by Tyler Cowen
on April 21, 2012 at 3:31 pm
1. Bo and Ben Winegard review Charles Murray in Evolutionary Psychology (pdf), and toward a theory of presidential fame.
2. Does using a foreign language reduce decision-making biases?
3. An experiment with pure cash transfers.
4. Eurozone contagion through U.S. broker-dealers?
5. One hundred years of shipping.
#5 is very interesting. Please note the huge proportion of shipping going to, through, or past Indonesia in all periods.
This is wildly off-topic, but I have a question that I haven’t been able to find an answer to elsewhere: It seems to be pretty much universally agreed that the mortgage interest deduction is distortionary in favor of buying vs. renting. But it seems to me that it’s actually anti-distortionary, since landlords are able not only to deduct as business expenses their mortgage interest, but also to depreciate the principal. If the personal mortgage interest deduction were eliminated, I theoretically could save money by establishing a shell company to take out a mortgage, buy the house, and transfer it to me via a rent-to-own program. The IRS might ban that as transparent tax evasion, but that would lead to distortion.
Given that there’s a near unanimous consensus on this topic, I suspect that I must be missing something, but I don’t know what.
Well, it makes housing a better deal for higher-bracket folks and a worse deal for lower-bracketers. It raises the cost of housing generally.
Do you see people forming shell corporations to buy expensive cars and lease them to themselves? It seems like this is a common disparity between businesses and individuals, although I guess a house is the largest purchase most are likely to make.
The landlord has taxable rental income and has to deduct the interest against that income. The net result is generally that he has no net income or deductions.
The homeowner has no taxable rental income from himself, but he still gets to deduct the entire interest.
Never mind…I get it. We actually need to allow landlords to deduct principal and interest in order to avoid creating a distortion in favor of buying rather than renting. Otherwise the mortgage payments would have to be paid with doubly-taxed money, since it would be taxed first when the renter earned it and then when the renter paid it to the landlord.
So the other day I was minding my own business when out of the blue thus guy gives Mr $1000. I told him I’d do something good with it, and at first I was just going to take my family on a trip. I realized that was selfish, so I decided to find something more charitable. But even my charitable ideas seemed self indulgent when I thought about it. So, finally I decided to cross the border and give $100 each to 10 people in a poor town, with the charge to do something really good with it. They are supposed to report back to me. It’s all very exciting.
“this guy gives me $1000…” – autocorrect, oy
So, the other day I’m walking through the barrio, and this guy walks up out of the blue and gives me $100. I’m supposed to do something good with it….
> 2. Does using a foreign language reduce decision-making biases?
Not too surprising. This sounds like the usual cognitive disfluency effect forcing people to shift into type-2 thinking. If they can’t solve it quickly and have to think carefully about each piece, then they’re more likely to reflect and use abstract thinking – which will usually increase normative scores.
I think these guys have a different idea of elite. Elites are not dentists making low six figures out in the ‘Po. Those people aren’t making policy. They are either:
1) Really rich people in every industry but oil/gas/defense.
2) Upper middle class people that are part of the “cathedral” (academia, media, government bureaucracy). They live almost exclusively in big coastal cities.
A key way to determine if someone is conservative or not is whether they are “cool”. How often have you met a cool conservative? Keep in mind, libertarians don’t count. That investment banker preaching Ayn Rand isn’t a conservative. What if you restricted yourself to the cities full of people who actually matter (NYC, DC, LA, SF, Chicago, Boston)? Boring people in boring jobs making upper middle class incomes are not cool. That’s the difference between Tea Party and OWS. One if for lame old people, and one if for cool young people.
Have you ever asked an elite their opinion on a third rail topic? The answers will be uniformly progressive.
“1) Really rich people in every industry but oil/gas/defense.
2) Upper middle class people that are part of the “cathedral” (academia, media, government bureaucracy). They live almost exclusively in big coastal cities.”
As for 1), the Bush Administration recruited former Goldman Sachs CEO Hank Paulson (a devout Christian Scientist and a center(?)-right Republican) and former Gilead Sciences CEO Donald Rumsfeld. Being slightly more quantitative, opensecrets.org lists “heavy hitter” corporate donations by political parties and shows most industries split their contributions with accounting/auditing firms, pharmaceutical companies and heavy industry leaning Republican. Wall Street is about evenly split.
The idea that people in academia, media and government bureaucracy “make policy” is simply wrong. Of course they influence it but that influence is not uniform over these professions. For instance, conservatives complain about how few conservative professors there are but in terms of people who actually influence policy in the real world, Samuel Huntington and the many distinguished conservative and libertarian academics passing through the University of Chicago have had far more influence than some Marxist English professor at Cal State Chico. Think tanks like Charles Murray’s employer also play a significant role in Republican policy-making. It has often been pointed out that John Goodman — head of the right-leaning health care think tank National Center for Policy Analysis — had more influence over the creation of health savings accounts than anyone else. Bush’s Social Security scheme almost certainly borrowed a few ideas from the Cato Institute. Etc.
Meanwhile, the people actually making policy are elected members of Congress and political appointees, who are about evenly split. They are heavily influenced by lobbyists, of course, and lobbyists too adhere to both political parties. Jack Abramoff was a pretty typical small-government Republican before he went to prison and he can point to actual provisions in laws passed by Congress that he insists came about as a direct result of his influence peddling. His long-time friend and colleague Grover Norquist continues to also play a very influential role in Republican politics.
Finally, the connection between “liberal elites” and big cities is itself misleading. Before looking it up on Wikipedia, guess which zip code topped the list in terms of contributions to George W. Bush’s re-election campaign in 2004.
Republican conservative. Corporatism conservative.
Hank Paulson is a pretty good example of the kind of elite Murray is describing. Does Hank Paulson question the fundamental philosophical underpinnings of modern American government? No.
Show me someone who isn’t down with Nietsche on a fundamental level and maybe we can talk.
There should be “does not equal” signs between those words but I don’t see them.
I am currently reading Jonathan Haidt’s new book, “The Righteous Mind: Why Good People Are Divided by Politics and Religion” discussed in this pdf, along with Haidt’s survey research on the characteristics of political types (liberals, conservatives, and libertarians) (Hint: Libertarians share a number of survey responses with, gasp, Liberals). They are non-authoritarian, like Liberals, react to fairness issues (liberals react more to equality issues, libertarians more on equality of opportunity), and share the same sanctity (religion) responses as liberals.
This is a very interesting book, and helps me understand some of the responses in the comment section better.
Including your own?
Of course, but you would expect that I understood my own responses unless one is self unaware.
Yours on the other hand…..
“They are non-authoritarian, like Liberals”
How are statists non-authoritarian?
Ask yourself whether liberals of the Nixon-Johnson era had a slogan that involved trusting what the government or elders said, and whether conservatives believed the generals because they were in a position of authority and they should know.
Get the book and look at the survey responses, and take some quizzes yourself.
That’s your argument? A political slogan from 40 years ago?
Liberals have tried to use the state to increase people’s freedoms in their personal lives. For example, homosexuality was once a crime and could land people in prison. Or interracial marriage. Etc. A better question might be: How are non-states authoritarian?
Maguro, No, of course not. You can take a whole battery of psychology questions that show commonalities and differences between liberals and libertarians.
Here’s one for you to answer. I’ll tell the results later.
Here is the question.
Ted purchases a chicken at the grocery store and has sex with the chicken, and later eats it by himself. He doesn’t tell anyone and no one is harmed.
Is this wrong, if it harms no one?
Why must you use me for your example?
I’m sorry. I thought it was funny and that you wouldn’t mind or would smile at it.
Here are the results:
Liberals and Libertarians would let the individual chicken lover to his own devices, while a conservative would disapprove. Read out why in the book.
Oh, I know, Bill. And it’s a very Haidt-like example. Is it from the book? But I would point out that some liberals, namely PETA, would object. Although if they have a better way to tenderize a chicken, I’d like to hear it.
Ted, you’re PETA example is in the book too.
How do you rank on the caring scale? Do you have caring only with close in groups like relatives, or does caring extend beyond those groups? Is it a small subset of relatives, or does it extend to classmates?
#1, from the conclusion:
“(Murray) ignores or downplays the importance of many developments in the past 40 years, including the decline of unions, the slow but constant shedding of a decent safety net, the loss of decent paying jobs for relatively uneducated citizens…”
It’s a shame how easy it is to just make s&^t up in ostensibly academic writing. I highly doubt that any uneducated American would willingly trade for the safety net or the range of jobs and real salaries that were actually available 40 years ago (1972). This is hyperbole that simply bears no resemblance to reality. But, I’m sure the authors are popular at faculty cocktail parties. Their rhetorical concern for the poor is so, so admirable.
For 40 years, apparently, the safety net has been constantly shredded! This kind of abject neglect – Shredded! For 40 years! Constantly! – should be very easy to document in government budgets and program descriptions.
Also interesting considering the safety net is bankrupting the country. Or, I guess I should say that middle-class-to-middle-class cash transfers that some people mis-label the safety net is bankrupting the country. Safety net: less is more.
Re #1, Matthew Yglesias seemed to grasp the important changes in gender relations over the period documented in Murray’s book, why didn’t two evolutionary psychologists?
I came across an old post where you gave cash transfers to some people in India and encouraged others to do the same. How about a further post on the matter? Did you keep track of any of the benficiaries?
A great book about shipping is “The Box”.
I loved it.
#1 is more if a hatchet job than a thoughtful analysis
“Using a crude, but perhaps appropriate, reductio ad absurdum, Murray’s argument seems to favor a return to a time when just providing another day’s worth of food would be lauded because life was precarious and starvation was an ever present possibility.”
This quote is just ridiculous to find in any kind of serious analysis. They employ a logical fallacy and admit it. I’m not sure which author thought that it’s acceptable to use poor arguments as long as you label them as such, but it’s never ok if you want to be taken seriously. And for the record Murray’s analysis covers white culture starting in 1960. It’s ridiculous to claim that “life was precarious and starvation was an ever present possibility” in white America circa 1960.
And the conclusion is ridiculously partisan,
“Whether consciously or not, Murray’s new upper class reads more like a conservative’s nightmare than like a dispassionate description of the data; consequently, it perpetuates an erroneous but popular and useful narrative. In fact, the picture it paints is not too far from the picture one can view on Fox News every night, replete with wine sipping, Proust reading, supercilious liberals pushing their bizarre agenda upon an unwitting and reluctant populace.”
It’s ok to point out the flaw’s in Murray’s description, but it’s ridiculous to classify his description as they have. It just doesn’t fit the description that Murray actually writes in his book. On the other hand, I suspect a lot of people reading this will never actually read the source material and thus won’t realize how misleading their comments are.
I second your comments. After the first rounds of discussions when the book had just been released, I decided that I had to read the book. I don’t think you can really get his point by reading reviews and commentary.
Let’s read Charles Murray’s own words in the Wall Street Journal: “Changes in social policy during the 1960s made it economically more feasible to have a child without having a husband if you were a woman or to get along without a job if you were a man; safer to commit crimes without suffering consequences; and easier to let the government deal with problems in your community that you and your neighbors formerly had to take care of.” He also writes, “My own explanation [of lower male labor force participation] is no secret. In my 1984 book “Losing Ground,” I put the blame on our growing welfare state and the perverse incentives that it created. I also have argued that the increasing economic independence of women, who flooded into the labor market in the 1970s and 1980s, played an important role.”
Murray says right here that “changes in social policy during the 1960s” made it easier to live without a job for men and this supposed ease of living the life of an unemployed man has contributed to lack of “industriousness” and social decline. Murray hardly shies away from his libertarian political preferences.
It seems to me based on Murray’s own words in a summary of his own book as well as his well-documented political preferences that he thinks men would work harder if the welfare state was cut back because men who currently do not work would be more likely to face the humiliations and of poverty head on if they continued down the path they chose. How is that an unfair characterization?
None of what you wrote resembles the author’s claim that Murray wants poor people to starve to death.
Nor is it consistent with the “constant shedding of a decent safety net” mentioned above.
#5: This is fascinating, although obviously only a sample of ships’ logs, and apparently excluding any ships’ logs for ships based in the U.S. (There are whole stretches of the 1800-1850 period that show no ships entering or leaving U.S. ports, which obviously can’t be correct.)
Did anyone else find the theory of presidential fame ridiculous? The authors are working with three data points: Civil War, WW1, and WW2. Being a war president hasn’t elevated the stature of most to “greatness” (eg. Madison, Polk, McKinley, Johnson, Bush x2). And while Wilson makes it onto the list of second-string great presidents as defined by historians, most Americans, I suspect, couldn’t tell you anything about him. So we’re left with Lincoln and FDR. Is there any knowledgable person who would argue that perceptions about their “greatness” turn on the size of the body count? This is inane.
We ran the regression even without FDR and Lincoln and still found it highly predictive. Wilson is one of the more recognizable presidents from the time before almost anyone alive was born. The idea that most Americans couldn’t tell you much about him is part of our point — big wars are big events, the bigger the war the better from the perspective of generating fame. If folks know anything, they know he was president during WWI. And Madison and Polk, despite not being very famous among the public, are relatively well-loved among historians.
On Henderson’s theory: I already posted this on his blog, but I think he’s wrong. War is just one form of government activism and that’s what garners glory. A simple example is the reputation of Theodore Roosevelt versus William McKinley. One waged war, the other earned a Noble Peace Price. Yes, Roosevelt had a reputation as a fighter, but he gets most the praise for fighting the trusts rather than the Spanish.
“but he gets most the praise for fighting the trusts rather than the Spanish.”
No, most of his fame is for the charge up San Juan hill.
Nope. Watch the Presidents series on The History Channel for one example, or Ken Burns’ National Parks.
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