Society – Page 12 – Difficult Run

Do Individualistic Values Lead to Less Inequality?

July 11, 2018 by Walker

That appears to be the case, according to a 2017 paper. From a working paper version,

Our results challenge the conventional view that individualistic societies are more prone to higher levels of income inequality. On the contrary, we find that even if people in more individualistic cultures are more likely to accept and encourage greater individual differences, they end up living in far more equal societies at the end of the day. In our 2SLS analysis, we find that the historical prevalence of infectious diseases is strongly and negatively correlated with individualistic values, which then, in the next stage, are a strong determinant of economic inequality, measured by the net GINI coefficient from the Standardized World Income Inequality Database (SWIID). These results hold even when we control for a number of confounding factors including the level of economic development, social capital, formal institutions, local factor endowments, geographic dummies, and other cultural values. The results are furthermore robust to different sub-samples of countries and alternative measures of income inequality and individualism.

One possible explanation for these findings is that citizens in individualistic cultures favor more inclusive institutions that are characterized by respect for the rights, liberties, and well-being of all members of society, not just their immediate circle. This is consistent with recent empirical findings which show that more individualistic societies are far more likely to develop high quality political and economic institutions including respect for the rule of law, protection of private property and strong democratic institutions (Greif, 1994; Nikolaev and Salahodjaev, 2017; Kyriacou, 2016; Nikolaev and Salahodjaev, 2016; Gorodnichenko and Roland, 2015; Licht et al., 2007; Inglehart and Oyserman, 2004). People in more individualistic cultures are also more likely to tolerate minorities and have higher levels of interpersonal trust and lower levels of corruption (Thornhill and Fincher, 2014; Allik and Realo, 2004), which can further reduce transaction costs and facilitate market exchange leading to higher rates of human and physical capital investment, technological innovation and long-run economic growth (Oyserman et al., 2002; Gorodnichenko and Roland, 2012) and encouraging people to put more effort and get a fairer share of the economic pie (Alesina and Angeletos, 2005). When citizens perceive state institutions to be fair, less corrupt, and more efficient, they are far more likely to tolerate higher taxes and government spending on welfare programs (Dimitrova-Grajzl et al., 2012; Svallfors, 2013; Pitlik and Kouba, 2015; Daniele and Geys, 2015; Pitlik and Rode, 2016). When they trust and care about the wellbeing of their fellow citizens, they will be more inclined to support welfare programs that benefit others. Finally, when people earn higher incomes, they are more likely to be able to bear the burden of higher taxation while still maximizing their own talents through their free choices (pgs. 3-4).

Is Unemployment a Rich Country Privilege?

July 6, 2018 by Walker

The question is cheeky, but appropriate given how “check your privilege” is all the rage. A new working paper suggests that high unemployment rates are actually found in wealthy countries rather than poorer ones. The researchers summarize,

[C]laims about unemployment in poorer countries are all over the map, with some studies finding that the highest unemployment rates in the world are in Sub-Saharan Africa, at around 30% per year (World Bank 2004), while others posit that unemployment is almost non-existent in developing countries, since people there are too poor to have the luxury of not working (Fields 2004, Squire 1981).

In our paper (Feng et al. 2018), we contribute to the study of unemployment by building a data set of average unemployment rates covering 84 countries of all income levels. To address the issue of data comparability, we intentionally bypass existing data banks, such as those of the ILO, and build our own measures of unemployment from the ground up using household survey data. We draw on 199 nationally representative household surveys conducted in various recent years (but mostly between 2000 and 2010). Importantly, our data cover not just the rich countries of the world, but many poor nations, including a dozen from sub-Saharan Africa and many more from the middle of the world income distribution.

…We define work as wage employment, self-employment, and unpaid work in a family farm or business. We exclude those doing home production of services like cooking, cleaning, and childcare. Our search measures cover job search activity in some recent period, like the last week (in our preferred metrics). We compute unemployment rates in each survey as the number of adults not working but searching for work / (number working + those not working and searching). We then average over all surveys for each county in our data.

What we find is that average unemployment rates are in fact substantially lower in poor countries than in rich countries. In the poorest quartile of the world income distribution, unemployment averages around 2.5%, while in the richest quartile, around 8% of the labour force is unemployed on average. Interestingly, we find that the higher unemployment rates of richer economies hold for workers of all ages, for men and women separately, and within both urban and rural areas. Thus, our data suggest that unemployment is largely a rich-country phenomenon, rather than a feature of underdevelopment.

Why is this the case?

The figure below plots the ratio of unemployment for the low educated to that of the high educated against the log of GDP per capita. In the poorest countries, this ratio is below one, meaning that the low educated are less likely to be unemployed than the high educated. The exact opposite is true of the richest countries, all of whom have ratios above one. For instance, in the US, the ratio is 2.3, meaning that those without high school education are more than twice as likely to unemployed as those that finished high school (or went on to college or beyond). Whereas one might have thought this pattern is a universal feature of labour market outcomes, our data show that unemployment concentrated among the less educated is actually confined to richer economies.

The authors explain,

Countries differ only by their productivity in the modern sector, with the traditional sector offering the same (low) level of output per worker in all countries. This assumption is central to our analysis and based on the emerging consensus that cross-country productivity differences are skill-biased, rather than affecting unskilled and skilled tasks and workers equally (Caselli and Coleman 2006, Malmberg 2016).

The model predicts that in countries with low modern-sector productivity levels, the bulk of the workforce sorts into the traditional sector. Only workers with the highest skill levels choose the modern sector. Then, as modern-sector productivity rises – our proxy for ‘development’ – more and more lower skilled workers are drawn into the modern sector. This raises overall unemployment, as more workers now search for jobs, with some of them being unemployed each period in equilibrium. As in the data, our model predicts that development also brings a rise in the ratio of unemployment for the less- to more-skilled. The reason is most of the higher skilled workers are already in the modern sector and searching for wage jobs in poor economies. As modern-sector productivity grows, it is the less skilled workers that switch sectors, and their unemployment rate rises faster as a result.

They conclude,

Our research suggests that unemployment is largely a feature of advanced economies. In poor countries, only the most skilled workers search for wage jobs, while most of the less skilled workers select into traditional self-employment activities. Thus, few workers in poor economies are actually unemployed in practice. In advanced economies, the modern wage-paying sectors have relatively high productivity levels and employ the bulk of the labour force. As a consequence, as modern firms and positions come and go, workers are occasionally cast into unemployment. While unemployment per se is undesirable, the high underlying productivity level of the modern sector is not.

Paul Krugman once famously said, “Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.”[ref]The Age of Diminished Expectations: U.S. Economic Policy in the 1990s, 3^rd ed., pg. 11.[/ref] Harvard’s Greg Mankiw writes, “Almost all variation in living standards is attributable to differences in countries’ productivity[.]”[ref]Principles of Economics, 7^th ed., pg. 13.[/ref] This study demonstrates at least two important points:

Employed =/= Productive
Jobs =/= Wealth

Abolishing Prisons

June 29, 2018 by Walker

Petition your state legislatures to pardon every convict in their several penitentiaries: blessing them as they go, and saying to them in the name of the Lord, go thy way and sin no more. Advise your legislators when they make laws for larceny, burglary or any felony, to make the penalty applicable to work upon roads, public works, or any place where the culprit can be taught more wisdom and more virtue; and become more enlightened. Rigor and seclusion will never do as much to reform the propensities of man, as reason and friendship. Murder only can claim confinement or death. Let the penitentiaries be turned into seminaries of learning, where intelligence, like the angels of heaven, would banish such fragments of barbarism: Imprisonment for debt is a meaner practice than the savage tolerates with all his ferocity. “Amor vincit omnia.” Love conquers all. – Joseph Smith, 7 Feb. 1844[ref]Hat-tip to Russell Stevenson for pointing this out.[/ref]

As reported by Vox,

America should abolish prisons. Perhaps not all of them, but very close to it.

That’s the argument in a recent, provocative paper by Peter Salib, a judicial clerk to Seventh Circuit Court of Appeals Judge Frank Easterbrook.

According to Salib, the idea behind the criminal justice system should be to punish and deter crimes. But prisons are arguably a very inefficient way to do that. The research shows that long prison sentences have little impact on crime, and a stint in prison can actually make someone more likely to commit crime — by further exposing them to all sorts of criminal elements. At the same time, prisons are incredibly costly, eating up funds that could go to other government programs that are more effective at fighting crime.

So why not, Salib suggests, consider alternative approaches to punishment that can let someone actually pay their debt back to society without forcing taxpayers to shoulder the burden of paying for his full confinement?

Salib gave the example of an accountant who burned down an office building. Instead of locking him up for potentially decades, Salib suggests keeping an eye on him through other means, such as GPS monitoring, and forcing him to work as an accountant to pay back the cost of the office building. This would, he argues, be much better for everyone involved; the office building owner gets paid back for the damage, and society has to pay much less to confine this person.

…Salib makes one of the clearer cases for how this change would be better not just for prisoners, but for society as a whole. You should read the full paper for more detail.

Check it out

Career, Community, Cause

June 28, 2018 by Walker

That’s what most employees want out of their place of work, according to a recent Harvard Business Review blog post. The authors write,

If [Abraham] Maslow were designing his pyramid from scratch today to explain what motivates people at work, beyond the basics, what would it look like? That’s a question we set out to answer at Facebook, in collaboration with our people analytics team.

We survey our workforce twice a year, asking what employees value most. After examining hundreds of thousands of answers over and over again, we identified three big buckets of motivators: career, community, and cause.

Career is about work: having a job that provides autonomy, allows you to use your strengths, and promotes your learning and development. It’s at the heart of intrinsic motivation.

Community is about people: feeling respected, cared about, and recognized by others. It drives our sense of connection and belongingness.

Cause is about purpose: feeling that you make a meaningful impact, identifying with the organization’s mission, and believing that it does some good in the world. It’s a source of pride.

These three buckets make up what’s called the psychological contract — the unwritten expectations and obligations between employees and employers. When that contract is fulfilled, people bring their whole selves to work. But when it’s breached, people become less satisfied and committed. They contribute less. They perform worse.

Here are a few interesting bits from their survey:

“Contrary to the belief that Millennials are more concerned with meaning and purpose, we found that younger people cared slightly less about cause — and slightly more about career — than older people. In fact, people ages 55 and above are the only group at Facebook who care significantly more about cause than about career and community. This tracks with evidence that around mid-life, people become more concerned about contributing to society and less focused on individual career enhancement.”
“Our engineers care a lot about community, giving it an average rating of 4.18 on a 1-5 scale. And just as we saw with age and location, across functions people rated career, community, and cause as similarly important.”
Career ekes out ahead in virtually every group, except among Latin Americans (just barely), Western Europeans (career and community are almost identical), and those 55 and above.

W180205_GRANT_MOTIVATORSBYAGE

W180205_GRANT_MOTIVATORSBYLOCATION

W180205_GRANT_MOTIVATORSBYFUNCTION

Are Asylum Seekers Economically Beneficial?

July 21, 2018June 23, 2018 by Walker

From Reason:

Nope

Migrants and asylum seekers provide big net benefits to their host countries reports a new study in Science Advances by three French economists. The researchers used 30 years of data on migrant and asylum seeker flows into 15 western European countries. They were seeking to find what effect permanent migrants including refugees who sought and obtained asylum between 1985 and 2015 have had on subsequent GDP per capita, unemployment rates, government spending and tax collections in those countries.

Flows of asylum seekers and migrants varied between countries. For example, Austria received 2.35 asylum seekers and 4.06 migrants per 1,000 residents; Germany 1.51 and 3.79; France 0.68 and 1.14; Italy 0.27 and 2.56; and the United Kingdom 0.63 and 2.36 respectively. Portugal received the lowest of both at 0.03 and 0.47 per 1,000 residents. Over all, the flow of asylum seekers and migrants into the 15 countries averaged 1.13 and 2.57 per 1,000 residents respectively.

Once the economists crunched the numbers they found that migrant flows during the past 30 years have had substantial positive effects on European economies. Specifically, the researchers report that migrants “significantly increase per capita GDP, reduce unemployment, and improve the balance of public finances; the additional public expenditures, which is usually referred to as the ‘refugee burden’, is more than outweighed by the increase in tax revenues.”

…This new study bolsters the results of similar research on refugees and migrants in this country, including a review reportedly suppressed by the Trump administration last year, that finds that they increase incomes and are a net fiscal benefit.

The evidence stacks up.

Can Americans Distinguish Factual Statements From Opinions?

June 21, 2018June 21, 2018 by Walker

From Pew Research Center:

In today’s fast-paced and complex information environment, news consumers must make rapid-fire judgments about how to internalize news-related statements – statements that often come in snippets and through pathways that provide little context. A new Pew Research Center survey of 5,035 U.S. adults examines a basic step in that process: whether members of the public can recognize news as factual – something that’s capable of being proved or disproved by objective evidence – or as an opinion that reflects the beliefs and values of whoever expressed it.

The findings from the survey, conducted between Feb. 22 and March 8, 2018, reveal that even this basic task presents a challenge. The main portion of the study, which measured the public’s ability to distinguish between five factual statements and five opinion statements, found that a majority of Americans correctly identified at least three of the five statements in each set. But this result is only a little better than random guesses. Far fewer Americans got all five correct, and roughly a quarter got most or all wrong. Even more revealing is that certain Americans do far better at parsing through this content than others. Those with high political awareness, those who are very digitally savvy and those who place high levels of trust in the news media are better able than others to accurately identify news-related statements as factual or opinion.

…Trust in those who do the reporting also matters in how that statement is interpreted. Almost four-in-ten Americans who have a lot of trust in the information from national news organizations (39%) correctly identified all five factual statements, compared with 18% of those who have not much or no trust. However, one other trait related to news habits – the public’s level of interest in news – does not show much difference.

In addition to political awareness, party identification plays a role in how Americans differentiate between factual and opinion news statements. Both Republicans and Democrats show a propensity to be influenced by which side of the aisle a statement appeals to most. For example, members of each political party were more likely to label both factual and opinion statements as factual when they appealed more to their political side.

No comment.

UPDATE: I lied. Here’s a comment from Jason Brennan, who has some pointed and insightful critiques of the study’s design:

First, this trades on a questionable and controversial view about whether normative statements are objective and provable. American K-12 schools dogmatically teach the view that all normative statements are subjective and mere opinion, but that’s in fact (and this is not mere opinion) a highly controversial philosophical claim. See this NY Times blog complaining about this: https://opinionator.blogs.nytimes.com/2015/03/02/why-our-children-dont-think-there-are-moral-facts/

Second, the normative statements in the bottom are what we might call “thick” rather than “thin” normative claims. A thin claim simply offers an evaluation, e.g., “Crooked Timber is bad.” A thick claim contains both normative components but also encapsulates, presupposes, encompasses, or in some way contains background descriptive claims. For example, “Corey Robin is intellectually dishonest” or “Michael Huemer is brave.”

Most of these statements are “thick” in that sense.

Is government wasteful and inefficient? I’m not sure if that is to be interpreted entirely as an opinion claim, or whether it is not entirely provable. “Efficiency” has multiple descriptive meanings in economics. “Wasteful” can be seen as a slightly normatively loaded version of “inefficient”; e.g., “This engine is less efficient than that engine, so it’s wasteful.” Economists regularly make claims like this when studying various institutions, and they see themselves as doing descriptive, positive work.

Are immigrants a big problem? Again, this question presupposes some normative commitments. However, we also tend to summarize descriptive claims in normative ways when the background normative commitments are shared. Someone reading this might think the statement is–as it often would be in conversational English–a way of summarizing a longer statement: “Immigrants cause crime, undermine social cohesion, and strain government budgets by consuming public goods, schooling, and social insurance.” (Note that I do not endorse these descriptive claims.) Similarly, if a medical doctor said, “Jason, your cancer is a aggressive and is going to be a big problem,” I wouldn’t think to respond, “Just give me the facts, doc.” Instead, it’s a way of summarizing such things as “The cancer has metastasized and is unlikely to respond to common treatments.”

Similar comments apply to the other opinion statements. Yes, they contain normative components, but nevertheless, the study both A) presupposes a problematic view about the objectivity of normative statements and B) seems to ignore or have questionable views about the pragmatics of thick normative statements.

Men, Religion, and Hormones

June 20, 2018 by Walker

Related image Women worldwide tend to be more religious than men. In the United States, for example, self-identified Christian women are more religious than self-identified Christian men.[ref]However, it’s the opposite in Israel among Jews.[/ref] Numerous possible reasons have been offered, from the social to the genetic. Last year, I highlighted a study that found religion to be less analytical and more pro-social: “In a series of eight experiments, the researchers found the more empathetic the person, the more likely he or she is religious. That finding offers a new explanation for past research showing women tend to hold more religious or spiritual worldviews than men. The gap may be because women have a stronger tendency toward empathetic concern than men.” As noted by economist Bryan Caplan, “Stereotypes about personality and gender turn out to be fairly accurate: on both Myers–Briggs thinking–feeling and FFM agreeableness, there are large male–female gaps in the expected directions. Women are about half a standard deviation more agreeable than men; on the binary Myers–Briggs measure, the thinking–feeling breakdown is about 30/70 for women versus 60/40 for men.”[ref]Caplan, “Stigler Becker versus Myers-Briggs: Why Preference-Based Explanations Are Scientifically Meaningful and Empirically Important,” Journal of Economic Behavior & Organization 50 (2003): 400.[/ref] According to Pew,

Under the “nature” umbrella are theories that variously attribute gender differences in religious commitment to physical or physiological causes such as hormones, genes or biological predispositions.

For example, Baylor University sociologist Rodney Stark postulates that men’s physiology – specifically their generally higher levels of testosterone – accounts for gender differences in religion. His argument rests on what he views as increasing evidence that testosterone is associated with men’s greater propensity to take risks, which he argues is why men are less religious than women. By inference, women are more religious because they have less risk-promoting testosterone.

A new study offers some evidence for the testosterone theory:

From the analysis of over 1000 men, [Aniruddha] Das found that men with higher levels of the sex hormones testosterone and dehydroepiandrosterone (DHEA) in their bodies had weaker religious ties.

“Religion influences a range of cultural and political patterns at the population level. Results from the current study indicate the latter may also have hormonal roots,” says Das. “There is therefore a need for conceptual models that can accommodate the dynamic interplay of psychosocial and neuroendocrine factors in shaping a person’s life cycle.”

He believes that more studies should be done to better understand how hormones, in particular, shape a person’s religious patterns in later life. This is of importance, as religion has been shown to have a positive influence on how people age and ultimately experience their later years. According to Das, the findings further point to biological reasons behind the particular personal networks and social affiliations that people form during the course of their lives.

Testosterone has been shown to reduce empathy, perhaps explaining why women tend to be more empathetic–and therefore, more religious–than men. As Steven Pinker explains, “Women have more intimate social relationships, are more concerned about them, and feel more empathy toward their friends, though not toward strangers.”[ref]The Blank Slate, pg. 345. This is why men suffer more from loneliness. See Thomas Joiner, Lonely at the Top: The High Cost of Men’s Success (New York: St. Martin’s Press, 2011).[/ref]

It’ll be interesting to see what future research finds.

The Economic Consequences of Gender Inequality

June 11, 2018 by Walker

BBC reports,

Saudi Arabia has issued driving licences to women for the first time in decades just weeks before a ban on female drivers is lifted. Ten women swapped their foreign licences for Saudi ones on Monday in cities across the country…”Expectations are that next week an additional 2,000 women will join the ranks of licensed drivers in the kingdom,” a statement from the Saudi information ministry said. It added that the 10 women who had collected their new Saudi licences had “made history”. “It’s a dream come true that I am about to drive in the kingdom,” Rema Jawdat, who received a licence, was quoted as saying by the ministry. “Driving to me represents having a choice – the choice of independent movement. Now we have that option.” The lifting of the driving ban was announced last September and is part of Crown Prince Mohammed bin Salman’s programme to modernise some aspects of Saudi society.

Saudi Arabia is an extreme case of gender inequality. But what is the economic impact of gender inequality? Here are some major findings from a May 2018 World Bank report:

Globally, women account for only 38 percent of human capital wealth versus 62 percent for men. In low- and lower-middle income countries, women account for a third or less of human capital wealth.
On a per capita basis, gender inequality in earnings could lead to losses in wealth of $23,620 per person globally. These losses differ between regions and countries because levels of human capital wealth, and thereby losses in wealth due to gender inequality, tend to increase in absolute values with economic development. For these reasons, in absolute terms the losses are largest in OECD countries.
Globally, for the 141 countries included in the analysis, the loss in human capital wealth due to gender inequality is estimated at $160.2 trillion if we simply assume that women would earn as much as men. This is about twice the value of GDP globally. Said differently, human capital wealth could increase by 21.7 percent globally, and total wealth by 14.0 percent with gender equality in earnings.

Read the full report here.

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