orientation, bringing the total to eighty-five, according to the International Lesbian, Gay, Bisexual, Trans and Intersex Association.”
“The number of people living in extreme poverty, making $1.90 or less per day, continues its steady drop, falling from roughly 35 percent of the world’s population in 1990 to 8.4 percent in late 2017, according to the Vienna-based World Data Lab.”
“Gambia’s longtime authoritarian president, Yahya Jammeh, steps down on January 20, 2017, weeks after losing his reelection bid to Adama Barrow and a day after troops from the regional bloc ECOWAS cross into the country. Barrow’s government releases hundreds of political prisoners, holds legislative elections deemed free and fair, and announces plans for a truth and reconciliation commission.”
“Maritime piracy declines in the first nine months of 2017 compared to the same period in 2016, dropping 14 percent to 121 incidents, according to the International Chamber of Commerce.”
“After resolving Argentina’s billion-dollar dispute with bondholders in 2016, President Mauricio Macri continues promarket reforms that have lifted the Group of Twenty economy.”
“The eurozone economy grows 2.5 percent more in the third quarter of 2017 than in the same period a year prior. The increase puts the zone’s economy on track to see its highest annual growth since before the 2008 global financial crisis. Unemployment in the single-currency area drops to 9.1 percent, its lowest level since early 2009.”

Selection Bias in High School Sports

December 20, 2017 by Walker

Ever heard that sports build a kid’s character? It might just be selection bias, according to a new study:

We revisit the literature on the long-run effects of high school sports participation on educational attainment, labor market outcomes, and adult health behaviors. Many previous studies have found positive effects in each of these dimensions by either assuming that sports participation is exogenous (conditional on other observable characteristics), or by making use of instrumental variables that are unlikely to be valid.

We analyze three separate nationally representative longitudinal surveys that link participation in high school sports with later-life outcomes: the NLSY79, the NELS:88, and the Add Health. We employ an econometric technique that empirically tests the sensitivity of the selection on observables assumption and find that estimates of the returns to sports participation are highly sensitive to this assumption. Specifically, we find that, for most educational and labor market outcomes, if the correlation between sports participation and unobservables is only a fraction of the correlation between sports and observables, the effect of sports participation cannot be statistically differentiated from zero. Thus, we conclude that a causal effect of sports participation is unlikely, and that most of the findings of the literature that report beneficial impacts represent the effect of selection into sports.

…Our largely null results inform the policy debate on high school sports by providing evidence against claims that sports foster skills that improve educational or labor market outcomes. However, despite having very little human capital value, sports may still have a place in high school as a social or cultural activity. We generally confirm the assertion of sports commentator Heywood Hale Broun, who said, “Sports reveals character, it doesn’t build it” (Phillips, May 12, 1974) (pgs. 19-20).

The exception? Guys–and just guys–who participated in sports are more likely to exercise regularly as adults.

Progress: Lecture by Johan Norberg

April 11, 2018December 16, 2017 by Walker

This is part of the DR Book Collection.

Swedish intellectual Johan Norberg has penned a readable, optimistic, and data-driven book on the progress the world has made over the last 200+ years. As the title–Progress: Ten Reasons to Look Forward to the Future–suggests, Norberg focuses on ten aspects of human well-being. Each one has improved dramatically over the last couple centuries:

Food
Sanitation
Life expectancy
Poverty
Violence
The environment
Literacy
Freedom
Equality
The next generation

As I was listening to the Audible version in the car, the section on poverty really got to me, especially this part:

According to some statisticians, 28 March 2012 was a big day for humanity. It was the first day in modern history that developing countries were responsible for more than half of global GDP, up from thirty-eight percent ten years earlier. This convergence makes sense. If people have freedom and access to knowledge, technology and capital, there is no reason why they shouldn’t be able to produce as much as people anywhere else. A country with a fifth of the world’s population should produce around a fifth of its wealth. That has not been the case for centuries, because many parts of the world were held back by oppression, colonialism, socialism and protectionism. But these have no diminished, and a revolution in transport and communication technology makes it easier to take advantage of a global division of labour, and use technologies and knowledge that it took other countries generations and vast sums of money to develop. This has resulted in the greatest poverty reduction the world has ever seen.[ref]Norberg, Progress, Kindle edition, Ch. 4.[/ref]

If you want a fantastic summary of some of the greatest achievements in human history, check it out. You can see a lecture by Norberg in the video below.

The DR Book Collection: Catch-Up #2

April 11, 2018December 13, 2017 by Walker

This is part of the DR Book Collection.

I’m behind on my book reviews, so I’m once again going to forego the mini-reviews and instead post the books’ descriptions with an accompanying video.

Image result for annie mckee how to be happy at work Annie McKee, How to Be Happy at Work: The Power of Purpose, Hope, and Friendship (Harvard Business Review Press, 2017): “”I’m working harder than I ever have, and I don’t know if it’s worth it anymore.” If you’re a manager or leader, these words have probably run through your mind. So many of us are feeling fed up, burned out, and unhappy at work: the constant pressure and stress, the unending changes, the politics—people feel as though they can’t give much more, and performance is suffering. But it’s work, after all, right? Should we even expect to be fulfilled and happy at work? Yes, we should, says Annie McKee, coauthor of the bestselling Primal Leadership. In her new transformative book, she makes the most compelling case yet that happiness―and the full engagement that comes with it―is more important than ever in today’s workplace, and she sheds new light on the powerful relationship of happiness to individual, team, and organizational success. Based on extensive research and decades of experience with leaders, this book reveals that people must have three essential elements in order to be happy at work: A sense of purpose and the chance to contribute to something bigger than themselves; A vision that is powerful and personal, creating a real sense of hope; Resonant, friendly relationships. With vivid and moving real-life stories, the book shows how leaders can use these powerful pillars to create and sustain happiness even when they’re under pressure. By emphasizing purpose, hope, and friendships they can also ensure a healthy, positive climate for their teams and throughout the organization. How to Be Happy at Work deepens our understanding of what it means to be truly fulfilled and effective at work and provides clear, practical advice and instruction for how to get there—no matter what job you have” (Amazon).

Steven L. Peck, A Short Stay in Hell (Strange Violin Editions, 2012): “As a faithful Mormon, Soren Johansson has always believed he’ll be reunited with his loved ones in an eternal hereafter. Then, he dies. Soren wakes to find himself cast by a God he has never heard of into a Hell whose dimensions he can barely grasp: a vast library he can only escape from by finding the book that contains the story of his life. In this haunting existential novella, author, philosopher, and ecologist Steven L. Peck explores a subversive vision of eternity, taking the reader on a journey through the afterlife of a world where everything everyone believed in turns out to be wrong” (Amazon).

Terryl L. Givens, Fiona Givens, The Christ Who Heals: How God Restored the Truth That Saves Us (Deseret Books, 2017): “In a world increasingly prone to doubt, a foundation in Christ is the only sure basis of a durable discipleship. And for Latter-day Saints, the Jesus Christ revealed through the Prophet Joseph Smith is, in some very significant ways, a different kind of Christ than the Jesus of modern Christianity. The Christ of the restored gospel collaborated with Heavenly Parents for our salvation even before the foundation of the world, “does not anything” save it be for our benefit (2 Nephi 26:24), and is determined to patiently guide and nurture every one of God’s children into an eternal heavenly family. Most significantly, this Christ does not rescue us from a condition of original sin or depravity. Rather, He is primarily a healer of the wounds incident to a long-planned sojourn, one intended to immerse us in the trials, pains, and soul-stretching of this mortal schoolroom. He is not only the most remarkable being in the history of religious thought; He is, in fact, The Christ Who Heals” (Amazon).

Neil deGrasse Tyson, Donald Goldsmith, Origins: Fourteen Billion Years of Cosmic Evolution (W.W. Norton & Co., 2004): “Our true origins are not just human, or even terrestrial, but in fact cosmic. Drawing on recent scientific breakthroughs and the current cross-pollination among geology, biology, astrophysics, and cosmology, Origins explains the soul-stirring leaps in our understanding of the cosmos. From the first image of a galaxy birth to Spirit Rover’s exploration of Mars, to the discovery of water on one of Jupiter’s moons, coauthors Neil deGrasse Tyson and Donald Goldsmith conduct a galvanizing tour of the cosmos with clarity and exuberance” (Amazon).

The Council of Fifty: What the Records Reveal About Mormon History, ed. Matthew J. Grow, R. Eric Smith (BYU Religious Studies Center, Deseret Book, 2017): “Three months before his death, Joseph Smith established the Council of Fifty, a confidential group that he believed would protect the Latter-day Saints in their political rights and one day serve as the government of the kingdom of God. The Council of Fifty operated under the leadership of Joseph Smith and then Brigham Young, playing a key role in Joseph Smith’s presidential campaign and in preparing for the Mormon exodus to the West. The council’s minutes had never been available until they were published by the Joseph Smith Papers in September 2016, meaning that the council has been the subject of intense speculation for 170 years. In this book of short essays, fifteen leading Mormon scholars explore how the newly available minutes alter and enhance our understanding of Mormon history. The scholars narrate and analyze the contributions of the records of the council to key questions, such as Joseph Smith’s views of earthly and heavenly governments; the presidential campaign; Mormon relationships with American Indians; explorations of possible settlements sites, such as Texas and California; the “lost teachings” of Latter-day Saint leaders of that era; and the leadership style of Brigham Young” (Amazon).

Bart D. Ehrman, Did Jesus Exist?: The Historical Argument for Jesus of Nazareth (HarperOne, 2012): “In Did Jesus Exist? historian and Bible expert Bart Ehrman confronts the question, “Did Jesus exist at all?” Ehrman vigorously defends the historical Jesus, identifies the most historically reliable sources for best understanding Jesus’ mission and message, and offers a compelling portrait of the person at the heart of the Christian tradition. Known as a master explainer with deep knowledge of the field, Bart Ehrman methodically demolishes both the scholarly and popular “mythicist” arguments against the existence of Jesus. Marshaling evidence from within the Bible and the wider historical record of the ancient world, Ehrman tackles the key issues that surround the mythologies associated with Jesus and the early Christian movement. In Did Jesus Exist?: The Historical Argument for Jesus of Nazareth, Ehrman establishes the criterion for any genuine historical investigation and provides a robust defense of the methods required to discover the Jesus of history” (Amazon).

Eli J. Finkel, The All-or-Nothing Marriage: How the Best Marriages Work (Dutton, 2017): “Eli J. Finkel’s insightful and ground-breaking investigation of marriage clearly shows that the best marriages today are better than the best marriages of earlier eras. Indeed, they are the best marriages the world has ever known. He presents his findings here for the first time in this lucid, inspiring guide to modern marital bliss. The All-or-Nothing Marriage reverse engineers fulfilling marriages—from the “traditional” to the utterly nontraditional—and shows how any marriage can be better. The primary function of marriage from 1620 to 1850 was food, shelter, and protection from violence; from 1850 to 1965, the purpose revolved around love and companionship. But today, a new kind of marraige has emerged, one oriented toward self-discover, self-esteem, and personal growth. Finkel combines cutting-edge scientific research with practical advice; he considers paths to better communication and responsiveness; he offers guidance on when to recalibrate our expectations; and he even introduces a set of must-try “lovehacks.” This is a book for the newlywed to the empty nester, for those thinking about getting married or remarried, and for anyone looking for illuminating advice that will make a real difference to getting the most out of marriage today” (Amazon).

Darrin M. McMahon, Divine Fury: A History of Genius (Basic Books, 2013): “Genius. With hints of madness and mystery, moral license and visionary force, the word suggests an almost otherworldly power: the power to create, to divine the secrets of the universe, even to destroy. Yet the notion of genius has been diluted in recent times. Today, rock stars, football coaches, and entrepreneurs are labeled ‘geniuses,’ and the word is applied so widely that it has obscured the sense of special election and superhuman authority that long accompanied it. As acclaimed historian Darrin M. McMahon explains, the concept of genius has roots in antiquity, when men of prodigious insight were thought to possess—or to be possessed by—demons and gods. Adapted in the centuries that followed and applied to a variety of religious figures, including prophets, apostles, sorcerers, and saints, abiding notions of transcendent human power were invoked at the time of the Renaissance to explain the miraculous creativity of men like Leonardo and Michelangelo. Yet it was only in the eighteenth century that the genius was truly born, idolized as a new model of the highest human type. Assuming prominence in figures as varied as Newton and Napoleon, the modern genius emerged in tension with a growing belief in human equality. Contesting the notion that all are created equal, geniuses served to dramatize the exception of extraordinary individuals not governed by ordinary laws. The phenomenon of genius drew scientific scrutiny and extensive public commentary into the 20th century, but it also drew religious and political longings that could be abused. In the genius cult of the Nazis and the outpouring of reverence for the redemptive figure of Einstein, genius achieved both its apotheosis and its Armageddon. The first comprehensive history of this elusive concept, Divine Fury follows the fortunes of genius and geniuses through the ages down to the present day, showing how—despite its many permutations and recent democratization—genius remains a potent force in our lives, reflecting modern needs, hopes, and fears” (Amazon).

Image result for against empathy Paul Bloom, Against Empathy: The Case for Rational Compassion (HarperCollins, 2016): “We often think of our capacity to experience the suffering of others as the ultimate source of goodness. Many of our wisest policy-makers, activists, scientists, and philosophers agree that the only problem with empathy is that we don’t have enough of it. Nothing could be farther from the truth, argues Yale researcher Paul Bloom. In AGAINST EMPATHY, Bloom reveals empathy to be one of the leading motivators of inequality and immorality in society. Far from helping us to improve the lives of others, empathy is a capricious and irrational emotion that appeals to our narrow prejudices. It muddles our judgment and, ironically, often leads to cruelty. We are at our best when we are smart enough not to rely on it, but to draw instead upon a more distanced compassion. Basing his argument on groundbreaking scientific findings, Bloom makes the case that some of the worst decisions made by individuals and nations—who to give money to, when to go to war, how to respond to climate change, and who to imprison—are too often motivated by honest, yet misplaced, emotions. With precision and wit, he demonstrates how empathy distorts our judgment in every aspect of our lives, from philanthropy and charity to the justice system; from medical care and education to parenting and marriage. Without empathy, Bloom insists, our decisions would be clearer, fairer, and—yes—ultimately more moral. Brilliantly argued, urgent and humane, AGAINST EMPATHY shows us that, when it comes to both major policy decisions and the choices we make in our everyday lives, limiting our impulse toward empathy is often the most compassionate choice we can make” (Amazon).

Is Occupational Licensing a Barrier to Interstate Migration?

December 12, 2017 by Walker

The question and title of a brand new NBER working paper. The authors find (according to the earlier, ungated version) that “the relative interstate migration rate of state-specific licensed occupations is 36 percent lower than that of others” (pg. 16). The authors explain,

We compared the relative within- and between-state migration rates of members of 22 licensed occupations to those of others using data from the American Community Survey. Our empirical strategy compared the relationship between licensure and migration between states and a far distance within state, which controls for unobservable characteristics that influence the propensity of licensed occupations to move out of their local area. First, we found that that migration across states for licensed individuals is reduced, but the size of reduction varies across occupations. Quasi-nationally licensed occupations do not show any limitations on their interstate geographic mobility. Second, using a causal model we find evidence using the reciprocity agreements for lawyers that the adoption of these agreements increases migration of lawyers into a state.

Economists have long held that restrictions on geographic mobility limit the ability of the labor market to operate efficiently. Within this context, occupational licensing provisions that restrict job entry through interstate migration could also be a barrier to economic opportunity and labor market efficiency. Specifically, the paper has empirically examined whether occupational licensing statutes limiting occupational entry from other states influence interstate migration.

…Our analysis examines the migration of individuals. For many, migration is not an individual decision; instead, it is a choice made on the basis of overall household or family well-being. As our analysis is limited to individuals we observe in an occupation after their move, we miss a potentially important effect of licensure on those making interstate moves: individuals who are forced out of an occupation or of the labor force entirely as a result of moving between states. An example is so-called “trailing spouses”, who move based on their partner getting a better job in another state, and if they were in a licensed occupation prior to the move, may have to switch careers as a result. The effect of licensure on career changes or labor force exits made as a result of household migration is potentially important, and as we cannot identify individuals affected by these phenomena in the ACS, we leave their analysis for future research (pgs. 27-28).

Or, as one of the researchers summarizes in a previous paper,

Johnson and Kleiner’s (2015) more comprehensive analysis of…licensed occupations shows that, after controlling for demographic characteristics, individuals in these regulated occupations have lower interstate migration rates than their peers in other occupations, while the rate at which they move within states is similar. To establish whether or not licensing is behind these differences, the authors perform a difference-in-difference analysis using changes in state licensing laws. State policies on accepting those who fulfill licensing requirements in other states as qualified to practice in their state (called endorsement) and on forming agreements with other states on establishing licensing requirements (called reciprocity) are amended often. For example, for lawyers, Johnson and Kleiner find that states that adopt these more flexible policies have higher migration rates compared to states with no such policies. They find that for these…licensed occupations, the additional costs placed on migration have restricted the movement of individuals in licensed occupations, accounting for part of the decrease in overall migration within the United States.

Taken together, these studies on interstate migration support the view that regulation may limit the number of practitioners in a country and that a policy of reducing barriers to interstate migration would provide benefits to workers and consumers. The ability to move across state lines with fewer impediments and have permission to work would allow individuals to more easily go to where there are jobs. This is particularly important because the growth in wage variation may make it more advantageous to move across state lines (Moretti 2012) (pg. 5).

As legal scholar Ilya Somin quipped on Facebook, this is “[a]n extremely important issue that does not get anywhere near as much attention as it deserves. These barriers victimize consumers and also prevent many workers from moving to areas with greater opportunity.”

You Are Not Morally Superior

January 18, 2018December 11, 2017 by Walker

From NPR:

A new study by Ben Tappin and Ryan McKay, forthcoming in the journal Social Psychological and Personality Science, follows previous work in finding that the tendency towards self-enhancement — towards judging ourselves “better than average” — is particularly acute in the moral domain. We think we’re more sociable and cooperative than average, but we’re especially inclined to think that we’re more honest and fair. The study takes a step beyond prior work, however, in trying to quantify the extent to which this moral self-enhancement might be justified.

The argument goes something like this. Not all self-enhancement is unjustified, because people have more information about themselves than they do about others…For their sample of 270 adult participants, Tappin and McKay quantified the extent to which self-enhancement was potentially justified by developing a model that took into account people’s judgments about themselves versus others across a range of 30 traits, the actual differences between self versus others in ratings for those traits, and people’s judgments about the desirability of each trait. Based on this analysis, they could estimate the extent to which self-enhancement was simply a consequence of making an uncertain inference about others, and the extent to which self-enhancement reflected a systematic bias to over-attribute desirable traits to oneself.

The analysis revealed that by and large, moral self-enhancement isn’t a simple consequence of drawing inferences from limited information. Whereas self-enhancement regarding social traits — such as sociability or warmth — could be entirely explained by the component of their model based on uncertain inference, moral self-enhancement went well beyond what could be justified in this way. In other words, the extent of people’s moral self-enhancement appears to be unjustified.

So why do we have such inflated egos?

One possibility is that we over-attribute positive traits to ourselves because the hit in accuracy is compensated by a boost in wellbeing. Thinking of ourselves as honest and warm, this story goes, could make us feel better about ourselves and our lives. And given that moral characteristics are especially key to identity, the effect could be greater for moral traits than for traits of other kinds.

Consistent with this idea, the researchers found that the magnitude of unjustified self-enhancement for social traits (such as sociability and warmth) was positively associated with self-esteem. But for moral traits (such as honesty and fairness), this wasn’t the case: There was no association between the magnitude of unjustified self-enhancement for moral traits and participants’ self-esteem.

A second possibility is that people aren’t overestimating their own moral virtue, but instead underestimating the moral virtue of others. In this view, the hit in accuracy that comes from regarding others less favorably than ourselves is compensated by a decreased probability of making a costly error: the error of assuming another person will be honest or fair when they’re not. Mistakenly assuming that another person is sociable or warm, by contrast, is less likely to be deadly.

In other words, we lie to ourselves to make us feel better or we have seriously misjudged everyone else. Neither speaks well of us.

Doing Right Is Profitable

December 9, 2017 by Walker

Image result for board meeting

At least according to a report by the non-profit research organization JUST Capital. As detailed in Forbes,

JUST Capital polls, on a continuous basis, more than 50,000 Americans, asking them over and over again a series of simple questions on what makes for a just company: Is pollution important? Are wages important? Do benefits matter?

These polls determine how JUST Capital measures corporate justness. The metrics range from worker pay and worker treatment, to leadership and ethics, job creation, customer treatment, supply chains and environmental performance. JUST Capital then proceeds to apply these metrics to individual companies to determine the most just companies in the nation — the 100 highest-ranking in measures of fair and responsible corporate behavior within its ranking of the largest 897 publicly-traded firms in the U.S.

Here’s what its most recent study found: Stock market indexes based on the leaders of JUST Capital’s 2016 rankings outperformed the Russell 1000 index throughout the decade ending in 2016 within a range of 1-4 percentage-points.

Most of these companies also:

• Generated 3.5% higher 5-year Return on Invested Capital.

• Pay roughly 20% more workers a living wage

• Have almost 17% more women board members

• Created 1.8x more jobs in America

• Provide employees more flexible working hours and paid time off

• Pay 8x fewer consumer-related fines

• Recycle about 3x more waste in % terms

• Are 2x more likely to have sound supply chain policies

• Donate about 2x as much of their profit to charity

The piece concludes,

What this all amount to is more than simply an exhortation to the American private sector to “do the right thing.” It’s not just a wake-up call to “do what’s best for your company long-term” but most importantly, it will do what will get this country booming for the top 20 percent of Americans as well as Wall Street. Our markets need the sort of demand our American consumers can fulfill with money they’ve earned — we need their spending power to drive all the growth we’re capable of creating. And to spend, they need to earn. Enlightened CEOs will making sure their employees will earn fair wages importantly because they are the true value creators of the 21^stcentury.

At the Ethical Systems blog, they mention Milton Friedman’s (in)famous 1970 essay in connection with this report:

In 1970 Milton Friedman wrote a now famous essay in the NY Times Magazine declaring that the social responsibility of business is to increase its profits. Since then, writers and researchers have been debating whether this accurately reflects the responsibilities of business in society. In the decade since the Global Financial Crisis these debates have become particularly critical, with some participants questioning the basic principles of free market capitalism and whether they serve our current societal needs.

But what if the best way to do right by shareholders was to run a socially responsible business?

What’s funny is that Friedman wouldn’t object, as he clarified in a 2005 Reason essay. Comparing his and Whole Foods’ John Mackey’s philosophy, Friedman writes,

Here is how Mackey himself describes his firm’s activities:

1) “The most successful businesses put the customer first, instead of the investors” (which clearly means that this is the way to put the investors first).

2) “There can be little doubt that a certain amount of corporate philanthropy is simply good business and works for the long-term benefit of the investors.”

Compare this to what I wrote in 1970:

“Of course, in practice the doctrine of social responsibility is frequently a cloak for actions that are justified on other grounds rather than a reason for those actions.

“To illustrate, it may well be in the long run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government….

“In each of these…cases, there is a strong temptation to rationalize these actions as an exercise of ‘social responsibility.’ In the present climate of opinion, with its widespread aversion to ‘capitalism,’ ‘profits,’ the ‘soulless corporation’ and so on, this is one way for a corporation to generate goodwill as a by-product of expenditures that are entirely justified in its own self-interest.

“It would be inconsistent of me to call on corporate executives to refrain from this hypocritical window-dressing because it harms the foundations of a free society. That would be to call on them to exercise a ‘social responsibility’! If our institutions and the attitudes of the public make it in their self-interest to cloak their actions in this way, I cannot summon much indignation to denounce them.”

…Finally, I shall try to explain why my statement that “the social responsibility of business [is] to increase its profits” and Mackey’s statement that “the enlightened corporation should try to create value for all of its constituencies” are equivalent.

Note first that I refer to social responsibility, not financial, or accounting, or legal…Maximizing profits is an end from the private point of view; it is a means from the social point of view. A system based on private property and free markets is a sophisticated means of enabling people to cooperate in their economic activities without compulsion; it enables separated knowledge to assure that each resource is used for its most valued use, and is combined with other resources in the most efficient way.

Of course, this is abstract and idealized. The world is not ideal. There are all sorts of deviations from the perfect market–many, if not most, I suspect, due to government interventions. But with all its defects, the current largely free-market, private-property world seems to me vastly preferable to a world in which a large fraction of resources is used and distributed by 501c(3)s and their corporate counterparts.

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