Month: March 2011

The male median wage picture is worse than we had thought

David Leonhardt has the scoop, here is an excerpt from the quoted Michael Greenstone:

The red line is the usual picture of median earnings for full-time men. The problem with this line is that the percentage of men working over time has been declining over time. This attrition or dropping out of the labor force is not random, though, as the decline in full-time work it is disproportionately concentrated among low-skill men. This means that the red line is being propped up by the fact that it is increasingly comprised of higher skilled men.

One sensible correction for this is to calculate the median wage for all men (not just the full-time workers). This is the blue line in the below graph.

Why is this important? The full-time sample (red line) suggests that median wages have been stagnant since 1969. The blue line or full sample of men (which accounts for reduced labor force participation) suggests that median wages have declined by 32% or $15,000 (in constant dollars). [emphasis added by TC]

Wisconsin vs. Texas, on education

This piece is marred by some unfortunate polemics, but it makes one core point very effectively:

To recap, white students in Texas perform better than white students in Wisconsin,black students in Texas perform better than black students in Wisconsin,Hispanic students in Texas perform better than Hispanic students in Wisconsin.

I can't do cut and paste on this Mac, so here is the link:

I thank several MR readers for the pointer.

What is the ultimate left-wing novel?

Isaac L. writes to me:

I am hoping you and your readers can help settle an issue. I am a left-leaning voter.  A conservative friend and I recently discussed Atlas Shrugged, which he said was the ultimate right-wing novel. He challenged me to point him towards a left-wing novel that does for that side of politics what Rand does for the right. I think the book needs to do two things: justify the welfare state and argue the limitations of the invisible hand. While I can think of lots of non-fiction texts, I am drawing blank on fictional offerings.

Do you or your readers have any suggestions? Any assistance would be greatly appreciated.

What jumps to mind is Steinbeck's Grapes of Wrath, but if you read the request carefully it does not qualify.  Here is a list of thirty famous left-wing novels, heavy on the mid- to late nineteenth century.  There is Bronte, Dickens, Hugo, Sinclair, Zola, Gorky, Jack London, and Edward Bellamy.  None of these books is as analytically or philosophically comprehensive as the novels of Ayn Rand. 

I would say that the story per se is usually left-wing, in both good and bad ways.  It elevates the seen over the unseen, can easily portray a struggle for justice, focuses on the anecdote, and encourages us to judge social institutions by the intentions of the people who work in them, rather than looking at their deeper and longer-term outcomes.  Precisely because the story is itself so left-wing, there won't be a definitive example of the left-wing novel.  Story-telling encourages context-dependent thinking, although not necessarily in an accurate manner.  One notable feature of Atlas Shrugged is how frequently the story-telling stops for a long speech or an extended dialogue, in order to explain some first principles to the reader.

Canadian data on income stagnation

The median earnings of full-time Canadian workers increased by just $53 annually — that's right, $53 annually — between 1980 and 2005.

Here is more, or here.  This is one reason why I do not adhere to some of the progressive or "class struggle" explanations of relative stagnation in median income growth.  Canada is not ruled by the so-called Republican Right.

There is another reason I don't buy the redistributive theory: here is a chart on The Great Stagnation of Capital.

The "class struggle" hypothesis makes at least some sense for 2001-2004, when measured productivity is high but the gains do not accure to the median.  It does not make sense for the last forty years as a whole, or for the international evidence across countries.

The quality of fiction vs. the quality of non-fiction

Marcos Jazzan, a loyal MR reader, requests:

The quality of fiction seems to be decreasing relative to the quality of non-fiction, or am I just biased against active fiction writers vs. dead ones?

I agree with this assessment, and I see a few mechanisms at work:

1. A lot of good non-fiction is based on current affairs, which are always changing, or progress in science or social science, or biographies of previous uncovered subjects.  Fiction doesn't have a comparable source of new material, at least not since the modernist revolutions.

2. The internet makes it easier for people to be interested in a "culture of facts."  It doesn't help long narratives in the same manner.

3. For a given level of IQ, people are more likely to agree on what is a good non-fiction book than what is a good fiction book.  Internet reviews therefore make non-fiction purchases more reliable to a greater degree than they do for fiction.

4. Arguably literary fiction peaked in the 1920s, with Proust, Kafka, Joyce, Mann, and other important writers.  Could it be that fiction took a bruising from the rise of radio and film at that time?  Even if we compare the 1960s to today, fiction seemed to be more culturally central then.

What mechanisms am I missing?

How to make better decisions?

I never thought of this method:

What should you do when you really, REALLY have to “go”? Make important life decisions, maybe. Controlling your bladder makes you better at controlling yourself when making decisions about your future, too, according to a study to be published in Psychological Science, a journal of the Association for Psychological Science.

Sexual excitement, hunger, thirst–psychological scientists have found that activation of just one of these bodily desires can actually make people want other, seemingly unrelated, rewards more. Take, for example, a man who finds himself searching for a bag of potato chips after looking at sexy photos of women. If this man were able to suppress his sexual desire in this situation, would his hunger also subside? This is the sort of question Mirjam Tuk, of the University of Twente in the Netherlands, sought to answer in the laboratory.

Tuk came up with the idea for the study while attending a long lecture. In an effort to stay alert, she drank several cups of coffee. By the end of the talk, she says, “All the coffee had reached my bladder. And that raised the question: What happens when people experience higher levels of bladder control?” With her colleagues, Debra Trampe of the University of Groningen and Luk Warlop of the Katholieke Universiteit Leuven, Tuk designed experiments to test whether self-control over one bodily desire can generalize to other domains as well.

In one experiment, participants either drank five cups of water (about 750 milliliters), or took small sips of water from five separate cups. Then, after about 40 minutes–the amount of time it takes for water to reach the bladder–the researchers assessed participants’ self-control. Participants were asked to make eight choices; each was between receiving a small, but immediate, reward and a larger, but delayed, reward. For example, they could choose to receive either $16 tomorrow or $30 in 35 days.

The researchers found that the people with full bladders were better at holding out for the larger reward later. Other experiments reinforced this link; for example, in one, just thinking about words related to urination triggered the same effect.

“You seem to make better decisions when you have a full bladder,” Tuk says. So maybe you should drink a bottle of water before making a decision about your stock portfolio, for example. Or perhaps stores that count on impulse buys should keep a bathroom available to customers, since they might be more willing to go for the television with a bigger screen when they have an empty bladder.

The pointer is from Michelle Dawson, although I do not take her to be necessarily endorsing (or rejecting) the results.  There is related work here and here (pdf).

I wrote this post with an empty bladder.

David Leonhardt on the state pension shortfall

This is exactly right:

But 8 percent [equity returns] still seems like an aggressive assumption for state and local governments to be making.

If state and local governments instead assumed a future return of 7 percent, their funding gap would nearly double, to $1.3 trillion, according to Alicia Munnell and her colleagues at the Boston College retirement center. If they assumed a 6 percent return, the funding gap grows to $1.8 trillion.

Even if you believe – as I do – that government workers are not grossly overpaid, you can see that states and local governments have not set aside nearly enough money for their employees’ retirement.

Here are related comments from Ezra Klein, though I see less agreement than he does.  Here is Baker, writing on social security privatization (see point seven), claiming we can expect rates of return on the stock market of four to five percent, not the seven to eight percent in the municipal context.

Good interview with Barry Eichengreen

Via Mark Thoma, it is here, excerpt:

The present bailout attempts have never made sense. Essentially, all Germany and France want to achieve with these measures is to protect their own banks from collapsing. Now people are beginning to realize that there is no way around rescheduling Greece's debt — and that will also involve the banks. For this to happen, there is only one solution: Europe needs to strengthen its banks! Greece lived beyond its means, but in Ireland and Spain it is the banks that are the problem. The euro crisis is first and foremost a banking crisis…

Europe's banks are in far greater danger than people realize. Most people now understand that last year's stress tests didn't tell us much. The tests were a token gesture and lacked realistic scenarios. They completely ignored the liquidity risks that banks could face. Regulators will not be allowed to get away with that this time. However, what would put my mind at rest more would be if the responsibility for carrying out the stress tests went to the European Commission. National regulators are too susceptible to pressure from the regulated.

Former markets in everything

Ice cream made from [human] breast milk has been removed from a central London restaurant on health grounds following complaints by members of the public.

Here is more.  The response?:

Mr O'Connor, said: "We have had an amazing response – many women have come forward and offer to give us milk.

"You can buy alcohol and tobacco but not breast milk in Westminster.

For the pointer I thank John Chilton.