Month: April 2007

Alesina and Giuliano report:

The structure of family relationships influences economic behavior and attitudes. We define our measure of family ties using individual responses from the World Value Survey regarding the role of the family and the love and respect that children need to have for their parents for over 70 countries.  We show that strong family ties imply more reliance on the family as an economic unit which provides goods and services and less on the market and on the government for social insurance.  With strong family ties home production is higher, labor force participation of women and youngsters, and geographical mobility, lower.  Families are larger (higher fertility and higher family size) with strong family ties, which is consistent with the idea of the family as an important economic unit. We present evidence on cross country regressions.  To assess causality we look at the behavior of second generation immigrants in the US and we employ a variable based on the grammatical rule of pronoun drop as an instrument for family ties.  Our results overall indicate a significant influence of the strength of family ties on economic outcomes.

Here is the link.  This topic remains understudied by economists.  Biographically speaking, our political views often spring from our experience of our families and our views of what kind of family structure is acceptable.  That is partly why true Russian liberals are so hard to find, and also why Russians are not obsessed with the welfare state.  Libertarians tend to be family-ornery; compared to their conservative brethren, they are less willing to knuckle down and admit the morally binding power of irrational family obligations.

Addendum: Will Wilkinson has a good post on family.
 

Read the whole thing, it is called "Am I ruining economics or not?"  Of course Alex and I already have weighed in on the "no" side.  I am reminded of Jonathan Swift:

Censure is the tax a man pays to the public for being eminent.

Michael Kremer has another neat idea:

Most countries prohibit the export of certain antiquities.  This practice often leads to illegal excavation and looting for the black market, which damages the items and destroys important aspects of the archaeological record.  We argue that long-term leases of antiquities would raise revenue for the country of origin while preserving its long-term ownership rights.  By putting the object into the hands of the highest value consumer in each period, allowing leases would generate incentives for protection of objects.

I’m all for trying this, as I see no major downside.  But I don’t think it would have a large positive effect.  Collectors, being irrational creatures and "completists," wish to own rather than lease, even if the lease extends past their expected lifetimes.  Museum donors wish to fund museum acquisitions more than museum borrowings.  Similarly, it is much easier for a non-profit to raise money for buying a building than leasing one long-term.  So the demand for leased antiquities won’t be all that huge.

In "Freaks and Geeks" (April 2, 2007) Noam Scheiber praises my work with Alan Krueger on the economic effects of compulsory schooling but argues that economics Ph.D. students today are obsessed with headline-grabbing trivia of little substantive importance.  The root cause is said to be excessive attention to a good or clever research design at the expense of the relevance of the underlying question.  Scheiber’s story is engaging and he lands a few punches, but his account is misleading in two important ways.  For one thing, he exaggerates the problem of small-bore studies.  America’s half-dozen top Ph.D. programs produce scores of Ph.D. students every year.  Most of this work is still on traditional topics.  At MIT (where Levitt studied), we continue to supervise empirical theses on, among other things, health insurance, immigration, unions, and human capital.  High-quality research on these traditional topics gets students high-quality jobs.  I’ll plead guilty, however, to being especially pleased when students manage to come up with clean identification–that is, they have a convincing strategy for uncovering causal effects.  Clean identification is not a fetish; without it, little of value is learned.  On this score, our students typically do better than the empiricists of H.G. Lewis’s generation.  In two of the most dynamic empirical microeconomics subfields, the economics of education and economic development, there has been a virtual credibility revolution, with the increase of randomized field trials as well as compelling natural-experiments research designs (see, e.g., the work done at MIT’s Poverty Action Lab).

Second, in his rush to tar some up-and-comers with the "cute-o-nomics" brush, Scheiber misses a central feature of the clean-identification research agenda, best explained by example.  One of the enduring scientific and policy questions in Labor economics is the sensitivity of hours worked to changes in pay (this matters for tax policy, for example).  The best evidence labor economists have on the relation between wages and hours worked comes from a small experiment (by Ernst Fehr and Lorenz Goette) involving the wages of bicycle messengers in Switzerland.  The second best comes from a study of stadium vendors by Gerald Oettinger.  Who cares about the riders of Veloblitz or snack sellers at Camden Yards?  We care because economics is predicated on the notion that a few simple principles explain behavior in many settings.  These studies produce results that are convincing and may well be general, though, as always in science, it will take replication to know for sure.  Some of the studies Scheiber dismisses can be understood in this spirit.  Finally, as to the merits of Freakonomics the book: My 17-year old daughter picked it up on her own last year.  She never knew economics could be so cool.  Even better, she now asks me what I’m up to.  So I tip my cap to Dubner and Levitt–I hope to see many of their readers in an economics classroom some day.

JOSHUA ANGRIST is a professor of economics at Massachusetts Institute

That is from TNR on-line.  Here is Alex’s earlier post on the Scheiber piece.

Here is the link, via Greg Mankiw.  Rodrik, a Harvard economist, is best known for his work on the political economy of reform, and for his views that market-oriented remedies are overrated in their effectiveness.  Here is Rodrik’s home page.  Here are his latest papers.  He’s treating blogging as too similar to talking, but he’ll get the hang of it soon enough.

1. Bryan shows that education is the best predictor of what makes a person think like an economist.  This will create problems for his next book, which is a critique of education.  He also urges professors to teach better; he is again putting his faith in education.

2. I’m amazed that the public is as rational and smart as it is.  Few people demand that our leaders resort, say, to the tools of superstition, even though many people believe in astrology.  Our political irrationality is highly selective and self-serving in a "feel good about ourselves" way, rather than indiscriminate.  I don’t understand what, in Bryan’s theory, prevents voters from satiating in irrationality, with truly dire social consequences.  He writes of "a demand for irrationality" in stripped down Beckerian fashion, but the model in the back of his mind has a great more structure in it than the book lets on.  The sheep on the cover, for instance, do not play a formal role in the model of the book, even though conformism both eggs on and constrains real world political irrationality.

3. Voters are less irrational in many northern European countries.  I don’t agree with their socialistic view of the world, but in epistemically procedural terms they are making a much greater effort to get at the truth and put that truth into their vote.  What accounts for such a difference?

4. Bryan comes dangerously close to agreeing with me on broad matters of politics.  I think public opinion, for better or worse, is often a constraint on what is possible; that is why Henry Farrell described my view as "big government libertarianism."  Bryan sees opinion as a variable to be manipulated, but he could equally well consider it as a constraint.  His proposal to take more matters out of democratic hands begs the question of how this could be possible, given current public opinion.

5. Bryan underrates the irrationality of many private decisions.  He views "decisiveness" as the most important quality in predicting the quality of an individual choice.  I think that even if our elections were up to one decisive voter, that voter would still choose lots of batty policies or politicians.  I view pride and self-image as the most important features in predicting the quality of an individual choice.  When our pride is at stake, we often self-deceive and make bad and irrational choices, even when we are purely decisive.  I’m not convinced, for instance, that most people make very rational decisions about marriage.  Or status goods, or giving to charity.  In these cases people often "look the other way" when they should be exercising their critical judgment.

Here is the book’s introduction.  Note that my criticisms, even if they are correct, do not puncture the major theses of the book.