Month: March 2007

The roots of structural unemployment

by  Tyler Cowen in

English economist Andrew Oswald
has shown that across European countries, and across U.S. states, high
levels of home ownership are correlated with high levels of
unemployment.  More conventional factors such as generous welfare
benefits or high levels of unionization don’t explain unemployment
nearly as well as the tendency to own houses.  Renting your home and
staying flexible do wonders for your chances of always finding an
interesting job to do.

Tim Harford has more.

Wages, height, and gender

by  Tyler Cowen in

A loyal MR reader asks:

We know women make less than men.  We know shorter people make less than taller people.  How much of the first is explained by the second?

Not much.  Short men have less self-esteem (recall that male height at the time of high school predicts earnings better than adult male height), but short women, when they are young, feel no worse about themselves than do tall women.  Next?

#28 in a series of 50.

Our next President

by  Tyler Cowen in

…I hate candidate blogging, but here is my neck on the line.  Obama faces too high a chance of self-destruction through scandal, meltdowns, and lack of testing at the national level.  Hillary has too many people who won’t change their mind about her, is too unpopular with suburban Cincinnati housewives, and looks shrill and ugly on TV.  Americans are tired of family dynasties in the White House.  Edwards has the best chance of any Democrat but won’t get the nomination.  Democrats do well when voters’ main concern is the economy, not foreign policy; that won’t be the case.  No matter how badly Iraq goes it helps the Republicans, who benefit from an emphasis on foreign policy, an area where Democrats are never trusted.  It is the Democrats who will tear themselves apart over Iraq, not the Republicans.  The evangelicals hate a Mormon candidate more than an immoral candidate; the latter allows them to stay unified.  McCain looks too old these days, and he peaked too early, so I’ll predict Giuliani as our next President.  Speeding up the primaries will make it harder for the Christian Right to sabotage him.  Rudy has many political negatives, including his name, his home state, and his flamboyant personal history, but all will be neutralized when his opponent is Hillary Clinton.

Don’t expect to hear about this topic again.

Complements which are local, not global

by  Tyler Cowen in

Several of you might have heard of this excellent philosophical time waster before, but it’s new to me (apparently it was first devised by Wilfrid Sellars):

Identify three foods A, B, and C such that any two of these are complementary (taste good in combination) but the trio does not.  So A and B must be complementary, B and C must be complementary, and A and C must be complementary, but A, B, and C must be foul when combined together.  (It’s harder than I thought!)

Here are some possible answers.  I opt for Coke, Merlot, and Chicken.  The pointer is from Ananda Gupta.

Addendum: In the comments, Stephen Dubner nails it.

Why are women so religious?

by  Tyler Cowen in

Here is a passage from Veblen’s Theory of the Leisure Class:

…the effective middle-class congregation tends…to become a congregation of women and minors.  There is an appreciable lack of devotional fervour among the adult males of the middle class…

This peculiar sexual differentiation…is due…to the fact that
the
middle-class women are in great measure a (vicarious) leisure class.
The same is true in a less degree of the women of the lower, artisan
classes.  They live under a regime of status handed down from an
earlier stage of industrial development, and thereby they preserve a
frame of mind and habits of thought which incline them to an archaic
view of things generally…For the modern man the patriarchal relation
of status is by no means the dominant feature of life; but for the
women…confined as they are by prescription and by economic
circumstances to their "domestic sphere," this relation is the most
real and most formative factor of life.  Hence a habit of mind
favourable to devout observances and to the interpretation of the facts
of life generally in terms of personal status.  The logic, and the
logical processes, of her everyday domestic life are carried over into
the realm of the supernatural, and the woman finds herself at home and
content in a range of ideas which to the man are in great measure alien
and imbecile.

That’s from chapter XII.  The implication is that women in the work force should be less religious, adjusting for income and education.  Is that true?  Here is Bryan Caplan on said topic.  Here is another article.  Here is another comment.  Here is my previous post on Veblen.

So why are women more religious than men?  Is it just greater risk-aversion?

More evidence on immigration and wages

by  Tyler Cowen in

As of 2004 California employed almost 30% of all foreign born workers
in the U.S. and was the state with the largest percentage of immigrants
in the labor force.  It received a very large number of uneducated
immigrants so that two thirds of workers with no schooling degree in
California were foreign-born in 2004.  If immigration harms the labor
opportunities of natives, especially the least skilled ones, California
was the place where these effects should have been particularly strong.
But is it possible that immigrants raised the demand for California’s
native workers, rather than harming it?  After all immigrants have
different skills and tend to work in different occupations then natives
and hence they may raise productivity and the demand for complementary
production tasks and skills.  We consider workers of different education
and age as imperfectly substitutable in production and we exploit
differences in immigration across these groups to infer their impact on
US natives.  In order to isolate the "supply-driven" variation of
immigrants across skills and to identify the labor market responses of
natives we use a novel instrumental variable strategy.  Our estimates
use migration by skill group to other U.S. states as instrument for
migration to California.  Migratory flows to other states, in fact,
share the same "push" factors as those to California but clearly are
not affected by the California-specific "pull" factors.  We find that
between 1960 and 2004 immigration did not produce a negative migratory
response from natives.  To the contrary, as immigrants were imperfect
substitutes for natives with similar education and age we find that
they stimulated, rather than harmed, the demand and wages of most U.S.
native workers.

In other words, if lots of Mexican carpenters move to California, we don’t see the non-Mexican carpenters leaving in droves, due to lower wages. 

Here is the paper.  Here is a non-gated version.  The article makes the interesting observation that if California were counted as a nation (and the U.S. not), it would receive the second largest number of immigrants per year of any country, with only Russia beating it out.

My podcast, #2

by  Tyler Cowen in

Tyler Cowen, professor of economics at George
Mason University, talks with Bloomberg’s Tom Keene from Fairfax, Virginia, the
impact of celebrities on politics and the economy, XM Satellite Radio Holdings
Inc.’s possible combination with Sirius Satellite Radio Inc., and the effect
of blogs on the news industry.

Scroll down from here, there are many other economist podcasts as well.  I predict that both XM and Sirius will go under, the iPod is the real competitor.

Addendum: Here is the new podcast link.

Behavioral microeconomics bleg

by  Tyler Cowen in

A loyal MR reader writes:

For a research on how undergraduate teaching of microeconomics incorporates the recent developments in behavioral economics, I have been trying to get the syllabuses of undergraduate microeconomics courses…

Syllabus or not, do you have information on how behavioral economics is being taught at the micro level?  Comments are, of course, open…

Diet and politics

by  Tyler Cowen in

A loyal MR reader wants to hear about:

’08 elections. where Kurzweil and company are most right and most wrong. veganism/vegetarianism/cave man diet/pescatarianism/organic.

1. Yes it does matter who wins but my gut reaction is to compare candidates to soap commercials.  At the end of the day there is a soap bar in your hand, but interest in the topic is driven mostly by our irrational side, programmed to respond emotionally to human faces and characters.  Candidate blogging usually bores me.  If you are figuring out who to vote for, try to predict a politician’s ruling coalition.  The current political question is whether the bad tendencies of Bush 43 are one-time or represent a shift in the political equilibrium and what it takes to govern; I think it is about 50-50 in each direction.

2. Here is my earlier post on the singularity, try to spot the facetious sentence.

3. I have nothing against eating animals per se, even live ones, but I think it is immoral to eat animals raised under awful conditions, such as factory farming.  Personally, I often try to be good but I often fail as well.  I never feel bad eating meat in Europe, and animal welfare is the best argument for European farm subsidies.  I will pay more for humanely-raised food, but I won’t drive through ten minutes of extra traffic to get it. 

4. For a diet I recommend fish, nuts, fruit, green vegetables, and lots of braised pork belly.  At least that’s what tastes good.  Few processed foods are worth buying; I come close to the caveman diet view without being dogmatic.  A good bread is not to be rejected and come on, can rice really be that bad for you?  Just avoid all junk foods.

#26 in a series of 50.

Tyrone says it is easy to stop global warming

by  Tyler Cowen in

Tyrone, like many other people, enjoys reading Instapundit.  Today he sent me the following by IM, or was it Google Talk?:

Global warming is easy to stop.  Is a carbon tax costly?  No way.  Didn’t we already agree that stopping global warming is wealth-maximizing for the world as a whole?  Then we just have to work out the right set of transfers.  As a first-order oversimplification, global warming benefits North Dakota but harms Bangladesh by a greater amount.  North Dakota cuts a deal with Bangladesh.  The two state Senators will support a carbon tax in return for FREE CALL CENTRES FOR FIFTY YEARS.  Or whatever is needed.  After all, a bargain is there.  We might even use the UN, or a revamped Kyoto agreement, to support and organize the deal.

You can see this agreement is self-enforcing, right?  If payment is not made, we can always take the carbon tax away.  Or do something even nastier with those silos up there in the Peace Garden State.  Obviously America could turn a profit on this whole carbon tax deal.  This might sound unfair, but surely it is less unfair than ignoring the problem altogether…

Sadly, Tyrone is still waiting for a response from Tyler.  Tyler thinks Tyrone is a nasty, nasty man, who has grasped only the worst of Edgeworth and understood none of the best…

Is there a political solution to global warming?

by  Tyler Cowen in

Some say no.  The challenge:

Name one government programme, in a democracy, for anything other than a war (on people, I mean, not ideas or natural conditions), that has ever forced the entire citizenry to do something as painful and inconvient as cut their energy usage by 20-50%.  If you can do so, I will reconsider my stance. I note that Britain is in the early stages of just such a plan, and if it works, I will eat my words with a glad smile.