Society

Does Gender Equality Enlarge Gender Differences?

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Previous research has found that the greater the gender equality, the greater the differences between genders. A brand new article in Science heaps on more evidence. Testing 80,000 individuals in 76 countries on preferences such as risk-taking, patience, altruism, positive and negative reciprocity, and trust, the authors found,

Gender differences were found to be strongly positively associated with economic development as well as gender equality. These relationships held for each preference separately as well as for a summary index of differences in all preferences jointly. Quantitatively, this summary index exhibited correlations of 0.67 (P < 0.0001) with log GDP per capita and 0.56 (P < 0.0001) with a Gender Equality Index (a joint measure of four indices of gender equality), respectively. To isolate the separate impacts of economic development and gender equality, we conducted a conditional analysis, finding a quantitatively large and statistically significant association between gender differences and log GDP per capita conditional on the Gender Equality Index, and vice versa. These findings remained robust in several validation tests, such as accounting for potential culture-specific survey response behavior, aggregation bias, and nonlinear relationships.

How do men and women differ?

On the global level, all six preferences featured significant gender differences (fig. S1): Women tended to be more prosocial and less negatively reciprocal than men, with differences in standard deviations of 0.106 for altruism (P < 0.0001), 0.064 for trust (P < 0.0001), 0.055 for positive reciprocity (P < 0.0001), and 0.129 for negative reciprocity (P < 0.0001). Turning to nonsocial preferences, women were less risk-taking by 0.168 standard deviations (P < 0.0001) and less patient by 0.050 standard deviations (P < 0.0001) (26).

The researchers conclude,

The reported evidence indicates that higher levels of economic development and gender equality are associated with stronger gender differentiation in preferences. These findings may also relate to other personality traits, such as the Big Five (34, 35) or value priorities (36). Our findings do not rule out an influence of gender-specific roles that drive gender differences in preferences. They also do not preclude a role for biological or evolutionary determinants of gender differences (37). Our results highlight, however, that theories not attributing a significant role to the social environment are incomplete (38).

In this regard, our findings point toward the critical role of availability of and equal access to material and social resources for both women and men in facilitating the independent formation and expression of gender-specific preferences across countries. As suggested by the resource hypothesis, greater availability of material resources removes the human need of subsistence, and hence provides the scope for attending to gender-specific preferences. A more egalitarian distribution of material and social resources enables women and men to independently express gender-specific preferences.

How much of gender is a social construct?

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Check out this National Geographic article “How science is helping us understand gender.” Author Robin Henig outlines different intersex conditions that can be more complicated than the typical XX vs XY binary. But here’s the quote that really caught my eye:

Gender is an amalgamation of several elements: chromosomes (those X’s and Y’s), anatomy (internal sex organs and external genitals), hormones (relative levels of testosterone and estrogen), psychology (self-defined gender identity), and culture (socially defined gender behaviors).

This is a good summary of the factors that could contribute to a person’s understanding of gender, but it also helps demonstrate why conversations about gender get confusing fast. Two thoughts:

1. Intersex =/= Transgender

To my understanding (which I admit is limited), intersex issues are not the same as transgender issues, and in fact people with intersex conditions don’t necessarily appreciate being used as the wedge to push society to accept transgender issues.

Intersexuality is not the same as a transsexuality (gender dysphoria) and is not a transgender state. Neither of the latter terms is one that we recognise as belonging in any general discussion of intersex. We are not happy with the recent tendency of some trans groups/people to promote transgender as an umbrella term to encompass, for example, transsexuality, transvestitism and intersex. We object to other organisations/individuals putting us in categories without consulting us, especially categories that imply that interexed people, of necessity, have gender identity issues.

2. Gender cannot be just a social construct.

If gender were only a social construct, it would be hard to explain why a trans man could not more easily exist simply as a masculine cis woman, i.e. a tomboy or someone similar. If gender is unrelated to sexuality and genitalia, transitioning seems like an unnecessarily difficult undertaking (financially, emotionally, physically, and socially).

That’s not suggest that gender is wholly unrelated to culture. It seems intuitive to me that at least some aspect of gender, especially society’s understanding of gender, is based more on cultural norms than biology. The extreme and perhaps tired example is that girls like pink and boys like blue. Presumably if we birthed children in a society where the opposite was the norm, they’d just go with it. But here and now dressing a baby in pink is a way to signal to others “this baby is a girl,” and while of course you can dress your baby girl in blue, you will probably confuse strangers who think you’re signaling “this baby is a boy” instead of just “I like blue.” Maybe you don’t care about that (I don’t) but that’s the cultural norm and I expect it influences the relative proportion of boys and men willing to wear pink. I digress.

What does it mean, for example, for a person to have all the biological traits (chromosomes, sex organs, genitalia, and hormone levels) of a male but “feel” female? What is the difference between a biological male who identifies as female and a biological male who identifies as a male who is partial to activities and preferences culturally viewed as female? This distinction especially gets confusing when we add in the idea that your sexuality and sexual preferences are not related to your gender. So what drives the difference between a cis straight male who is comfortable with the color pink, being a stay-at-home parent, and [insert female stereotypes here] versus a homosexual trans woman who also likes all of those things?

I ask these questions sincerely. I recognize that people feel very differently about these topics and I don’t begrudge anyone that. And, in terms of policy, I don’t think it’s a good idea for the government to get very strict about what constitutes male and female, not only because intersex conditions complicate matters but also because it’s not hard to imagine situations that would put trans people in danger if they are narrowed to the options of traditional cis sexuality.[ref]At minimum I can imagine pretty horrific effects of requiring a transitioned trans woman to enter an all male prison population. I’m sure there are other examples similar to this.[/ref] As the New York Times explains:

Several agencies have withdrawn Obama-era policies that recognized gender identity in schools, prisons and homeless shelters.

I suspect that as we learn more about human physiology and particularly neurology, we’ll gain more insight into the phenomenon of transgenderism. But if that turns out to be the case, to my mind it would be further evidence that gender is biological, as long as we recognize that biology includes more than our genitalia. National Geographic hints at this possibility (same article linked above) when Henig explains:

At least a few brain characteristics, such as density of the gray matter or size of the hypothalamus, do tend to differ between genders. It turns out transgender people’s brains may more closely resemble brains of their self-identified gender than those of the gender assigned at birth. In one study, for example, Swaab and his colleagues found that in one region of the brain, transgender women, like other women, have fewer cells associated with the regulator hormone somatostatin than men. In another study scientists from Spain conducted brain scans on transgender men and found that their white matter was neither typically male nor typically female, but somewhere in between.

Maybe all of this musing is getting to a broader question: can psychology exist independent from biology? If someone is psychologically male can we assume, by definition, that some part of that person’s brain structures, neural connectivity, whatever, will look more similar to cis male brains? I’m interested to see what we learn as time goes on.

DR Editor in Economic Affairs

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Image result for globalization

My article “Is Commerce Good for the Soul?: An Empirical Assessment” was published in the latest issue of Economic Affairs. The abstract reads,

Numerous empirical studies suggest that market exchange helps (a) create the conditions for liberal values to flourish, (b) refine our sense of fairness, (c) promote cooperation with those who are different from ourselves, (d) develop networks of mutual trust and trustworthiness, (e) generate tolerance and respect towards others, and (f) undermine hostility and conflict in favour of peace. This article reviews this empirical evidence and argues that markets make us better people, morally speaking.

You can read the full thing here. Check it out.

What Is the Impact of Minimum Wage Hikes on the Least-Skilled?

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In case you needed more evidence that minimum wage hikes tend to hurt those with the least skills and education, here are the conclusions from a paper from earlier this year:

This paper uses the ACS to generate early estimates of the employment effects of state minimum wage increases implemented between January 2013 and January 2015. Through 2015, our best estimate is that minimum wage increases exceeding $1 resulted, on average, in an employment decline just over 1 percentage point among teenagers, among individuals ages 16–21, and among individuals ages 16–25 with less than a completed high school education. Smaller minimum wage increases and inflation indexed minimum wage increases had much smaller (and possibly positive) effects on these groups’ employment…Due to the short time horizons we analyze, our estimates provide short-run evidence on the effects of the minimum wage increases enacted after the Great Recession. Data on the longer-run effects of this period’s minimum wage changes will be essential for arriving at strong conclusions regarding their effects (pgs. 720-721).

This should surprise no one. As economist Antony Davies explains, “Historically, as the relative minimum wage has risen, unemployment among college-educated workers has not changed, unemployment among high-school-educated workers has risen slightly, unemployment among workers without high school diplomas has increased moderately, and unemployment among young workers without high school diplomas has increased dramatically.”[ref]See Davies’ own research on the topic here.[/ref] 

“I Am Not the Problem”: Economic Freedom and Human Flourishing

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In this passionate TED talk, entrepreneur Magatte Wade explains why the continent of Africa is so poor: bad laws, high tariffs, and excessive red-tape on businesses. “Why is it,” she asks exasperated, “that when I look at the Doing Business index ranking of the World Bank, that ranks every country in the world in terms of how easy or hard it is to start a company, you tell me why African countries, all 50 of them, are basically at the bottom of that list? That’s why we’re poor. We’re poor because it is literally impossible to do businesses in these countries of ours.”[ref]In fact, business-friendly economic policies may actually matter more for per capita income than legal and political institutions.[/ref] She continues, getting even more worked up:

I have a manufacturing facility in Senegal. Did you know that for all my raw material that I can’t find in the country, I have to pay a 45 percent tariff on everything that comes in? Forty-five percent tariff. Do you know that, even to look for fine cardboard to ship my finished products to the US, I can’t find new, finished cardboard? Impossible. Because the distributors are not going to come here to start their business, because it makes no sense, either. So right now, I have to mobilize 3000 dollars’ worth of cardboard in my warehouse, so that I can have cardboard, and they won’t arrive for another five weeks. The fact that we are stifled with the most nonsensical laws out there. That’s why we can’t run businesses. It’s like swimming through molasses.

Doing Business 2018
Economic Freedom of the World 2018

But it was this story that broke me: 

I explained the [things above] to my employees in Senegal. And one of them started crying — her name is Yahara. She started crying. I said, “Why are you crying?”She said, “I’m crying because I had come to believe –always seeing us represented as poor people –I had come to believe that maybe, yes, maybe we are inferior. Because, otherwise, how do you explain that we’re always in the begging situation?” That’s what broke my heart. But at the same time that she said that, because of how I explained just what I explained to you, she said, “But now, I know that I am not the problem. It is my environment in which I live, that’s my problem.”I said, “Yes.” And that’s what gave me hope –that once people get it, they now change their outlook on life.

No, you’re not the problem. 

Most Americans don’t like political correctness.

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According to Yascha Mounk in The Atlantic the following people dislike political correctness:

  • 97% of devoted conservatives
  • 88% of American Indians
  • 87% of those who have never attended college
  • 87% of Hispanics
  • 83% of those who make less than $50,000 per year
  • 82% of Asian people
  • 79% of people under age 24
  • 79% of white people
  • 75% of African Americans
  • 74% of people age 24-29
  • 70% of those who make more than $100,000 per year
  • 66% of those with a postgraduate degree
  • 61% of traditional liberals
  • 30% of progressive activists

In fact “progressive activists” were the only group that overall liked political correctness, a group which Mounk describes as “much more likely to be rich, highly educated–and white.” This description supports previous findings by Pew Research.

Mounk asked his Twitter followers to guess what percent of the country has a problem with political correctness, and they greatly underestimated the true numbers. Mounk theorizes this is because, as he puts it,

They are probably a decent approximation for a particular intellectual milieu to which I also belong: politically engaged, highly educated, left-leaning Americans—the kinds of people, in other words, who are in charge of universities, edit the nation’s most important newspapers and magazines, and advise Democratic political candidates on their campaigns.

In other words, the progressive view (the minority view) benefits from having a particularly large mouthpiece.

The study Mounk is reviewing found that most Americans, described as the “exhausted majority,” see political correctness as “the preening display of cultural superiority” and “an excuse to mock the values and ignorance of others.” Mounk concludes:

A publication whose editors think they represent the views of a majority of Americans when they actually speak to a small minority of the country may eventually see its influence wane and its readership decline. And a political candidate who believes she is speaking for half of the population when she is actually voicing the opinions of one-fifth is likely to lose the next election.

In a democracy, it is difficult to win fellow citizens over to your own side, or to build public support to remedy injustices that remain all too real, when you fundamentally misunderstand how they see the world.

Graphic from the report “Hidden Tribes: A Study of America’s Polarized Landscape,” which Mounk summarizes in his article.

Half of Us Are Now Middle Class

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From the Brookings Institution:

For the first time since agriculture-based civilization began 10,000 years ago, the majority of humankind is no longer poor or vulnerable to falling into poverty. By our calculations, as of this month, just over 50 percent of the world’s population, or some 3.8 billion people, live in households with enough discretionary expenditure to be considered “middle class” or “rich.” About the same number of people are living in households that are poor or vulnerable to poverty. So September 2018 marks a global tipping point. After this, for the first time ever, the poor and vulnerable will no longer be a majority in the world. Barring some unfortunate global economic setback, this marks the start of a new era of a middle-class majority.

The authors classify the middle class as “households spending $11-110 per day per person in 2011 purchasing power parity, or PPP.” They “have some discretionary income that can be used to buy consumer durables like motorcycles, refrigerators, or washing machines. They can afford to go to movies or indulge in other forms of entertainment. They may take vacations. And they are reasonably confident that they and their family can weather an economic shock—like illness or a spell of unemployment—without falling back into extreme poverty…In the world today, about one person escapes extreme poverty every second; but five people a second are entering the middle class. The rich are growing too, but at a far smaller rate (1 person every 2 seconds).” 

Number of people who are Poor, Vulnerable, Middle Class, and Rich Worldwide

Sing it, Paul.

Political Identity Divides Us More Than Policy Preferences

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Politics is the worst:

Increased sorting could reflect identification with groups that better match our values. Perhaps Republicans and Democrats can’t compromise because their policy preferences are irreconcilable. However, this doesn’t explain why Americans personally dislike political opponents with such intense fervor. U.S. liberals and conservatives not only disagree on policy issues: they are also increasingly unwilling to live near each other, be friends, or get married to members of the other group. 

…Now, surprising new research suggests that what divides us may not just be the issues. In two national surveys, political psychologist Lilliana Mason of the University of Maryland measured American’s preferences on six issues such as abortion and gun control, how strongly they identified as liberals and conservatives, and how much they preferred social contact with members of their own ideological groups. Identifying as liberal or conservative only explained a small part of their issue positions. (This is consistent with findings that Americans overestimate the differences in policy preferences between Republicans and Democrats.) Next, Mason analyzed whether the substantial intolerance between liberals and conservatives was due to their political identities (how much they labelled themselves as “liberal” or “conservative”) or to their policy opinions. For example, who would be more opposed to marrying a conservative: a moderate liberal who is pro-choice, or a strong liberal who is pro-life? Across all six issues, identifying as liberal or conservative was a stronger predictor of affective polarization than issue positions. Conservatives appear particularly likely to feel cold towards liberals, even conservatives who hold very liberal issue positions.

…[W]e see that Americans are increasingly divided not just on the issues but also on their willingness to socialize across the political aisle. It is normal that society manifests new social cleavages as it heals old ones. However, when identities are fused with policies that have vast, long-term consequences (e.g., war, taxes, or the Paris Agreement), these divisions imperil our ability to select policies based on their expected outcomes. To paraphrase anthropologist John Tooby, forming coalitions around policy questions is disastrous because it pits our modest urge for truth-seeking against our voracious appetite to be good group members. If Americans slide into seeing all policy debates as battles between Us vs. Them, we stop selecting policies based on their actual content. Ironically, this would lead to choosing policies that don’t match our personal values, because the content and evidence would become less important than the source. In short, seeing politics as a battle may worsen things for everyone.

Once again, politics makes us into worse people.

Image result for politics gif

Negative Effects of the Corporate Income Tax

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I’ve looked at the evidence for adverse effects of the corporate income tax in a previous post. A brand new article in the American Economic Journal: Macroeconomics provides some more insights. The authors find,

A reduction in the corporate income tax rate leads to moderate job growth. If the corporate income tax were eliminated, the model predicts that the non-employed population would decrease from 34.1 percent to 31.7 percent, about a 7 percent fall in the relative nonemployment rate.

…[E]liminating the corporate income tax has a relatively small overall effect on TFP (an increase of only about 0.9 percent). The productivity loss due to capital misallocation caused by the corporate income taxation is estimated to be 2.6 percent.

…Average welfare is maximized with a 10 percent corporate income tax rate. With a lower corporate income tax rate, the widening of the corporate income tax base allows the government to maintain revenue neutrality without large increases in the personal income tax burden. An overwhelming majority of the population would be in favor of such a corporate income tax cut in this environment (pg. 302-303).

The Tax Foundation also has a new brief that looks at the benefits of cutting the corporate income tax rate:

  • One of the most significant provisions of the Tax Cuts and Jobs Act is the permanently lower federal corporate income tax rate, which decreased from 35 percent to 21 percent.
  • Prior to the Tax Cuts and Jobs Act, the United States’ high statutory corporate tax rate stood out among rates worldwide. Among countries in the Organisation for Economic Co-operation and Development (OECD), the U.S. combined corporate income tax rate was the highest. Now, post-tax reform, the rate is close to average.
  • A corporate income tax rate closer to that of other nations will discourage profit shifting to lower-tax jurisdictions.
  • New investment will increase the size of the capital stock, and productivity, output, wages, and employment will grow. The Tax Foundation Taxes and Growth model estimates that the total effect of the new tax law will be a 1.7 percent larger economy, leading to 1.5 percent higher wages, a 4.8 percent larger capital stock, and 339,000 additional full-time equivalent jobs in the long run.
  • Economic evidence suggests that corporate income taxes are the most harmful type of tax and that workers bear a portion of the burden. Reducing the corporate income tax will benefit workers as new investments boost productivity and lead to wage growth.
  • If lawmakers raised the corporate income tax rate from 21 percent to 25 percent, we estimate the tax increase would shrink the long-run size of the economy by 0.87 percent, or $228 billion. This would reduce the capital stock by 2.11 percent, wages by 0.74 percent, and lead to 175,700 fewer full time equivalent jobs.

Minimum Wage: Canadian Edition

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Increasing the Minimum Wage in Alberta: A Flawed Anti-Poverty Policy

The Fraser Institute has a recent study on the minimum wage in Alberta. The results are telling:

  • As part of its effort to reduce poverty, Premier Rachel Notley’s government will raise Alberta’s minimum wage from $10.20 per hour, the rate when the Notley government took office three years ago, to $15 in October 2018. But, raising the minimum wage is not an effective way to alleviate poverty primarily because the policy fails to provide help targeted to families living in poverty.
  • In 2015, the latest year of available data, 92.0% of workers earning minimum wage in Alberta did not live in a low-income family. Though counterintuitive, it makes sense once we explore their age and family situation. In fact, most of those earning minimum wage are not the primary or sole in-come-earner in their family.
  • In 2017, 50.1% of all minimum wage earners in Alberta were between the ages of 15 and 24, and the vast majority of them (85.1%) lived with a parent or other relative. Moreover, 23.2% of all minimum wage earners in Alberta had an employed spouse. Of these, 90.1% had spouses that were either self-employed or earning more than the minimum wage. Just 2.1% of workers earning minimum wage in Alberta were single parents with young children.
  • In addition to ineffectively targeting the working poor, raising the minimum wage produces several unintended economic consequences to the detriment of young and inexperienced workers. This includes fewer job opportunities, decreases in hours available for work, reductions in non-wage benefits, a shift towards automation, and higher consumer prices, which disproportionately hurt the working poor.
  • A work-based subsidy is a more effective policy since it better targets the benefits to those in need without these negative economic consequences.

This fits somewhat with U.S. data. From David Neumark:

[T]he relationship between being a low-wage worker and being in a low-income family is fairly weak, for three reasons. First, 57% of poor families with heads of household ages 18–64 have no workers, based on 2014 data from the Current Population Survey (CPS). Second, some workers are poor not because of low wages but because of low hours; for example, CPS data show 46% of poor workers have hourly wages above $10.10, and 36% have hourly wages above $12. And third, many low-wage workers, such as teens, are not in poor families (Lundstrom forthcoming).

Considering these factors, simple calculations suggest that a sizable share of the benefits from raising the minimum wage would not go to poor families. In fact, if wages were simply raised to $10.10 with no changes to the number of jobs or hours, only 18% of the total increase in incomes would go to poor families, based on 2010–2014 data (Lundstrom forthcoming). The distributional effects look somewhat better at a higher threshold for low income, with 49% of the benefits going to families that have incomes below twice the poverty line. However, 32% would go to families with incomes at least three times the poverty line. By this calculation, about a third of the benefits would go to families in the top half of the income distribution (pg. 2).

Low-wage workers =/= low-income households.