Society

The Benefits of Healthy Marriages

by

Image result for disney marriage gif

A recent post at the IFS’s Family Studies blog has a nice summary of the individual and social benefits of healthy marriages. For those who have kept up with me over the years, this is a subject I spend quite a bit of time researching. Nonetheless, it’s nice to have it all in one spot. Here’s the list:

  • “[T]he presence or absence of marriage impacts economic well-being, particularly for women and children. Children raised by married parents are significantly less likely to experience poverty, whereas single-mother families are over five times as likely to be poor. Additionally, the majority of homeless families are headed by unmarried mothers.”
  • “A study by IFS Senior Fellow W. Bradford Wilcox, Robert Lerman, and Joseph Price found that larger shares of married-parent families at the state level are linked to greater economic mobility, higher family incomes, and less child poverty.”
  • “[M]arried-parent families boost the academic prospects of students, especially boys. Research has consistently confirmed that a child’s home environment (family structure, parental education, and family income) is more closely associated with student success than school resources and spending. And a new study by Wilcox and Nicholas Zill found that “the share of families headed by married couples is a more powerful predictor of high school graduation and school suspension rates than are income, race, and ethnicity in Florida.””
  • “Married-parent families also improve the safety of women and children and communities. In general, unmarried women, including those in cohabiting relationships, are more likely to be victims of domestic violence than married women. And hands down, the safest place for a child to grow up is with his or her own married mother and father, while a child living with an unmarried mother and live-in boyfriend is the most vulnerable to physical, sexual, and emotional abuse. In addition to safer families, violent crime is significantly less common in communities and states with larger shares of married-parent families.”
  • “We know…that girls who grow up in single-mother families are more likely to engage in early sexual activity and to experience a teen pregnancy. Conversely, children who grow up in a married-parent family are more likely to form lasting marriages as adults and to raise their own children within a married union.”
  • “We also know that family fragmentation, including divorce, is especially harmful to children. Although the suffering sometimes manifests itself in less visible ways, it deserves to be acknowledged. Importantly, the harms of divorce are not just seen in lower income families; research shows that even privileged kids suffer when families break down.”
  • “Finally, the growing marriage divide between the college-educated and the poor and working class is at least part of what’s driving economic and social inequality in our nation. Because the college-educated are more likely to get married and less likely to divorce than less-educated Americans, they are more likely to reap the benefits of marriage, including better education, higher incomes, and family stability for their kids. Meanwhile, marriage is in retreat among the less educated and working class, who are more likely to be raising children outside of marriage, and to suffer the negative effects of family instability, including poverty. Bridging the marriage divide is an important part of efforts to boost economic mobility for all Americans.”

This is why marriage is still the gold standard. Check out the rest to see their pro-family policy proposals.

2016 NAS Report on Immigration: More of the Same

by

Image result for immigrants

The National Academy of Sciences released a new report in September that “provides a comprehensive assessment of economic and demographic trends of U.S. immigration over the past 20 years, its impact on the labor market and wages of native-born workers, and its fiscal impact at the national, state, and local levels.” Here are the highlights from the press release:

  • Effects on wages: “When measured over a period of 10 years or more, the impact of immigration on the wages of native workers overall is very small.”
  • Effects on employment levels: “There is little evidence that immigration significantly affects the overall employment levels of native-born workers.”
  • Effects of high-skilled immigrants: “Several studies have found a positive impact of skilled immigration on the wages and employment of both college- and non-college-educated natives. Such findings are consistent with the view that skilled immigrants are often complementary to native-born workers; that spillovers of wage-enhancing knowledge and skills occur as a result of interactions among workers; and that skilled immigrants innovate sufficiently to raise overall productivity.”
  • The role of immigrants in consumer demand: “Immigrants’ contributions to the labor force reduce the prices of some goods and services, which benefits consumers in a range of sectors, including child care, food preparation, house cleaning and repair, and construction. Moreover, new arrivals and their descendants are a source of demand in key sectors such as housing, which benefits residential real estate markets.”
  • Impacts on economic growth: “Immigration is integral to the nation’s economic growth. The inflow of labor supply has helped the United States avoid the problems facing other economies that have stagnated as a result of unfavorable demographics, particularly the effects of an aging workforce and reduced consumption by older residents. In addition, the infusion of human capital by high-skilled immigrants has boosted the nation’s capacity for innovation, entrepreneurship, and technological change.”
  • Fiscal impact of first-generation immigrants (1994-2013): “Annual cross-sectional data reveal that, compared with the native-born, first-generation immigrants contributed less in taxes during working ages because they were, on average, less educated and earned less. However, this pattern reverses at around age 60, when the native-born (except for the children of immigrants) were consistently more expensive to government on a per-capita basis because of their greater use of social security benefits.”
  • Fiscal impact of the children of immigration (1994-2013): “Reflecting their slightly higher educational achievement, as well as their higher wages and salaries, the second generation contributed more in taxes on a per capita basis during working ages than did their parents or other native-born Americans.”

I’ve written about the economic literature of immigration before and the NAS findings are pretty consistent with the ones I shared previously. This report could’ve used more exposure, especially given the outcome of Tuesday’s election.

Unfortunately, I doubt it would’ve mattered.

Victimhood Culture Metastasizes

by

dts-lonely-commute

One of the most important papers for understanding the political climate we live in is “Microaggression and Moral Cultures” by Bradley Campbell and Jason Manning.[ref]The article made a splash–it was covered in The Atlantic, among other places–and we covered Jonathan Haidt’s reaction to it here at Difficult Run back in September of last year. You can download the full paper for free, however, and you should do that.[/ref]

In the article, Campbell and Manning explore three stages in the evolution of moral culture:

  • Honor culture
  • Dignity culture
  • Victimhood culture

The essence of honor culture is reputation. That is because–in a society without a strong, centralized authority–the best defense against predation is a reputation for drastic overreaction. If people believe you will overreact to any provocation, they are less likely to provoke you. Unfortunately, when everybody is trying to build a reputation for toughness and overreaction at the same time, “people are verbally aggressive and quick to insult other.” This causes damage to reputation, and so we have “a high frequency of violent conflict as participants in the culture aggressively compete for respect.”

When strong, formal authorities begin to emerge, the logic of the honor culture dissipates. If someone insults you and you react by physically assaulting them, then–in the presence of a strong authority–you’re going to end up getting punished more harshly than they are. When there is a legitimate criminal justice system to handle major offenses, the best response to a minor offense is to simply ignore it. As a result, reputation is not as important in dignity cultures. In an honor culture, appealing to an outside authority is a sign of weakness. In a dignity culture, failing to appeal to an outside authority is taking the law into your own hands.

The transition from an honor culture to a dignity culture is vitally important, because a dignity culture has a much greater capacity for pluralism. Free speech is more than a legal framework or a constitutional right, it’s also a tradition. In a dignity culture, where having a thick skin is encouraged, that tradition can flourish because minor conflicts and disagreements don’t carry the risk of exploding into open hostility and violence.

Victimhood culture is an outgrowth of dignity culture that combines the worst of honor and dignity cultures. It is “characterized by concern with status and sensitivity to slight combined with a heavy reliance on third parties.” The “sensitivity to slight” comes straight from honor culture, and the “heavy reliance on third parties” comes straight from dignity culture. The basic idea of victimhood culture is to manipulate third parties[ref]These third parties can be formal authorities (like university administrators) or sympathetic crowds (like a a Twitter mob).[/ref] to intervene in a dispute on your side by appearing to be the victim.

The bigger the apparent injustice, the greater the chance of persuading a third party to take your side and the more drastic the action you can convince them to take on your behalf. Victimhood culture, then, is fundamentally about manufacturing and maintaining the highest degree of apparent victimhood. As Campbell and Manning point out, one simple way to achieve this is through the use of outright hoaxes and “hate crime hoaxes are common on college campuses.”[ref]Other tactics include hunger strikes and protest suicides which increase the apparent injustice by increasing the actual damage suffered.[/ref]

The gold standard in victim culture, however, is the microagrresion. Microaggressions are essentially a form of bundling. First, you bundle individual instances of minor offenses into larger patterns. Second, you bundle individual people (victims and perpetrators alike) into larger cohorts. By using this approach, an isolated and incidental comment from one individual to another becomes a symptom of systematic oppression of one entire category of people by another category. These forms of bundling are important, as we will see at the end, because they forge a link between victimhood culture and identity politics.

According to Campbell and Manning, one of the results of the rise of victimhood culture is a “clash between competing moral systems” as dignity culture and victimhood culture come into conflict. This is certainly true. Progressive social justice theories like Critical Race Theory “[reject] the traditions of liberalism and meritocracy,”[ref]What is Critical Race Theory?[/ref] which are the heritage of dignity culture. There is no doubt that victimhood culture–championed by progressive social justice ideology–is incompatible with dignity culture.

This is why so much of the push-back against second-wave political correctness has been bipartisan.[ref]For a sample, see the second section of my article: When Social Justice Isn’t About Justice.[/ref] There are plenty on the left of American politics who still cling to old-fashioned notions of liberalism like freedom of expression, the marketplace of ideas, and the dignity of individuals. Aligned with conservatives who share these concerns, they form a bipartisan coalition that is engaged in the conflict Campbell and Manning predicted: dignity culture attempting to hold off the insurgent victimhood culture.

But there is another conflict going on as well. The most vociferous push-back against progressive social justice ideology (and ostensibly the victimhood culture it embraces) comes from the alt-right. What is notable about this push-back, however, is that instead of genuinely objecting to victimhood culture, the alt-right has embraced a re-branded version of it. The best example of this is the most obvious: Donald Trump’s promise to “make America great again” and his obvious appeal to white grievance.

Just as with the progressive social justice movement, Trump’s appeal works because it has enough truth in it to give it the feel of veracity. One of the best explanation of this comes (believe it or not) from a Cracked article: How Half Of America Lost Its F**king Mind. The article (which includes lots of non-censored swearing) does a fantastic job of outlining the legitimate grievance of white, rural America.

Which leads me to an essential side-note: it is possible for the world to simultaneously get worse for both the minorities that liberals care about (black, Hispanic, women, and LBTQ Americans) and the group that Trump and the alt-right appeal to (rural, white Americans). I recently had simultaneous stories in my Facebook feed about white highschoolers putting a noose around a black student’s neck and another about how Berkeley students barricade bridge, force whites to cross creek. These two stories neither cancel out nor justify each other.

One of the things that contemporary theories of racism as systematized prejudice and discrimination fail to appreciate is that in the United States there is more than one system. The legacies of systemic oppression of racial minorities are absolutely still in place. My review of The New Jim Crow should leave no doubt about where I stand on that. But the existence of systematized anti-black discrimination in the criminal justice system does not obviate, cancel out, or justify the creation of anti-white (usually: anti-poor-rural-conservative-white) discrimination in other systems, like academia in general or social psychology in particular.

So this is where we stand: in the battle of victimhood culture against dignity culture, Trump and the alt-right are not fighting against the so-called social justice warriors. They are–with their grievance-based, identity-centric campaigns–quite literally part of the problem. They are fighting fire-with-fire while the whole world burns down.

Along these lines, David Marcus’s recent Federalist piece (How Anti-White Rhetoric is Fueling White Nationalism) is a must-read. In it, Marcus attacks another prong of the progressive social justice approach to race, writing that a shift to emphasizing privilege amounts to “ask[ing] white people to be more tribal” and is even “abetting white supremacy.” Marcus points out that the number of active Ku Klux Klan chapters more than doubled (from 72 to 190) just between 2014 and 2015, and argues that “one of the key components of this racism is the almost-daily parade of silly micro-aggressions and triggers.” He adds:

Young white men, reacting to social and educational constructs that paint them as the embodiment of historical evil, are fertile ground for white supremacists. They are very aware of the dichotomy between non-white culture, which must be valued at all times (even in the midst of terror attacks), and white culture, which must be criticized and devalued. They don’t like it.

It may seem like a stretch to draw parallels between ill-advised anti-racism efforts and the alt-right (let alone the KKK), but here’s a headline that might give you pause: Cal State LA offers segregated housing for black students. According to the article, the decision came after the Black Student Union cited “microaggressions” as part of their call for “housing space delegated for Black students.”

Journalism student Aeman Ansari recently made a similar case in the Huffington Post, justifying the expulsion of student journalists from an event because those journalists were white and arguing that safe spaces are different because “segregation was imposed on people of colour by people of privilege, not the other way around.” That’s a legitimate difference, but it doesn’t erase this fact that the two groups of people in America who think whites and blacks should not mix are the KKK and progressive social justice activists. The different terminology–safe space vs. segregated space–and the differing power dynamics can’t efface the fact that both of them have the goal of racial separation.

It is a genuine tragedy that–after such great (albeit incomplete) progress towards racial equality in this country–we are now seeing a resurgence of the kind of hardcore, strident racism that has not been prevalent for decades. But this is where we are today.

Victimhood culture, as Campbell and Manning note, originated with the political left because “the narrative of oppression and victimization is especially congenial to a leftist worldview.” However, there is nothing about the tactics of victimhood culture that dictate it must remain exclusively an artifact of the left, and it has not. “Naturally,” Campbell and Manning observe, “whenever victimhood…. confers status, all sorts of people will want to claim it.” White identity politics is a natural and inevitable response to minority identity politics, and it follows basically the same playbook.

So, while victimhood culture was initially created by left-wing activists in college campuses, it has metastasized and spread throughout American society. Because it is such an effective political weapon, it is has proved irresistable to many of the folks who originally set out to destroy it.[ref]In this reading, the alt-right is Boromir, and they have the Ring.[/ref] Based on grievances both real and imaginary, the alt-right has embraced the logic and tactics of victimhood culture. Because victimhood culture is fueled by identity politics and tribalism, the rise in the co-option of victimhood culture by the alt-right necessarily entails a reawakening of old-school racism the likes of which we have not seen openly promulgated for decades, if not more.

I agree with the solution that Marcus proposes, and it’s a solution that applies not only to the resurgence of racism in the US but to the broader problems plaguing our society. He writes that “our anti-racism efforts must be refocused away from guilt and confession and towards equality and eradicating irrational judgments based on race…we must return to the goal of treating people as individuals, not as representatives of their race.”

I would only add that this vision could be expanded even farther: we must treat people as individuals, not as representative of their race, gender, political party, or any other kind of identity-tribe.

 

The Welfare State & Social Capital

by

Samuel Hammond, the Poverty and Welfare Policy Analyst at the Niskanen Center, has an interesting post at LearnLiberty.org on the welfare state. He describes the role religion has played in social assistance, explaining that “philanthropy had to be earned through reciprocal relationships rooted in trust and goodwill. Churches relied on their member’s contributions and self-sacrifice to measure their strength of commitment to Christian ideals and bond the community together.” But then he points out how religion’s social assistance “began to unravel in the early 20th century”:

First, the social spending of the New Deal crowded out significant amounts of church-based welfare. By one estimate, New Deal spending caused church charitable spending to fall by 30 percent.

Then came President Lyndon Johnson’s “Great Society” and “War on Poverty,” and with it the creation of Medicaid and the expansion of food stamps and other income supplements targeted at the poor. Spending on Medicaid and Social Security rose exponentially after 1990, following a landmark Supreme Court decision that greatly expanded eligibility and a misconceived federal budget that promised to match state spending on low-income hospitals dollar for dollar, essentially turning Medicaid into a money pump.

Data shows that commitment to religious community in the United States has been steadily decreasing, and in a way that seems correlated to spending on public welfare. Since 1990, America’s non-religious population has grown from about 5 percent to over 20 percent and is climbing. A comparison of U.S. state rankings reveals a striking negative relationship between the generosity of the welfare system and the size of the self-identified “very religious” population.

So does the welfare state lead to a decline in social capital? When we look at the data from Europe, the “evidence by–and–large contradicts the U.S. narrative. Indeed, empirical studies tend to talk of welfare being “trust enabling”. Consider Sweden, which has one of most comprehensive welfare states in the world but also ranks near the top in measures of social capital.” So why the difference?:

The key factor appears to be the high level of decentralization in many social programs. For example, inSweden delivering healthcare is the responsibility of County Councils, while welfare, disability, and programs for the elderly are controlled by municipalities. Swedes also have very high rates of union membership. Yet instead of being confrontational with the employer, the norm is mutual advantage. In turn, unions are entrusted to manage stuff that in the U.S. would be cynically regulated, like unemployment insurance and parental leave. 

Economists extol the virtue of this kind of decentralization, known as subsidiarity, for reasons of asymmetric information. That’s just jargon for the truism that, in tight communities, everybody knows everybody. I was astonished to learn, for instance, that 75% of Swedes report attending “study circles,” 10% on a regular basis. These are regular meetings of a dozen or so people organized by larger voluntary associations that “range from the study of foreign languages to cooking to the European Union question.”

Elsewhere, Hammond proposes three ideas for decentralizing the U.S. welfare state:

  1. Medicaid wavers: “The first is the 1915(c) Home & Community-Based Waiver, which allows states to provide long term care under Medicaid through community based settings. An example might be an individual with severe intellectual or developmental disabilities. Traditionally, under Medicaid the individual will receive long term care through an agency and may even become institutionalized. Using the HCBS waiver, the eligible individual can self-direct their care from top to bottom, appoint a friend or family member as caretaker, and take control over their living environment. In some cases, the individual may even become the de facto employer, with the aid of a fiscal intermediary to handle payroll and other tasks beyond their capacities. So not only does the waiver redirect program delivery in a way that re-engages family and community, it also greatly enhances individual autonomy and self-determination.”
  2. Prevention programs: “A second, more recent example, is the Department of Health and Human Services’ initiative to channel Medicare spending on diabetes prevention through local YMCAs. The program launched as part of an innovation grant under the Affordable Care Act and is still being independently evaluated, but initial findings are promising. It’s a perfect case study in why community matters. By bringing pre-diabetic participants under one local roof, any direct educational benefits are reinforced by the peer-effects of other participants who may begin to form a loose network, check in on how well each is holding to their new diets, and so on. The best part is that, in theory, peer networks can persist long after the initial intervention. That means if this particular program were ended its effects may continue to reproduce overtime. The “cultural channel” for social policy is thus underrated by many progressives who automatically associate the enforcement of social norms through shame and stigma with conformity or oppression. Yet such social structures also serve as robust mechanisms for enhancing an individual’s self-control.”
  3. Universal basic income: “[Charles] Murray argues that [a lump sum transfer] only works if all or most other transfer programs are eliminated. It is in essence a strategy for eliminating the “hidden information” problem of poverty. With a basic income deposited monthly, it is no longer credible for someone who gambles their stipend away to claim total desperation, since their income stream is common knowledge. The remaining alternative is to appeal to friends and family. With the incentives set just right, the economies of scale and insurance benefits of pooling resources could lead to a dramatic community revival; however, Murray’s theory has yet to be put to the test.”[ref]See my previous posts on UBI along with economist Tyler Cowen’s latest Bloomberg article.[/ref]

This is why conservatives and libertarians need to “declare peace on the safety net” and seek out innovative ways to make it more effective and efficient.

O Canada: Bastion of Western Liberty?

by

Over the years, I’ve heard people of a certain political persuasion argue that the United States should be more like their northern neighbor Canada. And over the years, I’ve enthusiastically agreed, but mostly for different reasons. A recent article in The Economist captures a few of those reasons:

Donald Trump, the grievance-mongering Republican nominee, would build a wall on Mexico’s border and rip up trade agreements. Hillary Clinton, the probable winner on November 8th, would be much better on immigration, but she has renounced her former support for ambitious trade deals. Britain, worried about immigrants and globalisation, has voted to march out of the European Union. Angela Merkel flung open Germany’s doors to refugees, then suffered a series of political setbacks. Marine Le Pen, a right-wing populist, is the favourite to win the first round of France’s presidential election next year.

In this depressing company of wall-builders, door-slammers and drawbridge-raisers, Canada stands out as a heartening exception. It happily admits more than 300,000 immigrants a year, nearly 1% of its population—a higher proportion than any other big, rich country—and has done so for two decades. Its charismatic prime minister, Justin Trudeau, who has been in office a year, has welcomed some 33,000 Syrian refugees, far more than America has. Bucking the protectionist mood, Canada remains an eager free-trader. It was dismayed by the EU’s struggle to overcome a veto by Walloons on signing a “comprehensive” trade agreement that took seven years to negotiate (see Charlemagne). Under Mr Trudeau, Canada is trying to make amends for its shameful treatment of indigenous peoples, and is likely to become the first Western country to legalise recreational cannabis on a national level. 

The article acknowledges that Canada’s geographic location, history, and the like are important factors for its political decisions above, but it nonetheless makes an effort to find against the populist rhetoric within its own borders:

Canada not only welcomes newcomers but works hard to integrate them. Its charter of rights and freedoms proclaims the country’s “multicultural heritage”. Not every country will fuse diversity and national identity in the same way that Canada does. Indeed, French-speaking Quebec has its own way of interpreting multiculturalism, which gives priority to the province’s distinct culture. But other countries can learn from the spirit of experimentation that Canada brings to helping immigrants find employment and housing. Its system of private sponsorship, in which groups of citizens take responsibility for supporting refugees during their first year, not only helps them adapt but encourages society at large to make them welcome. The UN High Commissioner for Refugees has called on other countries to copy it.

Canada has been managing its public finances conservatively for the past 20 years or so. Now in charge of a sluggish economy, Mr Trudeau can afford to give growth a modest lift by spending extra money on infrastructure. His government has given a tax cut to the middle class and raised rates for the highest earners to help pay for it. These economic policies deserve to “go viral”, the head of the IMF has said. Canada has a further economic lesson to impart in how it protects people hurt by globalisation. Compared with America, its publicly financed health system lessens the terror of losing a job; it also provides more financial support and training to people who do. And its policy of “equalisation” gives provincial and local governments the means to maintain public services at a uniform level across the country.[ref]Large welfare systems have pros and cons when it comes to economic growth, innovation, and entrepreneurship.[/ref]

Perhaps most important, this mixture of policies—liberal on trade and immigration, activist in shoring up growth and protecting globalisation’s losers—is a reminder that the centrist formula still works, if politicians are willing to champion it. 

Of course, it’s important to point out that Canada “remains a poorer, less productive and less innovative economy than America’s.”[ref]However, scares over a “stagnating middle-class” in Canada are just as overblown as they are here in America.[/ref] Trade among provinces is still problematic and the “peace, order and good government” that is “enshrined in its constitution” may be “inadequate without an infusion of American individualism.” But when Canada outpaces the U.S. in economic freedom,[ref]Pg. 8.[/ref] it may be worth looking at the things they get right.

Adverse Effects of Family Instability: Possible Gender Differences

by

“When marriage breaks down,” writes sociologist W. Bradford Wilcox, “boys are more likely than girls to act up. From delinquency to incarceration and schooling to employment, a mounting body of research suggests boys are affected more by family breakdown than girls. As Richard Reeves, the co-director of the Brookings Center on Children and Families, recently put it, when it comes to thriving in difficult family environments, girls may be more like dandelions, while boys may be more like orchids.” He points to

research by economist David Autor and his colleagues [that] indicates that one major reason why boys are falling behind girls in school is that they are affected more by fatherlessness than girls when it comes to their behavior and academic progress. The figure below, taken from Autor’s new research in Florida, indicates that the gender gap in school absences is larger for boys from unmarried, father-absent homes than for boys born to married parents. Likewise, the gender gap in school suspensions and high school graduation in Florida is also smaller for boys from married homes. 

 

auterfigure

“Similarly,” he continues,

economist Raj Chetty and his colleagues have found that young men (at age 30) are less likely to be employed if they come from single-parent families than from married-parent families. Moreover, as the figure below indicates, young men from lower-income families do relatively worse than their female peers if they hail from single-parent families. But young men from married, lower-income families do relatively better than their female peers. In other words, Chetty’s new research suggests that young men’s labor force participation is affected more negatively by single-parenthood than young women’s employment prospects, especially when both are raised in a lower-income family.

 

chettyfigure

However, “it’s also possible that family instability and single parenthood affect girls and young women in ways that are not directly related to antisocial behavior, which is a classic male expression of emotional turmoil. In other words, perhaps both boys and girls are orchids in the face of family instability, but their vulnerability is simply expressed in different ways.” Wilcox then draws on the 2016 American Family Survey conducted by YouGov for Deseret News/BYU. The findings?

  • “[A]dult women are much less likely to report that their current relationship is “in trouble” if they come from a stable married home, and the advantage they enjoy from stability is clearly larger than the advantage that man from a stable home enjoy in this domain.”
  • “[T]oday’s women are much less likely to find themselves in a financial crisis if they hail from an intact, married family, as the figure below indicates. If the results of this survey are replicated in other data sets, they suggest that women may be affected by family instability more than men when it comes to their relationship success and freedom from economic distress.”

 

relationshiptroubleupdated

economiccrisisupdated

Wilcox says that the “survey suggests women have greater difficulty in forging and maintaining strong relationships as adults when they have been exposed to family instability or dysfunction as children. This, in turn, may lead to more relationship “trouble” and also to a higher incidence of single parenthood as adults. A higher incidence of single parenthood, in turn, may help explain why women with unstable families are more likely to report financial distress. Finally, if the absence of a stable, married home has a bigger impact on girls’ future relationship trajectories than boys, it may also explain why the gap in relationship trouble and financial distress by family stability looks bigger for women than men in this new survey.”

Poor Economics: TED Talk by Esther Duflo

by

This is part of the DR Book Collection.

Image result for poor economicsIf readers couldn’t tell, economics and the condition of the global poor are topics dear to my heart. Overall, I believe that globalization–particularly free trade and liberal immigration–benefits the least well off. But this largely looks at the problem from a broad, institutional standpoint. Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty by economists Abhijit Banerjee and Esther Duflo looks at the nitty-gritty details of the world’s poorest, providing the on-the-ground data necessary for constructing successful anti-poverty policies. The authors find five key factors that keep the poor trapped in poverty:

  1. Information deficiency: the poor often lack information, such as the benefits of immunization or early education.
  2. Lack of access: the poor lack access to things taken for granted by the non-poor: clean water, financial institutions, etc. They therefore bear the responsibility for all of these aspects.
  3. Missing markets: the conditions for favorable markets to emerge are often lacking, thus depriving the poor of their benefits.
  4. The Three ‘I’s: it’s not conspiratorial elites, but the ignorance, ideology and inertia of policymakers that lead to failing policies.
  5. Self-fulfilling prophecies: low expectations of both politicians and the poor themselves provide no incentive to improve and thus create self-fulfilling prophecies.

The book was eye-opening to say the least. You can see a TED talk by Esther Duflo below.

Prison Time and the Rise of the NILFs

by

“About 7 million American men of prime working age (25 through 54) are not in the labor force, according to the Bureau of Labor Statistics,” writes Bloomberg View columnist Justin Fox.

That means they don’t have a paid job and haven’t been actively looking for one.

This figure does not include those in jail or prison. It does include students and men staying home to take care of children or other family members — but, as Nicholas Eberstadt estimates in his important new book, “Men Without Work,” these two categories seem to account for less than 15 percent of what he calls the NILFs (for not in labor force). And the NILF share of the U.S. prime-age male population has been growing and growing.

Why? The usual suspects like technology, trade and a lack of motivation (“immigrants and married men are under-represented in the NILF ranks”) are listed along with the novel suggestion that value of leisure time has increased. “The percentage of NILFs has risen since the 1970s all over the developed world, which definitely fits with the technology-displacing-jobs explanation. But the trajectory has been much steeper in the U.S. than in other rich countries.” Why? In short, prison time:

Image result for no work prison[T]he great incarceration wave that began in the 1970s has produced millions of ex-convicts who are ill-prepared for jobs or are discriminated against by employers even when they are prepared. Eberstadt cites an unpublished study that estimates that 12 percent of the adult male civilian non-institutional population (that is, men not in jail) in the U.S. has been convicted of a felony, and figures the percentage must be even higher for prime-age men given that the “incarceration explosion” didn’t start till the 1970s.

This is on the one hand tragic: Millions of American men who were imprisoned in the 1970s through 1990s have been thrust into a labor market that really doesn’t want them. On the other hand, it is at least potentially fixable. Job displacement by technology is probably unstoppable, but how we punish crime is a public-policy choice. Incarceration rates have already been falling with the big declines in crime since the early 1990s, and the past few years have seen the growth of a bipartisan consensus (interrupted by the current presidential campaign, to be sure) that the U.S. throws too many people in prison for too long and doesn’t do nearly enough to rehabilitate them. Prison and sentencing reform might actually be the country’s best shot at thwarting that “linear trend” that would put a quarter of prime-age men out of work by 2050.

The scarlet-F strikes again.

Mobile Phones, Broadband, and the Poor

by

The Telecommunication Development Sector (ITU-D) released their 2016 ICT Facts and Figures with the following chart:

image11003

Technology analyst Benedict Evans tweeted the chart with the tongue-in-cheek caption “The evils of capitalism.” He followed up with, “That 5bn people have a phone & 2.5bn already have a smartphone is a huge achievement of, mostly, free markets and permissionless innovation…It’s been clear for a decade that access to communications transforms prospects for the poorest. A phone *does* put food in your belly.”

People are sometimes skeptical of this last claim, but they shouldn’t be. For example, a 2016 World Bank report found that “[a]lmost every study, despite the methodology and whether it was cross-country or single country, found a positive economic impact from fixed broadband” (pg. 11). A 2016 report from the McKinsey Global Institute found “that widespread adoption and use of digital finance could increase the GDPs of all emerging economies by 6 percent, or a total of $3.7 trillion, by 2025. This is the equivalent of adding to the world an economy the size of Germany, or one that’s larger than all the economies of Africa. This additional GDP could create up to 95 million new jobs across all sectors of the economy.” A 2012 report prepared by Deloitte for the GSM Association found that “[o]n average, across the sample of 14 countries considered, if countries doubled their consumption of mobile data per 3G connection between 2005 and 2010, they would have experienced a growth rate of GDP 0.5 percentage points higher each year” (pg. 7). A 2014 report from the Gates Foundation notes that “mobile data has been used by researchers, mobile operators and governments to help plan emergency response after natural disasters, enhance access to financial services for the poor, track the spread of infectious disease, and understand migration patterns of vulnerable populations. Indeed the full range of ways that mobile data can be used to improve the lives of poor people is only beginning to be explored” (pg. 4). A 2015 study found “evidence that the use of mobile money increases the use of formal savings accounts and allows for more effective risk sharing. In recent research, we show another important channel through which mobile money can enhance economic development. Namely, by allowing easier access to larger amounts of trade credit, mobile money allows firms higher production, with important macroeconomic repercussions.” The situation of Kerala fisherman also demonstrates the impact of mobile phones. As The Economist reports,

Dividing the coast into three regions, [economist Robert] Jensen found that the proportion of fishermen who ventured beyond their home markets to sell their catches jumped from zero to around 35% as soon as [phone] coverage became available in each region. At that point, no fish were wasted and the variation in prices fell dramatically. By the end of the study coverage was available in all three regions. Waste had been eliminated and the “law of one price”—the idea that in an efficient market identical goods should cost the same—had come into effect, in the form of a single rate for sardines along the coast.

This more efficient market benefited everyone. Fishermen’s profits rose by 8% on average and consumer prices fell by 4% on average. Higher profits meant the phones typically paid for themselves within two months. And the benefits are enduring, rather than one-off. All of this, says Mr Jensen, shows the importance of the free flow of information to ensure that markets work efficiently. “Information makes markets work, and markets improve welfare,” he concludes.

A 2008 World Bank study found that the mobile sector and use of mobile phones (1) boost GDP, (2) create jobs, (3) increase productivity, (4) increase tax revenue, (5) enable entrepreneurship and job search, (6) reduce information asymmetries, (7) correct market inefficiencies, (8) reduce transportation costs, (9) create consumer surplus, (10) aid disaster relief, (11) disseminate educational and health information, and (12) promote social capital and social cohesion. Other sources point to access to money and banking, improved governance, and disseminated agricultural, health, and educational information.

These various studies and reports confirm what economist Andreas Bergh found about globalization: larger information flows reduce poverty. If we want to help the poor, we need to integrate them into the global economy.

Infographic: Mobile Phones Tackling Poverty

The Consequences of Minimum Wage: Youth Edition

by

Time for yet another study on the minimum wage, this time by economist Charlene Marie Kalenkoski from March of this year. Do minimum wage laws have negative effects on youth employment and income?

Wait for it…

…

Yes. Yes they do.

Image result for die from not surprise gif

 

Kalenkoski writes,

Policymakers often propose a minimum wage as a means of raising incomes and lifting workers out of poverty. However, improvements in some young workers’ incomes as a result of a minimum wage come at a cost to others. Minimum wages reduce employment opportunities for youths and create unemployment. Workers miss out on on-the-job training opportunities that would have been paid for by reduced wages upfront but would have resulted in higher wages later. Youths who cannot find jobs must be supported by their families or by the social welfare system. Delayed entry into the labor market reduces the lifetime income stream of young unskilled workers (pg. 1).

A few selections on employment:

There is a substantial body of empirical evidence on the effects of a minimum wage on youth employment. Most of the studies have found negative effects on youth employment. A 1992 study of youth employment in the US found that a 10% increase in the minimum wage led to a 1–2% decline in the employment of teenagers and a 1.5–2% decline in the employment of young adults. A 2014 study of youth employment in the US showed a decline of 1.5% for teenagers. Thus, the estimated negative effect of minimum wages on employment in the US has been fairly consistent over time. However, these estimates are national averages, which obscure regional effects. A 10% increase in the minimum wage has been found to reduce regional employment by as much as 7%. One study that looked at teenage unemployment rates in the US instead of employment found that minimum wages indeed increase teen unemployment rates, as the standard economic model predicts (pg. 3).

Minimum wages reduce US teenage employment

And income:

How might the imposition of a minimum wage affect whether grocery store employers offer on-the-job training? If the minimum wage were set at W1 in Figure 3, for example, grocery store employers would be unable to offer on-the-job training to their grocery bagger employees. Workers would find themselves on the horizontal age-earnings profile at W1 and would thus earn less income over a lifetime than they might have had they been able to receive on-the-job training (pgs. 6-7).

On-the-job training changes the relationship between age and earnings

Kalenkoski concludes,

Rather than using a minimum wage to increase youths’ current incomes, policymakers should consider policies that improve the labor market opportunities of youths but do not increase the cost to employers of hiring young workers. Policies that would achieve both goals include providing cash welfare payments to youth if their earned income falls below some guaranteed level and providing in-kind support, such as food or housing assistance. Such policies create their own distortions (for example, causing some benefit recipients to choose not to work) but would not reduce the total number of jobs available or create unemployment (pg. 9).

Check out the full publication.