by Tyler Cowen
on November 8, 2012 at 12:22 pm
1. New results on savings behavior and the very poor.
2. New My Bloody Valentine CD to come.
3. Megan McArdle on whether the GOP can overcome demographic hurdles, and sanity from Kevin Drum.
4. Free archive of 1920s jazz.
5. How Top Chef tricks you.
6. Overview of what is going on with Chinese regime change.
1. Really enjoyed that paper. No question that I expect it to immediately work its way into the rational agent conceit, revolutionize neoclassical economics, and create a new political impetus for either (a) making the poor rich or (b) more state paternalism and less ‘choice’ and ‘freedom’ for the poor.
Is there any evidence that it’s irrational? You don’t think it’s reasonable that someone with no experience with Angry Birds or the stupid game they are being forced to play in a laboratory would not know whether borrowing shots from future turns would result in an increased score?
There is no difference between the “rich” and “poor” subjects in the experiment in access to or knowledge of information relevant to the task. Yet their behaviors and choices are different–so they can’t both be acting with the same ‘optimization’ rules, or ‘rationality’ or whatever you prefer to call it.
But the “rich” participants don’t need to borrow to get a good score. That’s why they’re not borrowing. Not because they magically have a better understanding of the value of borrowing because they are “rich”. The poor ones realize what they are doing is not working and decide to borrow to see if it will improve. Unfortunately that makes things even worse. But it’s not irrational.
Read the paper. Expmts 1 & 2 indicate clearly that this is not about borrowing per se, but expending more energy and time on the same task. Expmt 5 indicates its not about borrowing per se, but about decreased attention to things other than the scarcity. It’s simply not consistent with a single simple optimization procedure of any kind. Which is good, because humans aren’t college-level math.
Has Bryan Caplan read the study in the first link?
Here is a link to an interview (podcast + transcript) with Anuj Shah, one of the authors of the study in (1): http://www.sciencemag.org/content/338/6107/687.2.full
The mental exhaustion argument (that the poor make poor decisions due to mental exhaustion from scarce resources) also applies to the rich.
Ever notice how the lights and sounds in a casino overwhelm your senses.
Every wonder why.
Yeah, I don’t think TC’s summary of (1) is accurate. It’s not just about the very poor, and it’s not just about savings behavior…
I have been in casinos hundreds of times and I have never felt overwhelmed
I went to a casino once. I was overwhelmed by the sight of all the poor people.
Forget “Top Chef”…
There are multiple shows on television wherein the central entertainment is watching an obese person eat special/weird foods = there is no great stagnation.
There is no great starvation.
Re #1. At some point, behavioral economists are gonna have to make up their mind: is it simply that people make demonstrably poor choices sometimes and that better framing, etc. elicits better decision-making?
Or, is there something quintessentially human about these irrational choices, and hard-core rationalists are monsters?
Re #3. Megan McArdle rocks. Great link.
On McArdle’s optimism for the GOP:
2. Ethnic coalitions are inherently unstable.
Unless the GOP continues to carefully cultivate a stance of hostility to anyone who is not an old white male.
3. We are heading for a showdown between public sector unions and taxpayers.
Putting Democrats in the position of being able to negotiate down the union claims and save the taxpayers with less drama than the Republicans.
4. We’re heading for a showdown between the recipients of old-age benefits, and recipients of all the other kinds of benefits. Even after we hike taxes, something has to be cut.
My guess it will be easier for Democrats to scale back Medicare benefits than Republicans can.
5. On social issues, Democrats are badly positioned for the future.
Only if Republicans move toward the center.
6. Mitt Romney was a uniquely bad candidate for 2012.
He was the most electable candadate that the 2012 primry process could have produced, not becasue of a narrow choce, but becasue he had to BECOME a bad candidate to get the nomination..
7. GOP tax cuts have enabled Democratic spending promises.
This seem to assume that Republicns do want to contoll spending/care about the long term deficit and Democrats do not. This would be a Republiczn party not seen since the ’80’s.
The relatively non-gloomy prospects McArdle sees for the GOP make sense for a hypothetical reformed GOP that looks like the DLC, but how much chace does that have at least without a few more electoral drubbings?
2. The idea that the Republicans cultivate hostility to non-Whites is absurd. But the point about ethnic identity politics is not what is true, but what you can convince your own group to believe. I assume that we all know Jews do not murder Christians to make their Sabbath bread, but it was a useful argument at the time. In the same way no sane person thinks the Democrat’s Willy Horton-style arguments – that the GOP was going to ban abortion or put Black people back in chains – are true. But they seem to have worked. Which is why, ironically, the Republicans should be hostile to non-Whites. They were not and allowed millions of illegals into the country. So America has two dysfunctional underclasses. Great. But it is probably too late. The future lies with the growing, if dysfunctional, ethnic groups.
3. Why would you think we are heading to a show down with anyone? Argentina went down this path and chose not to confront the Unions. Why would Obama? He is undoing Clinton’s welfare reforms. Again, this is not a class argument within one community. This is a dispute between three ethnic groups. So sticking it to the old enemy does make sense, even if we all end up poorer. As long as they, whoever they are, suffer more.
4. As above. Oddly the Republicans took the old people’s vote. So that suggests they were not afraid the Republicans were going to cut their benefits. But then old people may just be disproportionately White.
5. The Republicans have tried and lost twice in a row with moderates. Even George W Bush claimed to be a moderate and stood as such. They hated him anyway.
6. Mitt Romney was a uniquely good candidate. He had a stellar CV. He was a patently good man with a solid family life. He had a good record of public service. He was as moderate as they come. Still wasn’t enough, because in the end he was right – the 47% would not vote for him. And didn’t. America had a choice between the makers and the takers. They did not choose the makers. Look how women broke down – two thirds of single women, welfare users more often than not, went to Obama. Most married women went to Romney.
7. Republican fiscal responsibility has taken a back seat for a long time to their urge to spend. And why not? If they don’t the Democrats will. This is the path to Argentina. But compared to Europe America has low levels of tax due to past fiscal conservatism from both parties. Expect this to change. I would expect Obama to try for a consumption tax of some sort because there is just no way that anyone can pay for his spending.
The GOP probably has one or two more election wins in it. Maybe. But the future of American politics will be a choice between the PRI and Al Sharpton. Argentina is the optimistic scenario. Detroit is the alternative.
[Mitt Romney] was a patently good man with a solid family life.
A solid family life? Probably so. A patently good man? No way. The guy is a pathological liar, a probable tax evader, a borderline sociopath.
What McArdle’s point #6 overlooks is that you have to nominate a real person. The idel nominee doesn’t exist. You can always talk, after the fact, about how bad the candidate was. But that’s the guy you picked. Does anyone think that another member of the Republican clown show would have done better. If so, turn yourself in. You need help.
I am intrigued by the insanity of people’s views of Republicans. A pathological liar? What can you say to an irrational comment like that? As opposed to Obama who went out and denied that Benghazi was a terrorist attack? Who arrested some harmless film maker who had nothing to do with it? A borderline sociopath? Yeah right. Bush Derrangement Syndrome is a real problem isn’t it? And it doesn’t seem to go away when Bush does.
Yes, a real person has to be nominated. And alas, you cannot rely on the media to cover up for him like they do for Obama. Romney was about as good as it gets as a candidate except no one liked him much. Another Republican? Hasn’t someone claimed that McCain would have won this election? The results were close. The GOP could have won it this time. I think several factors were working against them – Obama’s massive buying of votes in Car Country, the media’s relentless cover ups for his blunders and their dishonest attacks on Romney, the growth of the takers over the makers, the on-going destruction of family life and so on. Even Sandy might have done it for Obama. It wasn’t that much of a loss.
Romney systematically flip-flopped depending on the audience. Obamacare was modelled on his Mass. plan. He denied it during the primaries, promising to “repeal Obamacare on day one,” then during the general said he’d keep in the provision for pre-existing conditions. This is but one minor example. The guy was pathological.
The idea that the Republicans cultivate hostility to non-Whites is absurd.
No, it’s a fact, and if Republicans continue to live in denial they will continue to lose. Attempts at voter supression in majority Black and Latino districts is considered “hostility” by the non-White population. Romney attacking Obama supporters as non-productive “takers” comes across as racial hostility. When Pat Buchanan goes on TV and complains that traditional America is dead because the candidate of 59% of white people didn’t win – that looks like hostility. A lot more Republicans think like Laurence Auster, Buchanan and Steve Sailer than you probably want to believe. The Republicans probably need to embrace becoming the White people’s party outright. Dog whistles and tip toeing around the issue aren’t helping.
These phrases all came from prominent pundits & politicians on the right:
The Roots of Obama’s Rage
Pathological hatred for white people and white culture
America’s Half-Blood Prince
This doesn’t even touch on the birthers
Kenyan anti-colonial mindset
The Roots of Obama’s Rage
Pathological hatred for white people and white culture
America’s Half-Blood Prince
So Republicans are not hostile to minorities but should be to keep those dysfunctional underclasses from leaching off of everyone else. Huh, I get self-awareness is in short supply these days.
“because in the end he was right – the 47% would not vote for him”
You are correct about 47% of people not voting for Mitt Romney. That is, 47% of people who make over $50,000 per year. You do realize that it is possible to double-check ideological talking points by googling “exit poll 2012 election” right? But then maybe for some people, anyone who earns less than $300,000 per year is a “taker.”
Just a couple.
the Democrats were very successful at demagoging Republicans. I still don’t know if people understand what “legitimate rape” means. Regardless, that is not going to last for reasons McArdle points out.
Romney was not the best candidate, obviously. Many candidates chose not to confront a relatively strong sitting president. Romney ran BECAUSE he is weaker than the Christies and even the Ryans. His time was running out.
But, since you have to run someone, you then tell everyone that the incumbent is more vulnerable than he really is in hopes that they will believe you. Few really do believe you. But if you don’t say it you lose big.
Also the “binders of women” thing. It’s funny as a meme, but as a phrase it’s not even ‘clunky.’ It is exactly how someone like Romney should talk. It only becomes a political problem if your opponents have succeeded in setting peoples’ minds up to look for any little nitpick.
Surely you didn’t miss the double entendre in “binders full of women”. Romney almost certainly didn’t mean the double entendre. Clinton, OTOH…
Oh, sorry for the multipost, but the key point is that Romney got made fun of for an example of how he went out of his way to give women a fair shake. At that point you don’t even try when you have no hope of getting past peoples’ preconceptions.
Megan may well be right in her conclusion, but her supporting “reasons” once again prove that she is … not stupid, exactly, but a very poor critical thinker and someone particularly susceptible to making arguments (however poorly reasoned) that support her desires. (Not IMO dishonest, though a superficial read might incline one to think so. But over the years I’ve become convinced that she believes her own spin.)
The real reason her conclusion may be right (or may not, sometimes there are long term, if not quite permanent, long term realignments that give one party or the other years as the dominant party) can be summarized as “shlt happens.” Unforeseen events might well trump demographics. The thing is, but definition they aren’t … foreseeable, so they don’t make for the kind of naval gazing that Megan seems to enjoy so much.
Though pairing her with Drum is a case of (unintentional?) genius. Drum is probably the McArdle of the left. One does wonder what Tyler sees in these “thinkers.” At least Yglesias is a sharp guy, if sometimes a little facile.
you claim McArdle’s arguments are “poorly reasoned”.
Then you put forth a gauzy “shit happens” argument, presumably as a clinic in critical reasoning, complete with a hedge/escape hatch qualifier to boot. Well played.
I don’t think that McArdle is a poor critical thinker at all. I do, however, think that she is sometimes susceptible to unnecessary Slate-style contrarianism.
The arguments that the GOP is going to be made demographically irrelevant are very obviously arguments that ‘if they keep along the present trajectory, they will be made demographically irrelevant.’ There are some people making that argument without the conditional, but those people are mostly partisans and unserious, If the article was re-framed as “What the GOP needs to do” or “The Democrats have demographic problems too,” the criticisms would be largely irrelevant.
If half of those who voted for McCain last time but didn’t show up this time had, the conversation would have been the stem and root cleanout of the Democrats necessary to regain power.
What we’ve seen in Canada is the center left losing meaning for their existence when the ability to borrow money to fund goodies to buy voters dries up. The GOP in it’s obtuse way will probably miss this point and lose their meaning for existence as well. The two parties seem to see gaining power as only a way to get at the public purse to buy off their supporters and interest groups.
Demographics is one trend, but the fiscal situation is going to drive everything over the next couple of decades.
All we have to do is wait. They’ll get the point in the end.
I am unlcear how your comment is at all replying to mine.
Ha, I’ll believe it when I see it on MBV. That article could have been written in 1994! Trying to manage my expectations… but Brian Wilson lived up to them, so maybe Kevin will too.
On another note, I’d like to take this opportunity to deliver an election message:
I thank all of you that voted in a manner consistent with my values. You are infinitely wise and I am certain that you embody everything that is righteous and good in this world. Together, we will save the universe. To those that voted differently, well, I sincerely hope that you will deliver yourself from ignorance, selfishness and evil. Because I am kind and open hearted, I will support you in this process by faithfully endeavoring to criticize your patently absurd positions and by clearly and concisely stating my own self-evidently brilliant point of view, repeatedly and at high volume if necessary.
Thanks for the jazz – America’s only essential contribution to western civilisation.
The blues would like a word with you.
So would Aaron Copeland and Charles Ives. (Is that racist?)
The Situation is free, why don’t we just send him?
No, Copeland and Ives matter not a button. As for The Blues – fair point. I was using “jazz” for the whole nexus of ragtime, blues, jazz, tin pan alley (Gershwin, Porter etc): the popular rhythm music that died when rockshite and popcrap replaced it.
It’s especially brave of TC to downplay the disaster of Obama’s reelection since he did nothing to avert it. Plus ridiculing as insane those distressed by the loss of thier rights of conscience keeps him in good graces with the Grey Lady. Another profile in courage.
I think you have identified the single most important reason Romney lost: Tyler Cowen did not do enough to oppose Obama. Tyler could have easily turned his home state of Virginia for Romney had he only tried. From there, he could have turned Ohio and Florida for Romney. And, because even these three states would not have been enough, Tyler could have heroically swooped into to New Hampshire to save the day for Mitt, and every other god-fearing American.
There is also a chance – a small one I know, but a chance – that, maybe, Tyler doesn’t agree with you that Obama’s reelection was such a disaster. I know, I know, unlikely, but if we just make that small assumption, it all makes a certain kind of weird sense.
Against that I guess you have to weigh the obvious fact that his professional livelihood is controlled by an institution, George Mason University, that is deeply implicated in the vast liberal conspiracy (and, if you are right, secretly controlled by a “grey lady” of some type? Hillary maybe?). So there’s that.
But maybe you should consider another, darker possibility. Reject of course the overly simplistic idea that he might really believe what he writes. Reject also the notion that he is a coward afraid of losing his coveted chair at George Mason. I have the REAL scoop. He’s a closet statist, not merely a statist but a sort of double agent. here’s the proof, a rarely seen before article in an obscure publication where he admits – admits! – to appreciating the value of bigger government. Bet he would LOVE to cover up THAT article. But the internet has a long memory.
Tyler believes they were equally bad. He said as much on the Canadian TV interview.
Combine Obama’s immigration and spending policy and the Fed’s QE, and there will be extremely cheap chalupas soon, perhaps the cheapest in all the Americas.
#1 Very week evidence trying overcome the very intuitive wealth effect. I will stick with the wealth effect that is it gets easier to gamble and waste away money when you have more of it, not the reverse.
#3 I saw one poll that showed Romney with 0% of the black vote! (For comparison Bob Dole got 14%.) Surely 99.5 % of blacks do not agree more with Obama than Romney on policy. Double surely 66% of hispanics do not agree more with Obama than Romney policy. It is identity politics. The GOP only needs to carve off 30% of the black vote and split the Hispanic vote to easily beat the Democrats so they should nominate a ticket with Mia Love and Marko Rubio and see what happens. Obama was a great gift to the Democrats but they cannot cintinue to field black candiadetes for long without loosing more white votes.
Politics is not about good policy.
Did you read the paper? That is not what it is about. The ‘poor’ spend more *time* and *energy* (measured by subsequent performance degradation) on the same task as the ‘rich’ just by virtue of being ‘poor.’ The ‘wealth effect’ doesn’t explain that at all.
Is “sanity” quite the word for someone who believes that rising incomes require a corrective? (Not that I doubt for a minute his ability to provide one.)
3) Of course, if you’ve had enough sanity, read Drum’s best rated comment: (long-term deficit reduction and entitlement reform really are pretty important) is true only if you don’t understand that the deficit isn’t actually a “debt” that needs to be “paid back” but is simply an addition to the money supply that can remain in circulation indefinitely so long as inflation is under control. Since there’s basically zero inflation these days, deficit reduction (not to mention “entitlement reform”) is about as far from important as it can get.
Nobody who is in touch with reality “understands that”.
The fact that Drum even makes the statement the way he does, as if it’s in any way controversial, is revealing of liberal denialism here (conservative denialism on the subject looks different, centering on the need to cut the Pentagon budget and raise taxes).
The fact that Ronnie B. contests the idea, with the standard “free debt! get yer free debt!” perspective, is the icing on top.
Hopefully, at the policy level, the discussion is more serious.
Basically it assumes there should be no deflation, right?
Let’s say gasoline was on track to drop in price by 90%. The government could keep buying to keep the price at 100%. No inflation- check. No real impact? No check.
Comment writing is tough. Here’s a summary of my point:
Drum: Debt reduction and entitlement reform are important.
Top rated comment on his post: Deficit reduction and entitlement reform are absolutely not important.
Ronnie B: Drum’s point is obviously correct. His commentors do not agree.
Oh ah. I believe we’re all in agreement here then. Carry on.
future in which smart machines do more and more work and humans do less and less.
Kevin’s really key economic insight is this coming future.
The US gov’t should start preparations, now — with half time workers. Starting with the highest paid 10% gov’t workers, who are transferred to half-time work. Plus all new hires to be hired at half-time, so as to increase the total number of workers getting a paycheck. But reduce the total paid.
The humans who will be “rich” in that future, are those who have saved/ invested enough capital to be the owners of the machines. The push to make most taxpayers spend more and save less is contrary to goal of making more workers wealthy in the long term.
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