by Tyler Cowen
on October 24, 2013 at 12:45 pm
1 Cardiff Garcia on what is the case against quantitative easing?
2. One theory as to why women are paid less.
3. In praise of Frank Ramsey.
4. The housing wedge.
5. Eighteen signs you are reading bad criticisms of economics.
I was looking at the BLS data today, and noticed something odd: in 2011 at least, women working between 5 and 39 hours made ~102-110% of men’s wages. http://www.bls.gov/cps/cpswom2011.pdf table 5. Women working 40 hours, 88.4%, and more than 40 hours, 86.8%. In part time jobs, white women make significantly more than white men. Black men and women are even. Hispanic women make significantly less (92%) than Hispanic men in part time jobs.
Are part time jobs less competitive? Are white women more competitive relative to white men than Hispanic women to Hispanic men? How much is the wage difference made up of a different choice of occupation, and how much is choice of occupation dependent upon ‘competitiveness’? I don’t know the answers to any of these. It would be interesting to find out.
White women are the most likely demo to want the flexibility of part time work in professions. Black women are usually the head of household and need full-time work. Female programmers, for example. will take contract work while they have kids. Part-time work for men is most likely going to be no-skill stuff like warehouse work and agriculture.
The wage gaps between men and women are simply more proof that men and women are different.
Of course, I meant re: 2…
as has been pointed out way too many times, women make $0.91/$1 for *the exact same jobs.* So while this may or may not explain the $0.77/$1 overall, it doesn’t get you nearly close enough to the goal.
But not the same length of service. If salesman X has ten years and salesman Y has five years, they will not earn the same, despite doing the same job.
I wouldn’t be surprised if the real options embedded in hiring a man were 9% more valuable.
Those asterisks should really be quotation marks.
Physics jokes: “Economists quote their numbers to two sigfigs to prove they have a sense of humour”. Dude what are your error bars? How they hell can I know that $0.91 is not “nearly close”to $1.00?
Do they have the exact same qualifications? Among new college graduates don’t women have higher incomes for the same job?
Since women will work for less, shouldn’t corporations just fire all the men and replace them with women? The sociopaths in the C-level suite would love it.
Exactly. Stop complaining and exploit this opportunity.
So the whole point of 2. was that women are less risk-accepting than men. Which has long been known.
One experiment put people in groups of four. They could get compensated either $5 per person, or $20 to the best-performing person in the group. Women who were clearly better than their competitors still chose the guaranteed payment. While men who were clearly outclassed by someone else in their group still wanted to compete for the $20 prize instead of the guaranteed payout.
You will note that is mentioned in the article
“This result accords with the broader insights from laboratory experiments that others—Muriel Niederle, Lise Vesterlund, Aldo Rustichini, etc.—have found”
@#1 – gated, reading the comments I got a sense of what the article was about but could not access the actual article
@#2 – freakonomics server timed out. I’m sure the speculative theory is passed on as fact however.
@#3 – “F. P. Ramsey has some claim to be the greatest philosopher of the twentieth century. In Cambridge in the 1920s, he singlehandedly forged a range of ideas that have since come to define the philosophical landscape. ” – LOL! This cannot be true and is a Oxford fellow’s highbrow attempt at UK uni mysticism. A lad that dies in his early 20s cannot by definition contribute much, unless his name is Évariste Galois.
@#4 – The housing wedge- much ado about nothing. Limited land, be it in the Bay Area or No Va, drives up housing prices when skilled people cluster there. This helps landlords like me charge $1000 a room for sub-standard housing. I live outside of DC, as an absentee landlord. Thank you, bureaucratic, rent-seeking America and Washington DC. I pay no taxes on my non-real estate income btw, but that’s a separate loophole.
@#5 – this is standard in any field, talking down to layman outside the field. Done in my field and in yours. But you must look past the misuse of terms of art and see what is the layperson really trying to say? Maybe they have a larger point? http://onlinelibrary.wiley.com/doi/10.1111/1475-4932.12028/full (“Before dismissing Debunking Economics entirely, however, we should consider: Why is there a market for this kind of thing? And why does this particular author have a fair-sized corner on the market? The answer, of course, is that the USA and much of the European economy are in the dire state referred to above, and the economics profession as a whole has failed to provide consistent warning, diagnosis or treatment.”) Exactly.
Off-topic: who thinks the music parodies of Bart Baker on Youtube are funny? They are mostly LOL funny, though red-neck humor. http://www.youtube.com/user/BartBaKer
FT is free registration.
# 4 , the article has this line:
“America is ‘taxing’ richer Americans through expensive housing and raising the real incomes of lower income workers by diverting them to cheaper places.”
Wow, that America is pretty powerful, doing all that “diverting” of lower income workers, like water.
It’s not limited land, it’s housing policy
I do not see how land in CA is limited in any meaningful way.
Why is the mythical “pay gap” debate still going on? The studies have been in for a decade. Once you factor in the job differentials, experience, hours worked etc. the “pay gap” shrinks to 96 cents on the dollar, and that’s without counting risk (males make up ~98% of workplace deaths), female choice, and actual skill (I know, HERESY!). What we know is this, women do not work the same jobs at the same rate as men, they take more time off, they work fewer hours, and they plain don’t want to do some jobs (oil drilling, lumberjacks, long-haul truckers), they like steady pay, and prefer benefits to increased salary. There is no pay gap. Not one little bit.
Uhm, because the governing ideology of the last 50 years has been cultural genocide against white Christian men. Did you seriously think this was ever about the truth?
Because politics poisons almost everything. Wherever there is a bad statistic, there is a politician looking to use said statistic to get elected.
2. Another fine example of fraud as a research technique. Probably about 1000 person-hours were spent by honest job seekers wasting their time in correspondence with this freakonomics fraud team.
Isn’t one of the primary means by which markets lead to greater efficiency their ability to lower transaction costs? How is it ethical to increase transaction costs for 7,000 people in the labor market?
I had the same thought, plus what a crappy trick Freakonomics played on these job seekers in a time when interviews for lower level professional jobs are few and far between. How many people told their spouses, friends, parents or children: I’m so excited, I got an interview! then found out it was all a ploy.
I should withdraw my earlier comment. Browsing the underlying paper revealed that hires have been made for every position advertised. I shouldn’t have assumed contrariwise, and I apologize to the freakonomics team.
This does raise the question, now that we know that compensation schemes can have a disparate impact on the gender of people who get hired for a job, will employers have to calibrate their compensation schemes so they are not discriminatory?
2. Perhaps this study shows that women have better bullshit detectors than men, since, after all, they weren’t being offered real jobs in the study. I’m not even a woman but my bullshit detector would go off if I was told the compensation was being offered under such an improbable scheme. On the other hand, maybe it showed that men are more desperate for jobs and are therefore more willing to accept even one that sounds like it’s probably bullshit on the off-chance it’s not.
Or maybe women – like myself – sense that they will lose (or not enjoy) such competitions and thus don’t apply. Most workplace competitions involve a fair amount of bullshit, especially ones run by men.
Are there real world examples of such compensation schemes for people making on the order of $15 an hour? The scheme sounds more plausible for a job in the six figure range. My guess is the authors of the study felt comfortable, as Curt F points out, wasting the valuable time of those beneath their pay grade but wouldn’t have had the stones to mess with people closer to their own status, so they designed a study that people looking for admin assistance jobs could smell was fishy. Another case of academics with no common sense or understanding of psychology.
Again List is very sensible with his experiments so the out of touch academic critique is probably not going to work well here. Bonuses tied to performance are common in sales even at that level so probably not a novel arrangement for most applicants. While I am concerned like Curt F about people being human subjects in an experiment without their consent, there were 19 people hired and offers made for every position posted. And that’s probably the reason to focus on lower wage jobs. My concern with these real world experiments is the mechanism is seldom illuminated and you can’t exactly survey people who didn’t know it was an experiment.
You successfully slow-played that if you knew from the start they were offered actual jobs.
I would love to hear how competitions run by men involve more “bullshit” than those run by women. This sounds like the kind of comment that is really just a bunch of words expressing emotion, rather than based on any substance – typical of women.
a joke, mike. haha.
Glad to see Chris Auld include the “not a real Nobel” line in his list.
it’s interesting on #2 (male/femal pay gap) that many comments that are actually putting forth interesting comments or interpretations are voted down and made invisible on the blog unless you actually click the comment to expose it. It’s almost if you try to come up with an explanation for the pay gap other than “descrimination” you get voted down…
Not just voted down, but voted into oblivion.
Re: #1. It seems Cliff is not really convinced on his thesis that QE is bad, in fact at the end he agrees it is the best policy and offers his continued support. Is there anyone else willing to take it on, who actually thinks there are problems with this policy?
Frank Ramsey, wow. I’d always assumed he was like John Nash, a mathematical genius who dabbled in economics in his spare time and made Nobel-worthy contributions to economics almost in passing. I hadn’t realized he was a philosopher too.
#4 Economists who think the higher nominal wages in expensive areas prove that workers there are more productive than workers in cheap places are making the same mistake as people who think higher nominal wages in places like California and New York mean that workers there are richer.
The statistics count the sales value of what you do, so a construction worker in New York who achieved the same amount of actual construction per hour as one in Dallas would be viewed as many times more productive. A cook who gets to sell steaks in NYC for twice as much is counted as twice as productive as the same cook in Dallas. And on and on.
Yes, clusters of highly talented people in highly skilled vocations — Silicon Valley — may spread knowledge such that average individual productivity really rises. But anyone who thinks this happens lower down the skill ladder is kidding himself. Not only do busboys not become excellent through exposure to the fast-paced world-class busboys on NYC, well-compensated, college-educated mid-tier workers don’t become better paper pushers through exposure to the world’s best paper pushers.
My former employer automatically paid 25% more to people in the same position in metro NYC rather than metro Dallas. If you transferred, they simply increased or decreased your salary. (How did they justify paying more simply by location rather than relocating everyone to Dallas? Because the CEO wanted to live in NYC where he could really enjoy his $20 million a year and he needed the cover of having the company’s biggest office in the same location. Dallas is a terrible place to be a CEO because your mid-tier VPs who only make $500,000 can live every bit as well as you rather than living like beggars in undersized one-bedroom apartments and making you feel like a king.)
I’m really glad that Tyler wrote a high-profile article that finally explained why people who make $50,000 in Texas are richer than people who make $75,000 in costal California — but the logic goes far, far further than this author understands.
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