Hiring Women and the Moral Inversion of Economics

In my post on why economics is detested I quoted Arnold Kling:

The intention heuristic says that if the intentions of an act are selfless and well-meaning, then the act is good. If the intentions are self-interested, then it is not good.

In contrast, economics evaluates an act not by its intentions but by its consequences. Since “bad” intentions can lead to good consequences (“as if by an invisible hand”). It’s not surprising that economists often praise what others denounce. Here’s a case in point:

At a Sydney technology startup conference, Evan Thornley, an Australian multimillionaire and co-founder of online advertising company LookSmart (LOOK), gave a talk about why he likes to hire women. “The Australian labor market and world labor market just consistently and amazingly undervalues women in so many roles, particularly in our industry,” he said. When LookSmart went public on Nasdaq in 1999, he said, it was one of the few tech companies that had more women than men on its senior management team. “Call me opportunistic; I thought I could get better people with less competition because we were willing to understand the skills and capabilities that many of these woman had,” Thornley said.

Thornley went on to say that by hiring women, he got better-qualified employees to whom he was able to give more responsibility. “And [they were] still often relatively cheap compared to what we would’ve had to pay someone less good of a different gender,” he concluded. To illustrate his point he showed a slide that said: “Women: Like Men, Only Cheaper.”

For his comments, Thornley’s was labelled a sexist and loudly denounced, especially so by furious women. Strange? Not according to the intention heuristic which judges self-interested actions as bad.

If we judge actions by consequences, however, Thornley should be encouraged, perhaps even praised. Accepting for the sake of argument the truth of the story, it’s Thornley who has overcome prejudice (his or his society’s), recognized the truth of equality and taken entrepreneurial action to do well while doing good. It’s Thornley who is broadcasting the fact of equality to the world and encouraging others to do likewise. Most importantly, the consequence of Thornley’s actions are to increase the demand for women executives thereby increasing their wages.

Women’s wages aren’t pushed down by employers who hire women but by employers who don’t hire women. So why does Thornley get the blame? Instead of denouncing Thornley, whose actions push up the wages of women he hires and the wages of the women he does not hire, why not ask, How can we encourage employers not to overlook talented women and minorities?

For those wanting to break the bonds of discrimination whether they be women, blacks or Dalits, lower wages and a competitive market aren’t the cost of discrimination but the cure. It’s the lower wages that give employers an incentive to overcome prejudice, seek out talent, and experiment with new ways of doing business. And it is the self-interested pursuit of profit that is the surest means to increase the wages of the unjustly ignored and overlooked.


Not quite cynical enough - everyone knows that hiring women is a sacred value. (Just compare the PR value of trumpeting that you make efforts to hire women, vs. trumpeting that you hire men.) So employers are in many cases willing to take a hit on the bottom line to be able to reap the intangible benefits of being seen as upholding sacred social values. But of course they may not want to use those terms, and may want to justify themselves by the cold economic argument that women are undervalued by the market, thus seeming both holy *and* savvy technocratic businessmen!

(That a few fringe feminists were annoyed by him anyway provides almost zero Bayesian information.)

You are right to be skeptical about whether this guy is really being criticized much. The SMH quotes people who do not seem to be fringe feminists, but then they are people I have not heard of. As we all know, some Internet commenter somewhere will always get the wrong end of any given stick, and a journalist trying to manufacture a story can just contact such people for quotes.

Public outrage about racism, sexism, homophobia, etc., is massively overproduced right now. There is *always* some shockingly wrong thing someone has said (and sometimes, what they said is even reported accurately and in context, though that's not the way to bet), which *someone* is using to drum up some outrage.

I gather this is a way to get a lot of people to click through to your article, or to get a lot of people to watch your cable talking-heads program. But there's not much incentive to get the facts right, or put them into context, or to judge whether it's really newsworthy that some guy on the other side of the planet said something that makes you mad in a speech.

One side effect of this is that someone who's uninformed or not really interested in getting the facts straight can cause the internet to fall on some random person, which I guess can be pretty awful for the person who finds himself getting hatemail from thousands of people who know nothing about him. Another side effect is that lots of people like me learn to tune these stories out, since they're so often contentless rabble-rousing.

'Public outrage about racism, sexism, homophobia, etc., is massively overproduced right now.'

Absolutely - it threatens to drown out the mundane reality.

Like this - 'Texas police mistakenly pulled over and arrested a woman, scaring her four children in the car including a 6-year-old boy who exited the vehicle with his hands up.

Dashboard footage from the officers' car in Forney, Tex., was released to TV station WFAA.

The officers were searching for a beige or tan Toyota with four black males after authorities were alerted a gun was pointed out of the window.

Police pulled over a burgundy red Nissan Maxima driven by Kametra Barbour's on Aug. 9 that was spotted in the same area as the other car, the station reported.

Sir, what is going on? Oh my God. You will terrify my children.

Barbour was immediately pulled out of the car and handcuffed with her four children inside.

"Yes sir, what is wrong? My kids. They are 6 and 8 and 10, 9. What are we doing?" she asked. "Sir, what is going on? Oh my God. You will terrify my children."

After his mother was pulled away, 6-year-old Ryan can be seen exiting the car and walking to the officers with his hands up.' http://www.nydailynews.com/news/crime/video-texas-cops-mistakenly-arrest-woman-4-kids-car-article-1.1915009

Just another example of the sort of normal policing Americans apparently expect as taxpayers - note that the cops seem to have a problem distinguishing red from black. Well, at least when it comes to the color of the car, that is.

Or why go back a month? There is also this - 'At the weekend, actress Emma Watson gave a well-argued and reasoned speech to the UN calling for better relations between the sexes. And lo, internet trolls have set up a website threatening to release nude photographs of the Harry Potter star.

The website, www.emmayouarenext.com, features a 4chan logo, a badly rendered snap of Watson apparently crying, and a countdown clock with about three and a half days left to run. Anonymous comments on a moron-infested 4chan.org board said Watson's nude pictures would be leaked online when the countdown reaches zero.

It's likely the dotcom is a hoax set up by bored board kids – there's no evidence Watson has even taken such images, and it wouldn't be the first time someone online has falsely claimed to have celebrity nudes. But given the spate of thefts from Apple's iCloud of famous actresses' private photos, it's not inconceivable the threats may be carried out.

Meanwhile, on Twitter, trolls are tweeting #RIPemmawatson to push bogus reports that the talented British actress has shuffled off this mortal coil.

The trolls' actions merely prove Watson's point. In her speech, given under the auspices of her role as a UN Goodwill Ambassador, she expressed support for the HeForShe campaign, an organization set up to promote equality between the sexes, and said feminism wasn't a force of dividing the sexes but for bringing them together.' http://www.theregister.co.uk/2014/09/23/4chan_trolls_threaten_release_of_emma_watson_nude_pics_after_un_speech/

What does your comment have to do with the discussion? Or is it just another blatant attempt to highjack a thread?

He won again when you (we) replied to him.

"Threat to post Emma Watson nude photos appears to be hoax"


"So why does Thornley get the blame?"

Because he's a white man.

Modern morality really isn't that complicated anymore. As Hayek noted, Lenin liked to point out that central question of politics is always Who? Whom?

Please. "Logic" has no place in discussions of employment discrimination!

I wish this made me laugh instead of cringe

The more nuanced criticism, which I think you're stepping over, is precisely that markets in of themselves aren't sufficient to overcome prejudice and discrimination.

Call it what you will - perhaps that people aren't perfectly rational agents - but at the end of the day "self interested pursuit of profit" has yet to deliver us a more just world.

Further, the view you espouse invites its own prejudice. I can think of a counter argument for which economics (or narrowly defined in the libertarian streak, maximizing individual outcomes) provides little comfort:

- People with higher social status possess a greater marginal value in roles where that social status is useful. Between two equally intelligent candidates, surely the best move is to keep hiring white males for sales and executive roles.

The end result remains discriminatory, even if the intent may not necessarily be there. This doesn't even begin to address the ways in which that people's value heuristic is going to skewed by their own prejudices, the role that systemic incentives have in shaping the lives/positive attributes of the downtrodden, etc, etc.

tldr: the *reasons* why people engage in some activities matter, for there is a wide array of human behaviour that is not well captured in economic models yet still affects outcomes.

(Predicting counter argumentation: the Cold War chestnut cold hearted capitalism has yielded the most fair society to date, even if it's not yet achieved maximal-justice, to which I say: poppycock.

Capitalism has yielded the most _prosperous_ society to date; fortunately, broad prosperity correlates with justice but in of itself contains no moral judgement; it is but a happy coincidence and not a default attribute. Let us keep the prosperity but also be more just)

What then was the most fair society to date?

Due to our lack of solid info, this is partially question-begging. We don't actually know that women are underpaid. And even at the individual level, compensation is not an exact science and it is laden with behavioral economics factors (women don't fight for their value, etc.).

I agree with the other commenters - you haven't shown much. You call it a "more nuanced criticism", but you don't show that markets don't deliver a less discriminatory result. You just assert it, which isn't particularly nuanced.

Capitalism has one again failed to provide more justice, and less discrimination than unicorn utopia.

Perhaps I derailed it, putting too much stock in my ability to put the idea across.

I'm explicitly not critiquing capitalism vs whatever-the-hell, just the notion that capitalism in of itself yields just outcomes.

"I’m explicitly not critiquing capitalism vs whatever-the-hell, just the notion that capitalism in of itself yields just outcomes."

How can you attempt any objective critique with no metrics? There's a reason contrast and compare is taught in school. As triclops stated, your implied standard is "unicorn utopia".

Fair enough. Markets are good at clearing, and this generally makes the whole society work better in the sense that there's more wealth available and people can get things they want by buying them, but this obviously doesn't mean that we'll always be okay with the moral outcomes of markets. This is why we have laws that forbid markets in things like slaves or murder-for-hire.

Andrew' refers to the "royal we" in terms of lack of solid info. Not quite sure what you're referring to?

In my case, I provided a counter example that also fits the argument laid out by Alex above.

Simply this, the raw difference in pay, whatever it is, 77 cents to the dollar largely disappears when we "correct" for some things we know for sure. Then there is the unknown unknowns that we don't even account for.

A raw difference is not a priori proof of discrimination. Assuming it is is just begging the question. You can say that we should compensate women for raising kids, but that is a different discussion. This discussion is whether people get paid roughly their marginal productivity within reason. Remember how women are even more discriminatory against women in the ultimatum game? So, we can't ever really expect them to make identical to men, but what can we expect and are we in the ballpark?

Nobody knows.

the "correction" comes down to normalizing salaries across industry medians, and so the result really is there are certain fields that to this day are considered "women's work". that's a larger discussion.

>This discussion is whether people get paid roughly their marginal productivity within reason.

But pay differentials are not attributed to marginal productivity but rather one's aggressiveness while negotiating. It strikes me as disingenuous to try to claim it's solely down to productivity; that's rarely directly measured via salaries.

The point is, what the employer is doing is exactly how irrational discrimination gets eliminated in the market. People are getting mad at him for helping to solve the problem.

>but at the end of the day “self interested pursuit of profit” has yet to deliver us a more just world.

I can't even imagine the sort of willful historical ignorance behind a statement as idiotic and divorced from reality as this one. What is wrong with you?

Yes, this part was the key fallacy from which he built the entire comment.

Sir, it is this kind of comment precisely that I had in mind when I wrote my pre-emptive reply above.

The crux of it comes down to, nobody is disputing a market's greater efficiency at settling resource distribution preferences. But in of itself that does not guarantee "fairness" or "morality" or "justice". In the end markets are still operated by people, and people still have extra-rational preferences.

See you still assume that all people actually are equal, which isn't true. That's why capitalism doesn't treat everyone equally.

No, this argument is no better.

First, even if you are right that the market alone doesn't suffice this employer's attitudes still work to lessen the wage difference and improve the prospects of women in the workforce. Unless you really think that every employer who simply doesn't discriminate against women without offering an affirmative action bonus to women (maybe can't afford to) is sexist and anti-woman then not discriminating AND observing that women are a particularly good value (sending desirable signals to females in school and other businesses) is surely not worthy of criticism. I mean this is more than many employers who are not thereby criticized as anti-female do.

Second, you *CAN'T* be right about the market not being enough unless you believe that women genuinely provide less economic value in the tech sector (either because of ability, life choices about overtime etc.. etc..). If the provide the same economic value all it takes is for a significant minority of businesses to value earnings over discrimination forcing other businesses to do the same to remain competitive.

The thought counts for a lot of things; you may still do good actions while having poor intentions.

>Second, you *CAN’T* be right about the market not being enough unless you believe that women genuinely provide less economic value in the tech sector

Women right now genuinely have to take time off work in order to produce children, an activity I think we can all agree is ultimately in the public interest. So, I mean, by definition on average in dollar-terms women will always produce less over time.

That said,

>If the provide the same economic value all it takes is for a significant minority of businesses to value earnings over discrimination forcing other businesses to do the same to remain competitive.

Is entirely reliant on the businesses being able to value it appropriately. I posit that a) we're not perfectly rational actors independent of our social context (i.e. prejudice is real) and b) we see this in effect across the board when comparing nominally equally meritorious candidate with different social status.

I forget how big the black/white gap is these days, but I do recall a paper a few years ago noting how "black sounding" names get fewer resume callbacks. That's quite the discount, over time.

Second, you *CAN’T* be right about the market not being enough

Of course he can be right, and is right, as ample historical evidence demonstrates.

Th eworld does not operate strictly according to the assumptions of perfect rationality, and the desire to maximize one's economic position does not trump all other preferences.

Much of the pay gap at the high end (such as people working in technical roles at a technology company) might have something do do with this:


The fellow's notion that men and women are identical other than what "employers choose to pay them" is empirically false. Women's own lifestyle choices, interests and aggression in compensation negotiations also have something to do with it. The bogeyman that "but for" discrimination, all outcomes between different groups would be equal is a tired leftist canard.

The poor fool likely made his statement in an attempt to get social approval for hiring women in technology. Oh well.

To the extent the disparity between women and men in some field is due to irrational discrimination, a rational employer should see this as his competitors leaving money on the table.

To the extent the disparity is due to different requirements (maybe women can do the job fine, but you might need to reorganize your workplace in some ways so that women are happy working there), an employer who realizes this can also gain by figuring out how to do that reorganization, assuming it's cost effective. (If this means everyone gets flextime and maternity leave, it may not be cost effective. If it means you tell the guys in the warehouse to take down the playboy centerfolds tacked up on the wall and stop catcalling the women walking into the office, it's probably pretty cost effective.)

To the extent that the difference is that women are worse negotiators, a rational employer will hire a lot of women but pay them less than the prevailing wage in the industry. He'll be very happy with these equally-hard-working-but-less-expensive employees.

To the extent that the difference is that women can't do the work as well as men, a rational employer will hire few or no women. That's probably the case for jobs involving a lot of heavy lifting, but probably not for most professional jobs.

"take down the playboy centerfolds tacked up on the wall and stop catcalling the women"

As you know emasculated nerds do this shit all the time from their cubicles.

My sister, with a masters in engineering, quit a good job at Motorola when a slightly more senior engineer called her into his office to discuss a project. There was no reason to have the meeting in his office, expect that he resented working with women, and he'd taped a Hustler centerfold on the wall behind his desk so the crotch was just above his head in her eyeline. She got the message, quit, and started law school a couple of months later.

She knew HR and upper management would punish the guy, but that he represented a good chunk of the corporate culture. No rational economics involved, just human beings being human beings. This is the kind of stuff you can't capture in graphs about IQ distributions.

Law school is a scam and probably worse in terms of harassment.

If you don't want to attend a meeting just click tentative in outlook and don't attend or email 2 min before and ask for a dial-in number like a normal person.

Well...I don't know about this. Thornley is not being disparaged for his actions or "self-interested" intentions so much as the opinion he expressed: which appeared to be celebration of unequal pay for women and the advantage that gave him in hiring. It seems like a PR issue rather than anything substantive about his underlying motivation.

As for intentions vs. consequences, nobody evaluates solely based on good intentions. Other qualities are also needed for success. However, intentions are valued because they are predictors of future actions. Suppose you had an employee who stole all the pens out of your office. As a result, you were not able to sign a big contract. Later on, you found out that the contract was fraudulent and would have bankrupted the company. Would you promote this employee due to the wonderfully beneficial consequences of their actions?

"When LookSmart went public on Nasdaq in 1999, he said, it was one of the few tech companies that had more women than men on its senior management team."

In 1999 LookSmart was over $50 a share. Today it's $1.62.

Maybe not the best example.

Or maybe it is.....

Tech bubble.

See guys? I could do this on every comment, but I usually let them pass.

Yeah, still existing now is above-average performance for a 1999 internet company.

The pay gap in this country is around 10% (heard on the radio recently), the cost of hiring women of reproductive age is maybe a little less than that, though as the skill of the person increases, the cost increases (increased cost of training). So the pay gap isn't as large as it sounds in pure economic terms. Perhaps he's found a niche where it is... or perhaps he actively discriminates against the kind of women that would choose to have a family... I know that many employers do, including my own (a small ISV) back when I hired and fired (not my choice - I went into bat for the right candidate, but a woman had to be better qualified to overcome this :-()

However there is a factor - there are a lot less women in IT in Australia, and in some areas they are actively discriminated against (technical stuff). So they expect less. Perhaps he can leverage their lower expectations and tell himself he's doing the world a favour?

Disclaimer: I'm a male white IT manager here in Australia. I do think the market is skewed against women, but $$ is only the result, and I don't think he's on track of the cause.

As an economist, my natural reaction is obviously to very much agree with your point.

On the other hand, one has to realize that what led to the backlash was that implicitly, Thornley is saying that he is paying women cheaper for the same work.

Your view is that by his actions, Thornley is making this wage gap disappear. This should be celebrated by women.

The critics' view is that by making such a comment, Thornley sounds like someone who says: "Wage discrimination is great for my business! I can make more by paying these ladies less!" In other words, he really is a pay discrimination apologist, and this sends an awful signal.

I would venture that none of the two interpretations is better than the other. They stem from the same fact and both are correct. Yet they lead to very different reactions.

in fact, Thornley would arguably be doing even more "good" on this issue if he were to voluntarily pay his female employees the same wage as men. An economist like you is likely to argue: "but wait, this makes no sense, this is not rational!" I agree, but the discussion here is not about rationality; you framed it as a discussion about doing "good", and on that dimension, Thornley would be sending an even better signal by adopting an equal-work-equal-pay scheme.

Ultimately, I think this whole thing shows what economists miss most sorely in order to truly make a difference in this world: PR abilities. As a profession, we do not understand human (and voters') psychology.

Or, and I mean this seriously, other people could get their $#!+ together, and dispense with the luxury of their narcissistic mood affiliation.

"Hire women at the market rate." No one can seriously argue with a person who shouts that from the rooftops. But they'd rather climb up and shout "I love black people!" Oh wait, wrong movie.

"Or, and I mean this seriously, other people could get their $#!+ together, and dispense with the luxury of their narcissistic mood affiliation."

Reset your expectations, look around you and realize that you should realistically consider yourself a "mood taker". Deal with it instead of asking the masses to listen to your "this will be good for you" preacher talk.

Darn, you must be a theorist...

No, I just have no problem telling people to f off when I know they are wrong. I don't expect them to change, thus my question below. But I don't have to adjust to them in most cases either. In this case, I'm not Thornley, (or Larry Summers) so I don't have to beg anyone forgiveness.

"They stem from the same fact and both are correct."

The point is that the two views are not both correct. If all employers became convinced that "wage discrimination is great for [their] business", then that wage discrimination would disappear.

He should have just said that there were all these valuable employees that his competitors had simply ignored.

Or, we can make fun of the people who don't could recognize that that is what he said.

Since, I am told, it is foolish of us to expect them to change, let's just make fun of them.

Exactly, this is what he should have said. But he didn't. Instead he expressed it in terms that most sane people who know about the real world (whether they like it or not) would realize was bound to lead to some backlash. That was my point.

In the end, it's not clear whether he is doing more good than bad, as a whole... Even if the intention is there, social intelligence seems to be lacking.

And yet, having an outrage fest about this guy's comment is:

a. Yelling at the guy who's helping solve the problem you care about

b. Never going to make the world better in any way

c. Creating an incentive for people (especially white men) to never discuss these issues except in empty platitudes, since on most topics, they don't have to wonder if they're somehow going to make a statement that's kinda tone-deaf and thus gets them lots of outrage.

d. A good way to get people like me, who care about making sure women get a fair shake in tech, to tune out nearly all such outrage fests, since most of them are of similarly low quality to this one.

In my experience, women's wages are pushed down by their lack of actual productivity.

Women who produce at the level of their male counterparts are rare. I think the Peter Principle comes in to play too frequently.

'Women who produce at the level of their male counterparts are rare.'

Yep, all those female singers and actresses - just rare examples.

The exception which proves the rule.

Plus, you'd have been better off giving the porn industry as your counter-example - riffs so well off the peter principle

Well, that was two exceptions, to which one can add novelists and poets.

Along with being a politician - Margaret Thatcher bowed to no one but another woman, after all.

And yes, ruling royalty seems to be another one of those exceptions.

Women are a gazillion times more productive - at motherhood

I'm not sure where you've worked, but this hasn't been my experience at all. Not at work, and not in any other environment I've ever been in. Women do most of the housework, sit on most of the committees, do 90% of the work at church, etc., etc., etc.

I'm being serious here, that is making his argument...which I disagree with, for the record.

I will definitely disagree with that statement.
If you do a bit of research beyond your "experience" you will see that the productivity between women and men haven't left much of a gap, and if there is, it would sway to the women;s die being more productive.

I have never heard a truly convincing explanation of why economic thinking is so hard for people? Any ideas?

Honestly? Couple of reasons

First - the teaching of it pretty much sucks. Far too many students mentally glaze over after the 3 chart - too much theory, not enough practical examples in action. This particular case would make an excellent real-life example of economic thinking for students to hash over - instead they'll get boring charts.

Second - solipsistic narcissism doesn't mesh well with market thinking. "It's not fair!!!!" is the prevailing mindset of too many and is quite hard to overcome.

Who has to be "taught" how to think with what amounts to common sense? One instantly sees the problem with fractional reserve banking when it is described purely functionally. Then a subset of the population think FDIC is the only possible solution. Warren Buffett has said that a large portion of the population never gets value investing, but other people he will describe it and they get up and go do it before he finishes a sentence (this is just an illustration, not a critique of EMH, which people also don't grasp as quickly as they should). I think a lot of economics training is probably anti-economic.

Your second point, I think might be right. Maybe there is no unifying theory, but just a cluster of many individual psychological hurdles to getting to the common sense.

Plus "common sense" differs between individuals....what you and I might agree upon would be viewed with utter dismay by a 3rd party

A 3rd reason for the above - economic thinking often involves negative individual consequences and wide spread positive benefits. IOW - when jobs are lost due to global free trades, it's easy to see the individual losses - but much harder to see the net gains elsewhere. (I'm not saying this very clearly I realize). So - oftentimes "economic thinking" comes across as cold and unfeeling - which runs counter to our human emotionalism. We have an instinctive nature to protect the weak and poor - and that's often exactly the wrong thing to do "logically"

By "common sense" I mean pretty fundamental things like Supply-and-Demand. People talk about worker solidarity, but they don't realize they are excluding other workers. Stuff like that.

(and by Supply-and-Demand being "common sense," I mean, I would assume most people have a feeling for it before being exposed to the formal presentation in an economics class)

It's so easy to go off the rails on macro. My daughter is a senior in high school. Actual conversation about her macro class from last evening:

Her: We saw a video from this short guy. He was Clinton's Labor Secretary. Ray Rice?

Me: Robert Reich.

Her: Yeah. He's so smart. He said that it's not true that there are only a few job creators. The middle class is the great job creator.

Me: Really?

Her: Yeah. Because of all the stuff we buy. That's where the jobs come from.

Me: Oh ah. What about saving money? Is that a bad thing?

Her: Yup. Spend it all. Be a job creator.

"The last thing I remember was bringing up Schumpeter and the next thing I know I'm on the elevator floor."

It really doesn't matter if an employer makes a hire based on the perceived utility of that person or if the employer enjoys the employee's taste in music. The criterion used to make the decision is his and if freedom is to mean anything in a free society so it must ever be.

Vulgar Keynesianism, as Krugman called it.

Of course, self-interest as promoting the common good has limits, in particular in sectors like banking which can attract the narcissist who ruins everything for everybody. Up until 2008, the theory was that bankers would self-police and prevent the narcissist from destroying the goose that laid the golden egg. Like all theories, it has limits.

This post reminds me of a recent debate with my friends about the wisdom of boycotting Walmart. The boycotters have great intentions of wanting to help the poor. The consequences, however, of boycotting a business that provides employment and affordable products for the poor is that the poor will have fewer places to work and shop.

The anti-Walmart crowd, however, cannot stop labeling employment as "exploitation". Just as Thornley's critics don't understand that women's low wages are due to those that *don't* employ women, Walmart's critics don't understand that Walmart's employees' low wages are due to those that don't employ those Walmart workers.

Logic is difficult for some people

Oh, I think the critics get that. They think Walmart drives out competitors that would employ Walmart workers under better conditions if Walmart's market share were smaller.

Nice work illustrating cheestrader's point.

The critics' line of reasoning may be wrong, but it is not illogical.

It is highly illogical. Walmart doesn't drive out its competitors, Walmart shoppers do.

Asking people in difficult economic situations to choose to pay a premium to have your own preferences advanced is not only painfully selfish, thinking it might actually happen is highly illogical. The "competitors" aren't there because people with limited means choose to shop at Walmart. The foundations of that choice aren't going away. Pretending the contrary is anymore than fantasy is, to be highly charitable, illogical.

+1. I was going to make the same point, but you made it very well.

I boycott Walmart because their stores depress the hell out of me, and I know people who have worked there who were treated horribly. Economic 'wisdom' doesn't factor into the equation, though it helps that there's almost nothing carried by Walmart that I want in my home.

I will now go immediately to Walmart and buy something I don't need, because my utility increases when your utility decreases.

'economics evaluates an act not by its intentions but by its consequences'

Best satire site on the web.

You're kind of tooting your own horn there, given that it's your contributions that make this the best satire site on the web, but go on. You've earned it.

Sure, in light of the answer below about the goodness of a low wage employer's heart - 'And it is the self-interested pursuit of profit that is the surest means to increase the wages of the unjustly ignored and overlooked.'

Strange how that worked out in the Commonwealth of Virginia - it seemed as if the belief in Jim Crow outweighed employer interest in the pursuit of profit. Almost as if intention and consequence mysteriously aligned in a way that Prof. Tabarrok's version of economics apparently is unable to explain.

Another example of inverted but correct economic thinking is with immigration. The left thinks its fine to take in immigrants when its a humanitarian thing but when an economist correctly argues that immigrants bring massive economic gains he ends up being denounced as an exploiter of the poor.

an economist correctly argues that immigrants bring massive economic gains

I think you mean, "When Bryan Caplan makes the unsupported assertion that there are massive economic gains". See the work of George Borjas. The economic gains accrue to the immigrants themselves and are inconsequentially small for the extant population.

OK. I see your George Borjas and raise you one David Card.

Large + small > 0


Now we are just quibbling over price, right?

You're forgetting about distribution. For a certain segment of Americans, the utility of immigrants enters negatively into their utility function.

BTW - this train of thought is precisely what begets minimum wage hike to $15 chatter - if WalMart and others aren't hiring at a "good wage", we'll make 'em do so - resulting unemployment and higher prices be damned.

It's good if people are unemployed anyway. They can finally take up arts, crafting, or door-to-door canvasing for Democrat politicians.

Thornley's biggest mistake was in his naivete and overall tone deafness. The absolute worse thing you can do with activist feminists is to try to pander to them; it's blood in the water. He should have just hired the women and shut up about it instead of trying to earn feminist street cred. As you point out, you don't get feminist cred by doing things that positively impact women. You get feminist street cred by publicly affirming the ideology of feminism.

Point of info: that is the feminists mistake that he is made to pay for.

My fellow chimpanzees! Lay down your water hoses! (See, he is just the newest chimp who is climbing the ladder for the banana, and we are the chimps who nail him with the water hose simply because that is what has always been done to the chimp who went for the banana, although we no longer remember why)

We judge actions by intentions, not consequences because by valuing intentions t we encourage actions that are more likely to yield the desired consequences in future situations and by understanding intentions we can predict behavior.

If someone does something that has desirable consequences, but with purely selfish intentions, we won't have confidence that we will obtain desirable consequences in the future when achieving them requires the person to make a personal sacrifice.


The "intention heuristic" does not exist in either the psych or behavioral econ literature. Go search the term.


It is a term created, as far as I can tell from CATO sponsored writings beginning in May 2014.


Demand that the author of this post, and those using the term "intention heuristic" point to any, ANY, published psych literature, any tested behavioral econ literature, that uses this term and measures it

Good luck.

Don't be sheep.

Arnold Kling was using it a few years before that.

The general concept has been around for, well, centuries.

“The evil that is in the world comes out of ignorance, and good intentions may do as much harm as malevolence, if they lack understanding.”
― Albert Camus

“Most of the evil in this world is done by people with good intentions.”
― T.S. Eliot

You forgot the best one:

"The road to hell is paved with good intentions." - Mom (a Democrat)

That's an aphorism. And, its also a meaningless statement.

All you need to do is posit your opponent as one having good intentions.

How do you like: "Well meaning persons who pursued austerity in the belief that it would correct the economy brought their economy to its knees. The road to hell is paved with good intentions."

1. I wasn't talking to you.

2. I know it's an aphorism.

3. It's not a meaningless statement.

4. It does not equate to "All you need to do is posit your opponent as one having good intentions." Appalling logic 101 fail there.

5. I like your statement just fine, except for the wild factual inaccuracies.

The meta-point is that Kling used a term (intention heuristic) that lit up neurons in your head related to cognitive biases and sent you scurrying off to Wikipedia. I think the word choice is unfortunate precisely because of the silly chain reaction it set off in your head, but it is quite possible that Kling is simply referring to the true sentiment captured in the aphorisms that are shared above. Sheesh.

Brian, Tell me what the Logic 101 fail is. If the aphorism is: presume good intentions of the person, and then presume the opposite occurs. I say: You have a good intention of turning the economy around with austerity. I say the economy, based on your actions, goes to its knees.

Your turn to show "Appalling logic 101 fail."

Brian, saying it is so doesn't make it so.

That's an aphorism.

Bill: "All you need to do is posit your opponent as one having good intentions. ... Tell me what the Logic 101 fail is."

To be specific, you jumped from: “The road to hell is paved with good intentions.”

To: "All you need to do is posit your opponent as one having good intentions."

That's a Converse Error; and it is a basic logical fallacy.


JW, The premise was that having good intentions. It is not the converse, but the premise.

You can see it if you state the premise of the syllogism, the middle term, and the conclusion. I did not say that bad results mean there were good intentions.

It is not a behavioral econ or a psych term.

If you want to call it some guys opinion, call it that. It is not a measured heuristic.

By the way, to help reduce some of the missing knowledge or background in psych or behavioral econ in this post, here is a link to the recently published 2014 DICTIONARY of BEHAVIORAL ECONOMICS which summarizes the literature and defines the terms, and links to the psych research on heuristics:

Here is the link: behavioraleconomics.com


Now, if you want heuristics from philosophers or those influenced by. say, Nietzsche, i understand that Adolph Hitler had some untested heuristics as well.


D, Please point to or quote the section in this reference that you believes supports the claim of the existence of this heuristic. And, then look up heuristic means. Since you also went to wiki, heuristic is defined as "experienced based techniques for problem solving, learning, and discovery that finds a solution which finds a solution which is not guaranteed to be optimal, but good enough for a given set of goals."

Come back and let me know when you find it.


Nothing in the definition you posted of "heuristic" says that only behavioral economists or psychologists are authorized to identify one.

Someone has to prove something is a heuristic, whether a behavioral economist or psychologist, before labeling it as such. Why don't you just call it a slogan.

Otherwise, its just propaganda, sloppy thinking, or itself a heuristic or itself...something designed to shorten the thinking process to get the person to the desired result.

So, in that sense, I suppose a fictional, made up and unsupported term like "intention heuristic", in the hands of propagandists, is a heuristic, and probably one trying to ride on the use of that term in other more scientific disciplines.

Oddly, sometimes people have conversations in which the terminology and definitions of your field are not assumed background knowledge.


First, I think there's a terminology issue here. I'm used to thinking of heuristics as being ways of quickly getting a usually-good answer to some factual question--which line is longer, what does that person believe, which of these claims is more likely, etc. But here, we're talking about a heuristic for answering a moral question--specifically, how I should evaluate the speaker in moral terms. It's going to be much harder to evaluate this kind of heuristic experimentally, because there's not a universally accepted way to decide the underlying moral question. (By contrast, we can know the right answer to questions like "which of these claims is more likely" using probability theory.) I'm wondering if there's another term that is used for heuristics for moral questions.

Second, why on Earth would you start shouting about FRAUD ALERT when your actual complaint is that Kling and Cowan aren't using their terminology quite the way you'd like to, or are claiming the existence of a heuristic which hasn't been experimentally demonstrated? I get why you wanted to call this out, and it's worthwhile to do so. But there's no way it makes sense to call this fraud.

Wait, do you have a point? "Intention heuristic" is a shorthand used by a few economists to describe a certain phenomenon. Does the term misleadingly describe the phenomenon? If not, who cares?

I care. People are mislead.

Just call it a slogan. A catchphrase. Don't pretend it is what it isn't.

But it's not a slogan or catchphrase. It's a proposed model of the way many people think.

Jesus, but you're full of yourself.

What is an untested model of the way people think.

Its called opinion. Belief. Garbage.

Dont glorify it by calling it a heuristic, which implies it is some tested measurement of default thinking.

You are not free to pollute using language loosely.

Bill, I'd worry about real issues over what someone chooses to call a model.

Calling something a heuristic doesn't sanctify it in any way. I mean we have made up law's all over the place: Godwin's Law, Poe's Law, etc...

And personally, I think it's quite a decent model. It explains why people trust government intervention over commercial enterprise.

My main complaint is that economists fail to understand the importance of this heuristic and tend to overweight the importance of results and underweight the importance of means, which is fine if you're dealing with homo economus, and not so good if you're suggesting policies for human beings.

Tom, He could call it HIS unproven model, but labeling something as a heuristic is different. Heuristics mean something, or they mean nothing. Either the author knows what the term means and how it is used, or he doesn't. I suspect he does, and simply wanted to cloak his opinion in something that appeared to be proven.

Tom, this is not a heuristic. Call it his belief. His faith. His opinion.

Why would you look at the psych literature for evidence? Did you miss repligate? There are zero trustworthy results right now in the experimental psych literature, the entire field is fraudulent.

Your faith in your beliefs must keep you happy.

Evidence of what?

And society can make it more costly to exhibit behaviors that are prejudice, by sanctioning firms that discriminate using lawsuits or denial of government contracts.

Society can't do that, only the government can. It's not the same thing.

AFAIK, gender arbitrage has been a thing for a long time, especially in Asia. University admission is based on test scores, but hiring is extremely discriminatory. Western firms in Asia take advantage of the fact that the top female graduates receive few offers from Asian firms and often prefer to work at Western ones, because they provide better opportunities for advancement.

The LookSmart Wikipedia page describes neither a successful nor innovative company, but a 1999 dot com startup that financially floundered so badly during the dot com bust, that it replaced Evan Thornley. It also makes no mention of continuing Thornley's HR policy of hiring more women than men.

Hmm... where are the "women who loudly denounced him" including "many women in the audience"? I see two guys writing about this "controversy".

Warning: this is going to be less interesting than a Steve Sailer comment, but here goes.

You are pretty sure a dude isn't going to get pregnant. You also assume he's going to prioritize work over family obligations. You are pretty sure the dude isn't going to take a few years off to raise kids. Work is competitive, and you aren't sure the dude is going to be the champion of the work tournament, but you are pretty sure he isn't going to end up in second place right from the starting gate. What is the net present value of these statistical uncertainties?

Oh, and let's say you are dude's wife. How does this affect your domestic division of labor choices?

But that is a market failure, because, if women start to behave like men and forget about kids, then....

This reminds me of my critique of blaming the employers of low-wage workers for their low wages. Of all the people in the world, the low-wage worker's employer is least responsible for his lot, because the employer offered the worker a better job than anyone else was offering.

However, the employer is determined to be guilty through the profit heuristic: In any economic transaction deemed unsatisfactory to a leftist, the nearest person making a profit is to blame. In absence of any profit, the income heuristic comes into play, and the nearest person with an income greater than the leftist ever expects to make is guilty.

'Of all the people in the world, the low-wage worker’s employer is least responsible for his lot, because the employer offered the worker a better job than anyone else was offering.'

Interesting on how that works out for high wage workers - but then, I'm sure that the employers of low wage workers are not at all motivated by the sort of greed that one sees in the following case. 'Four major Silicon Valley companies have formally agreed to pay $324.5 million to settle claims brought by employees who accused them of limiting competition by colluding not to poach each other's talent.

The settlement, between Apple Inc, Google Inc, Intel Corp, Adobe Systems Inc and roughly 64,000 workers, was disclosed in papers filed late on Thursday with a federal court in San Jose, California.' http://uk.reuters.com/article/2014/05/23/us-apple-google-settlement-idUKBREA4M0MY20140523

Consequences, intentions, law breaking - that's why judges make decisions such cases, and not economists.

I didn't know that Wal-Mart had near-monopsony power in the no-skills employment market. I'll bow your to experience on this question, PA.

If the employers of low-wage workers engage in some kind of cartel to keep their workers' wages low, then they are, in fact, partly responsible for the low wages of their employees. That's what those tech companies appear to have done.

Any company in America can fire all its men, hire women to replace them and save 23% on labor cost with those women doing the EXACT SAME JOB as the man that was just fired.

Statisticians of the world unite!

Economics is detested because people feel uncomfortable with other (autistic) people like Cowen and Tabarrok trying to measure the value and efficacy of everything they do. It's a natural and normal reaction. Becker was the harbinger of the technocratic geekocracy.

Well. Alex has made the case extremely well that pay for workers is unrelated to the benefits the workers provide to the business. Wages are not constructed on a rational basis.

Rather wages are paid in a conspiracy of men that is effectively "I will overpay you in the expectation you will overpay other men and together you will support me continuing to be overpaid in the future."

Neither link quoted any criticism from a woman or otherwise. Alex seems to be making a little too much of this.

Perhaps economists make the mistake of measuring everything in $. Perhaps women don't just want to make more money, but to be treated as equals. The CEO could have explained his business plan in a less crass manner and people who aren't economists think he should have.

Economists are very smart because they are able to parse out the important facts from a given situation without getting bogged down in merely human values. So when a CEO gloats that he is able to get the same amount and quality of work as his competitors, at less cost, because he is able to pay women less, humans onlookers might object, thinking that even though he did the economically rational thing, he did the morally wrong thing by taking advantage of them. The well trained economist's mind though, immediately goes in to gear. Whirring and buzzing, the pulleys and belts spinning at a frantic pace, his rationalization engine goes into overdrive to find the hidden counterfactuals and extenuating circumstances that might absolve the capitalist of moral duty. Even better, find the counterfactual that turns avarice into charity! If he hadn't employed them at the less than "fair" (whatever that means) wage, they would probably be stuck at home cooking and ironing in misery, confined merely to daydreaming about powerpoint slides and HR meetings, the poor wretches.

I think paying someone more than necessary is itself immoral. And I think EvilPutin is kind of thick-witted.

Wow! Look at all those angry women! First, there's the world-famous feminist "Ben Grubb", and then there's well-known she-devil "Mat Beeche" of startupdaily.com.au. And don't forget those "many women" that Mr. Beeche speculated might have been furious! Meanwhile, don't get me started on those crazy women in Grubb's article, saying such menacing things like "his heart was probably in the right place" and "I'm glad that there's finally someone saying it out loud". And just look at those angry tweets posted alongside the article, such as Maxine who was obviously blistering when she dug into Thornley saying "Epic talk by Evan Thornley @ Sunrise Conference. What a gun.", and Zhoe who stooped so low to say, "he is my favourite so far!". Wow! The backlash truly is intense.

This blog has certainly caused a stir in the "gender-war"
I loved the blog.
I don't really care what the term "heuristic" means and whether it was said in the right context or not. HOWEVER on the topic of Thornley- my personal opinion is that He is a legend, and very far from sexist. I personally also work in a company in South Africa that consists out of 90% women. I don't have anything against men, but i do think that women are in some cases more productive and i think they are being undervalued.
Statistics show that women are being underpaid, and i fully agree. In most of the companies- if it was between a woman or male to get promoted- it will always be the guy.
Listen to this-
"South Africa has an overall gender gap of 25%, as measured by economic participation and opportunity, education, health and political empowerment, yet its gender pay gap remains static at 35%.

“This means women effectively earn in a full year what men earn in eight months,” says Sandra Burmeister, CEO of executive search firm Amrop Landelahni.

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