by Tyler Cowen
on June 11, 2014 at 12:28 pm
1. Venezuelan markets in everything.
2. The choices Harvard Business School made for on-line education.
3. Scott Sumner on the quest for the free lunch.
4. How Delaware nudged students into going to college. And nudging commuters to avoid peak times.
5. The emerging science of computational anthropology.
6. Some cost reasons why workers stop working.
Speaking of “nudges”, not recognizing homosexual marriage can be thought of as a nudge against homosexuality. People can still be gay, but the government will not recognize their relationships. Given the health consequences of male homosexuality, such a nudge seems rational to me. But it seems that some nudges (against smoking, drinking, using non-renewable energy) are ok but other nudges are horrific bigotry.
Straight people also get STDs; not all homosexual conduct is high-risk; it’s a rights issue not a health one.
I think that nobody, straight or gay, likes to think that their partner is has an STD and to whip out protection would be kind of an insult or insulation that you or your partner has an STD. For straight partners, the desire to prevent unwanted pregnancy is good reason enough to use it, but for the gay population, that risk isn’t there and therefore the gay population would run a higher risk of STD’s compared to the straight population.
not all homosexual conduct is high risk, but it’s *higher* risk.
I’m just guessing here.
If you’re looking to segment populations into high- and low-STD risk based on some criteria, I bet age and commited-relationship status are much better than sexual preference. Married gays almost certainly get much fewer STDs than uncommitted but sexually active gays – same for straights.
Even among married (male) gays, upwards of 80% are non-monogamous in some way. A term often bandied about is “monogamish”, where the partners are allowed to have occasional flings but not have anyone else serious. Among heterosexual marriages upwards of 90% are monogamous. Needless to say married gays have much higher STD risk than married straights. In contrast lebians have lower STD rates than straight women.
In terms of health nudges policy should encourage women to be lesbians or bisexual and men to be straight.
‘Among heterosexual marriages upwards of 90% are monogamous.’
Such a fascinating number – does this include all the people who divorce and remarry? Or how does it square with the fact that many people who marry have already had sexual partners?
And perhaps you are unfamiliar with a certain web site – Ashley’s, so to speak?
Sorry, but this is the exact reasoning that used for regulation and sin taxes on alcohol, tobacco, and (in some cases) sweets and fast food.
Not all alcohol, tobacco, and fast food users are unhealthy, but so what? A do-gooder saw the relationship and figured this would be a good nudge, and so we have it.
It’s kind of depressing that the mentality has to spread to bans on gay marriage before people finally balk.
Two of the three cases you cite are presumed to have externalities. Smoking, and second hand smoke; and non-renewable energy. Even drinking can have externalities; dui, or medical costs in a shared-cost scheme like insurance.
Homosexuality is almost completely devoid of externalities of this type.
Devoid of externalities?
“The cost of new HIV infections in the United States in 2002 is estimated at $36.4 billion”
“Gay, bisexual, and other men who have sex with men (MSM) of all races and ethnicities remain the population most profoundly affected by HIV.”
Good troll! Obviously by not recognizing gay marriage, homosexual men will simply become monogamous heterosexuals!
#3. Sumner is great, as usual. Tyler, didn’t you used to write about economics?
3. I understand Sumner’s hostility to Piketty; I’d be hostile too if Piketty described my life’s work with words like “vacuity of the content”. But Sumner does a disservice to his profession including like-minded colleagues when he resorts to childish name-calling. Whether “liberals” are only interested in a “free lunch” is a campaign slogan. We have a growing inequality of wealth and income that is undeniable. Is it worrisome to Sumner? I don’t know. Is he concerned about the historical correlation between high levels of inequality and financial and economic instability? I don’t know. All I know is that “liberals” are out for a “free lunch”. When we look back on this period the lack of seriousness among economists like Sumner will stand out, as will their refusal, or is it the inability, to make a serious contribution to analysis and policy choices. I would say that it’s Sumner who was out for a “free lunch”.
Plenty of liberal economists have argued that (a) paying person A to dig a hole, and (b) paying person B to fill the hole, would boost the economy. Maybe Sumner is just being nice by calling this ‘free lunch’ thinking.
So you’re saying I shouldn’t fill in today’s hole, tomorrow?
No! Fill in tomorrow’s hole, today.
Sumner is one of the most serious and least partisan economist bloggers. Not every single post has to be about your favorite topics.
“When we look back on this period the lack of seriousness among economists”
This is the “beat you over your head” debate style of those who “just know”. Global Warming, Wealth Inequality Rising, Inequality is a Crisis, Opposition to Immigration is Racism, White Privilege, Male Privilege, Opposition to Obama is Racism, Teachers Aren’t Paid Enough, Keynesian Stimulus. The list goes on. Each one of these “just known” claims is apparently evidenced by the science that informs the decision of the believers. Unfortunately, the science has already been declared decided by supporters, and further inquiry is nothing more than denial to their eyes.
Well, on climate change the science is decided. Come on, look at any serious journal. Nature, Science, all of them. Written by scientists for scientists, all of whom accept the proposition that the planet is warming because of greenhouse gas emissions. I mean, if you want to do science, you *must* accept that. All of your colleagues do, because they discovered long ago that there is no other scientifically coherent explanation. Really, it is settled.
Of course if you want to drag in all of your other cultural grievances… As a white male who’s not getting the respect he deserves? Have at it, but I don’t see much that has anything to do with science.
That there is some global warming from CO2 is simple physics.
That the proper policy in the US is a large tax to be redistributed as a demogrant of historic proportions, when the advocates of such policy skate by policy recommendations that would actually accomplish a tremendous amount — building multiple nuclear power plants — is not so decided.
Average global temperatures as measured by satellite sensors are pretty much unchanged for more than 15 years. It is true that fifteen years ago they were much higher than they were ten or twenty years before, so if you go back far enough there is certainly warming. If the planet was warming we could argue why, but if the temperature is stable I’m not sure what there is to argue about. I suppose that we could argue about where to draw the semantic line between “is warming” and “was warming”.
It is simply not true that “all of whom accept the proposition that the planet is warming because of greenhouse gas emissions”. Quite a few accept that the planet warmed since the 19th century for this reason. I imagine that this proposition looked very attractive fifteen years ago but perhaps some are having second thoughts given that CO2 emissions have accelerated over that period and the atmosphere does not seem to be any warmer.
It’s true that all the models predict such an effect, but economists have lots of cool models too. The public is too smart to believe that these models alone are a sound basis for far-reaching policy changes.
I think it’s fascinating that the same people who berate the economics profession for their outrageous consensuses bow down before seeming consensus in another field of study. The same professional forces that are at work in economics are present in other fields too.
Let me point out the obvious problem with the “warming has stopped” meme. You don’t measure long-term climate trends by cherry picking one indicator for a single year (1998) when natural variation (a once-in-a-century El Nino) overwhelmed the long-term trend. You measure it by taking decadal averages and using multiple indicators (air temperature, surface and deep sea heat, humidity, etc. etc.). Most of those indicators show that the last decade was the warmest on record. Global warming has not stopped. If you include sea heat data, it has accelerated.
It’s not like this information is secret. Just Google “warmest decade on record” and you’ll find statements from NASA, NOAA, and all 10 of the groups that track global temperatures worldwide. They all say the same thing. So do the papers in Science and Nature. In the face of all that, it’s amazing how this “warming has stopped” meme manages to live on.
From 6. : “[M]monetary policy doesn’t do a good job of making distinctions among different groups of people [between “Discouraged” and “Other” workers]. Fiscal policy does, however. Affordable child care or cheaper public transportation [i.e., taxpayer subsidized] might get more people who want to work back to work.”
Just my anecdotal observation, but wouldn’t subsidizing these costs increase the supply of “Other” workers…those who would work if their compensation covered their costs of working…and thereby drive down wages and drive up childcare, etc costs for those workers? How many of these discretionary-employment Other workers are low-skill second incomes that were working when the economy was booming and labor was tight due to fiscal stimulus but now that the economy has normalized find there are no jobs for them? Why should we have taxpayer subsidized policies to employ people unproductively…we already have the Postal Service and TSA.
All we need is full deductibility of child care for two-worker households. That solves the problem of free daycare encouraging marginal workers to go back to work. It also would increase revenues for the government as well as GDP. A no-brainer.
“That solves the problem of free daycare encouraging marginal workers to go back to work. It also would increase revenues for the government as well as GDP. A no-brainer.”
A no-brainer, assuming you consider parents raising their own children a “problem” to be “solved.” GDP uber alles.
I positively agree with Cliff. I would have normatively agreed with him five years ago. Now I have three kids, a stay at home spouse, and love it.
Incidentally the “cost of working” can be very high; I’ve done the math, for my family it is about $55k/yr. So if my wife makes $65k she’s effectively busting her butt and disrupting our family for $10k/yr. And we’d probably spend that on vacations and expensive presents because we feel guilty about not being around for our kids.
Daycare for 3: $3000-$6000/mo depending on location.
Taxes: Her first dollar taxed at my top marginal rate.
Commute costs. Wardrobe. Increased convenience meals. House cleaner. Etc.
It very much boosts GDP, but it results in very little discretionary income from me.
Based on opportunity costs, my wife makes at least as much as her next-best alternative. What if we included her not-insubstantial labor into GDP?
So, how many single moms would your work at home home keeper mom keep employed with her imaginary income?
Unless she was working as the operator of a daycare center and her job would go to the woman she paid to care for your kids, or ran the house cleaning agency that paid the housekeeper who cleaned your house, her not working and not paying the costs of working means lower wages for all those her “costs” paid.
I see the logic of conservatives on economic to be free lunch. If we eliminated all the costs of living, everyone would be richer.
No child care would put $6000 in your pockets.
No taxes would put $15,000 in your pockets.
No “gas” taxes would put $2000 in your pockets.
… that was $45,000 that vanished into a blackhole and never ended up in the GDP.
But her wages at the job were a cost that simply sucked money out of the economy and into a blackhole never to add to the GDP….
I’m not arguing your wife is wrong not to work – you are choosing to place happiness over GDP.
Which is very different than a worker who has no car and thus must depend on public transportation to get to work, and if the work is scheduled in ways that make the transportation costs and other costs higher than the wages, and for really low wage workers no Federal taxes are owed – the EITC exceeds the FICA tax.
I noticed in 2008 job ads started requiring applicants have TWO RELIABLE CARS – the standard for reliable car during the Bush years for the low wage workers kept falling. Lots of jobs require a car – the job location changes so you need to drive to it. Some jobs require you supply the car to do the job. But those jobs often don’t pay enough to buy a reliable car – you had to have bought the car at a prior high pay job.
I’m not sure what the point of your post is. Your numbers are specific to you. I have three kids and my wife is home right now but she wants to go back to work soon. It makes sense for us financially as well as “emotionally” but it would make more sense and be way more fair if childcare expenses were deductible. I’m not proposing some crazy law that all parents have to work, I’m just proposing that the system should be logical and consistent for those who choose to.
So many things wrong with your comment. First of all, day care is not equivalent to “other people raising your children”. Second, this policy is an improvement over free daycare which would encourage mothers to return to work even where the economic value is not there. My proposed policy is completely consistent with the non-taxation of business expenses where the current policy is not. Third, in no way does this penalize parents who stay home. It only benefits those who choose to return to work. All it does is offer parents a fair choice to return to work if that is what they want and think is best.
Finally, evidence shows that daycare leads to better socialized children with no downside. Never in the history of the world have children been raised by their mothers in isolation. It’s frankly absurd to believe that is the best way to raise a child. Being exposed to lots of other children and caregivers is hardly a bad thing.
“full deductibility of child care for two-worker households”
Under this policy what prevents the rapid inflation of child care ala higher education?
I’m confused, what is the relation? Is higher education fully deductible? I’m not recommending easy credit government loans for child care. Sure the demand for childcare would increase and more providers would enter the market. Market clearing price would be marginally higher but I see no reason to believe it would be equivalent in any way to higher education.
Btw this “policy” is consistent with the philosophy behind income taxation whereas the present law is not. Childcare is a business expense for a two-earner household, there’s no way to work without it. Business expenses are generally not taxed.
But people aren’t taxed like businesses. For me personally, driving to work is a “business expense,” so is paying for parking. So is buying a tie. But I don’t get to deduct any of those things, even though if I was a business I would. It might be more *consistent* if individuals were taxed in this way but what a pain in the rear.
I think the general idea here is “at the margins, income taxes decrease motivation to work” which is true, but not unique to parents.
Employees of businesses filing as individuals ARE entitled to deduct business expenses, see http://www.irs.gov/taxtopics/tc514.html.
A tie is not a business expense regardless of whether you are a business, because it has substantial non-business uses. It’s true that commutes and parking are not considered business expenses, but only because it would be so difficult to track and police. Chlidcare expenses are very easy to track and police and very obviously business related.
2) “How many calculus professors do we need in the world?” he asked. “Maybe it’s nine. My colleague says it’s four. One to teach in English, one in French, one in Chinese, and one in the farm system in case one dies.”
It seems to me that by the time this all shakes out, the answer will be zero. We’ll just need sufficient hardware to make the calculus-bot available to everyone with an internet connection.
Some people can learn from a calculus-bot. Some people need in-person attention and math tutoring. Don’t assume your learning style is universal.
My thinking here is that software will soon be sufficiently advanced to give “in-person” attention and math tutoring. Once conversational and logical agents are far enough along (and it only seems to be a matter of time), we should be able to build calculus-bots tailored to any learning style. The comparative advantage of humans will vanish.
Flip the classroom. Use “Khan Academy” style videos to teach the subject, and online testing to determine what the student learned and what he or she needs additional tutoring on. Then, if need be, a human tutor can intervene.
The advantage of the flipped classroom is that we can get the best teachers to do the videos, and using editing get their best lectures.
The world had two calculus professors, Newton and Leibniz (though perhaps Leibniz was not officially a professor). In any case, two was more than enough. What the hell is a calculus professor in the modern world?
“professor ” “inventor”
If we have a calculus-bot, why does anyone need to learn calculus??
(I ask this tongue in cheek.)
#4: Thanks Delaware for making sure no smart High School Seniors go into the Armed Forces. Where do you think that 20% of SAT-1500 students that weren’t immediately matriculating into a college were going? The article doesn’t even mention the word ‘military’.
1500, out of 2400, is dead middle. Is “average” now college material?
Credential treadmills will chew up and destroy the lower- and middle-class. The upper-class can ride as long as it takes.
Are you serious? Average is definitely college material. Where have you been for 20 years?
Handle is showing his age. 1600 used to be a perfect score in the SAT.
#4 so where are the great auto mechanics going to come from now?
They’ll just be college-educated auto mechanics now.
Have you tried to work on a car in the last decade? You need a college degree.
I suspect that the great auto mechanics will come for the under SAT-1500 crowd.
The SAT is not necessarily a good test of who would be good mechanics.
Of course now a good auto mechanics needs to very good with using computers and other high tech equipment.
#6…I wonder how much of the discouraged workers will become the Home School Revolution in which a good portion of these workers were former second incomes in a family. Considering the number of children born to mothers over 35 indicates that people are putting off marriage and children and then evidently one spouse drops out of the workforce to teach homeschool to the two children.
Close, but I am sending my kids to public school. Once they are out of the house most of the day, my wife will go back to work.
Regarding #3, I don’t think it’s a demand for a free lunch, per se. I think there has been a trend of demonizing the major sources of tax revenue and establishing them as “other”, so that:
1) Ignorance of costs is a signal of political power.
2) The removal of mutual identity makes it easier to judge them in “far” terms, so that policies can be judged more simply in terms of intentions, instead of outcomes.
I think that what happened was the recession that created a free lunch where none had existed before. There were unemployed resources; putting them to work WAS a free lunch which good monetary policy will eliminate as quickly as it can be implemented.
5. The emerging science of computational anthropology
I see the next advance in China’s control of the People in People’s Republic,
…and some very frustrated NSA/CIA officials pissed that Obama didn’t immediately try to shutdown everything Bush setup to immediately create overwhelming public support for even more comprehensive spying on everyone including Americans.
#1. “sex workers have been able to supplement their income by selling dollars on the black market.”
No one sells dollars voluntarily. Obviously, these women have been trafficked into Venezuela and forced to exchange currency. While selling dollars shouldn’t be illegal, buying them should be. Only by targeting the demand side can we eliminate the victimization of currency exchangers.
#4b) I’m not sure that these qualify as nudges, although the policies are quite creative. Nudges, as I understood the term, entice people to make choices that are *different from rationally equivalent choices* due to behavioral anomalies. Classic example would be where people make different choices when required to opt-in vs opt-out. Here, people accept payment to avoid peak travel times, where the payment is entry into a lottery. Where is the behavioral inconsistency?
Our own firm has had success at trade shows in getting people to drop business cards to enter a raffle for an iPad. We found that the cost per business card collected in a raffle is much lower than if we offered a (low-cost, low-value) trinket to everyone. That’s not a nudge. It just shows that people like lotteries. In the US, gambling and lotteries are illegal or restricted. Thus, it would seem to make rational sense that there is a lot of unmet demand for lotteries that can be taken advantage of by incentive programs. I would classify this as regulatory arbitrage rather than nudging. Are gambling and lotteries similarly restricted in India?
What Harvard Business School should have done: http://www.evanvanness.com/post/88443494421/what-harvard-business-school-should-do-to-prevent-mooc
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