Month: August 2022

U.S.A. facts of the day

In 2021, the average American could expect to live until the age of 76, federal health researchers reported on Wednesday. The figure represents a loss of almost three years since 2019, when Americans could expect to live, on average, nearly 79 years.

The reduction has been particularly steep among Native Americans and Alaska Natives, the National Center for Health Statistics reported. Average life expectancy in those groups was shortened by four years in 2020 alone.

The cumulative decline since the pandemic started, more than six and a half years on average, has brought life expectancy to 65 among Native Americans and Alaska Natives — on par with the figure for all Americans in 1944.

Here is more from the NYT.  Do note that Native Americans are generally considered to have done OK in terms of their vaccination rates.

The temporary popularity of Caplanian views on higher education

Bryan Caplan as you know argues that even the private return to higher education isn’t what it usually is cracked up to be, especially since large numbers of individuals do not finish with a four-year degree.  Susan Dynarski (tenured at Harvard education, but an economist), writing in the NYT, seems to have started flirting with this view:

…a majority of people holding student debt have moderate incomes and low balances. Many have no degree, having dropped out of a public college or for-profit vocational school after a few semesters. They carry little debt, but they also do not get the benefit of a college degree to help them pay off that debt.

Defaults and financial distress are concentrated among the millions of students who drop out without a degree. The financial prospects for college dropouts are poor; they earn little more than do workers with no college education. Dropouts account for much of the increase in financial distress among student borrowers since the Great Recession.

And dropout is not at all rare. A bit less than half of college students don’t earn a bachelor’s degree. Some people earn a shorter, two-year associate degree. But more than a quarter of those who start college hoping to earn a degree drop out with no credential. A full 30 percent of first-generation freshmen drop out of four-year colleges within three years. That’s three times the dropout rate of students whose parents graduated from college.

I’ve seen modest variants on those numbers, but the general picture is broadly accepted.  Now here is Dynarski’s Congressional testimony from last summer:

College is a Great Investment

A college education is a great investment. Over a lifetime, a person with a bachelor’s degree will earn, on average, a million dollars more than a less-educated worker. Even with record-high tuition prices, a BA pays for itself several times over.

She is quite clear in the former NYT piece that she has changed her mind, so there is no “gotcha” here.  But clearly her views are evolving in Bryan’s direction.

In terms of policy, Dynarski notes that more than a quarter drop out of college with no credential.  Shouldn’t we restrict loan forgiveness to them?  Doesn’t that at least deserve discussion?  Or should we just go ahead and grant forgiveness to those with the “great” returns as well?  Her change of mind concerns the higher-than-expected problems of the non-finishers, not that she has seen new and inferior income numbers for the successes.  (In fact since the numbers for the average return haven’t changed, being more pessimistic about the losers has to mean being a bit more optimistic about the successes.  That should make us all the more interested in targeting the forgiveness.)

Why are we not allowed to know what percentage of the forgiveness beneficiaries fall into the “didn’t finish” category?  What should we infer from the reality that no one is reporting that statistic?  Is that good news or bad news for the policy?

What does Dynarski think is the marginal return from trying to finish college?  Are they really so positive for the marginal student?  What is the chance of the marginal student finishing?  The cited figures are averages, presumably for the marginal student the chance of finishing is much worse.  Presumably she is pessimistic about the nature of the college deal for the marginal student?

Now I know how these discussions run.  Suddenly there is plenty of talk about how we should make it easier for people to finish, perhaps by offering more aid.  As someone who teaches at a non-elite state university, I do understand what is going on with students who need to drop out to take care of family, and so on.  Still, in the meantime should we be encouraging more marginal students to try their hand at college? 

Yes or no?

That question runs against the prevailing mood affiliation and good luck trying to get a straight answer.  In the meantime, the world is taking an ever-so-temporary foray into the views of Bryan Caplan.  Let’s see how long it stays there.

What is the equilibrium in higher education policy?

That is the topic of my Bloomberg column, here goes:

Critics of the policy see it as rewarding Democratic supporters and interest groups, including university faculty and administrators but most of all students. This perception, regardless of whether it’s true, will influence political behavior…

Republicans, when they hold political power, are likely to strike back. They may be more interested in draining the sector of revenue. The simplest way of doing this would be to limit tuition hikes in state universities. De facto tuition caps are already common, but they may become tighter and more explicit, especially in red and purple states. Such policies might also prove popular with voters, especially during a time of high inflation.

A second set of reforms might limit the ability of public universities to spend money on hiring more administrators, including people who work on so-called DEI issues. Given the fungibility of funds, and the ability of administrators to retitle new positions, such restrictions may not be entirely enforceable. Still, they would mean less autonomy for public universities as policy in many states tried to counteract their current leftward swing.

Another possible reform could tie funding for a school or major to the future earnings of graduates. That likely would penalize the humanities, which already tend to be one of the more politicized segments of the modern university…

Longer-term, a future Republican administration might decide to restructure the entire system of federal student loans. How about making student loans dischargeable through normal bankruptcy proceedings? That might sound like a pretty unremarkable idea to most voters, and many economists, including Larry Summers, favor it. It would also allow for some measure of debt relief without extending it to the solvent and the well-off.

Still, the long-term consequences of this reform would probably lead to a significant contraction of lending. Most enrolled students do not in fact finish college, and many of them end up with low net worth yet tens of thousands of dollars of debt. (By one estimate, the net worth of the median American below age 35 is $13,900.) So the incentives to declare bankruptcy could be relatively high. This would make federal student loans a more costly and less appealing proposition. Private lenders would be more wary as well. Higher education would likely contract.

The net effect of the president’s loan-forgiveness initiative — which is an executive order and thus does not have an enduring legislative majority behind it — could amount to a one-time benefit for students, no impact on rising educational costs, and the intensification of the culture wars over higher education.

Sad but true.

The Price of Power and the Power of Prices

As Europe’s energy crisis intensifies we are seeing calls for price caps, rationing, and command and control.

What’s happening: A range of government-imposed restrictions, akin to the kind of restraints during wartime, here is a sampling.

In Germany:

  • Cologne’s magnificent cathedral — normally lit throughout the night — now goes dark over night. Public buildings, museums and other landmarks — such as the Brandenburg Gate in Berlin — will no longer be illuminated overnight either.
  • In Hanover last month, hot water was cut off at public buildings, as the city seeks to cut consumption by 15%.
  • The southern city of Augsburg decided to turn off traffic lights.


  • Congress agreed to temperature limitations — air conditioning no cooler than 27 degrees Celsius, or nearly 81 degrees Fahrenheit.
  • After 10 p.m. shop windows and unoccupied public buildings won’t be lit.


  • Air conditioning in schools and public buildings has already been limited in what the government labeled “Operation Thermostat,” starting in May.


  • Shopkeepers will now be fined for keeping doors open and air conditioning running, a common practice.
  • Illuminated signs will be banned between 1 a.m. and 6 a.m.

The Economist, however, reminds us of the power of prices. Namely, price caps can backfire but price increases can be combined with cash transfers can protect vulnerable consumers while maintaining strong incentives to reduce consumption and find substitutes:

How households respond to enormous price shocks has rarely been studied, owing to a lack of real-world data. One exception is that produced by Ukraine, which Anna Alberini of the University of Maryland and co-authors have studied, looking at price rises in 2015 after subsidies were cut. They found that among households that did not invest in better heating or insulation a doubling of prices led to a 16% decline in consumption.

Policies to help households cope with high prices have also been studied—and the results are bad news for politicians capping prices. In California, where a government programme cut the marginal price of gas for poor households by 20%, households raised their consumption by 8.5% over the next year to 18 months. Ukraine has found a better way to help. Households struggling to pay their bills can apply for a cash transfer. Since such a transfer is unrelated to consumption, it preserves the incentive for shorter showers, and thus does not blunt the effect of high prices on gas use. Another option is a halfway house between a price cap and a transfer. An Austrian state recently introduced a discount on the first 80% of a typical household’s consumption, which means people retain an incentive to cut back on anything over that.

…Households are not the only consumers of gas. Early in the war, manufacturers and agricultural producers argued against doing anything that might risk supplies, since production processes took time to alter and output losses could cascade through the economy. But initial evidence from the German dairy and fertiliser industries suggests that even heavy users respond to higher prices. Farmers have switched from gas to oil heating; ammonia, fertiliser’s gas-intensive ingredient, is now imported instead of being made locally.

Over time, households and industry will adapt more to higher prices, meaning that with every passing month demand for gas will fall.

The power of prices reminds us that carbon taxes can be effective at surprising low cost if we give them a chance to operate.

India forecast of the day

India is likely to be the fastest-growing  in the Asian region in 2022-23, according to analysts at Morgan Stanley, who expect the expect India’s gross domestic product (GDP) growth to average 7 per cent during this period – the strongest among the largest economies – and contributing 28 per cent and 22 per cent to Asian and global growth, respectively. The Indian economy, they said, is set for its best run in over a decade, as pent-up demand is being unleashed.

Here is further detail.  How many other countries can expect to average even five percent growth over the next decade?  Bangladesh?  A few of the smaller nations in West Africa?  Who else?  Possibly Indonesia?  It is hard not to be (relatively) optimistic about India, economically speaking at least.

The wisdom of Garett Jones

Of course this Bloomberg column was inspired by Garett’s work, not to mention Paleo-Caplanianism!  Here is one excerpt, with the focus being on the annoying tendency to label various policies “anti-democratic”:

The danger is that “stuff I agree with” will increasingly be labeled as “democratic,” while anything someone opposes will be called “anti-democratic.” Democracy thus comes to be seen as a way to enact a series of personal preferences rather than a (mostly) beneficial impersonal mechanism for making collective decisions…

It is also harmful to call the Dobbs decision anti-democratic when what you’re really arguing for is greater involvement by the federal government in abortion policy — a defensible view. No one says the Swiss government is “anti-democratic” because it puts so many decisions (for better or worse) into the hands of the cantons. And pointing out that many US state governments are not as democratic as you might prefer does not overturn this logic.

It would be more honest, and more accurate, simply to note that court put the decision into the hands of (imperfectly) democratic state governments, and that you disagree with the decisions of those governments.

By conflating “what’s right” with “what’s democratic,” you may end up fooling yourself about the popularity of your own views. If you attribute the failure of your views to prevail to “non-democratic” or “anti-democratic” forces, you might conclude the world simply needs more majoritarianism, more referenda, more voting.

Those may or may not be correct conclusions. But they should be judged empirically, rather than following from people’s idiosyncratic terminology about what they mean by “democracy” — and, by extension, “anti-democratic.”

I am worried about some of the increasing polarization on this issue.  If you are on “the Left,” and you think various social and policy trends are so immoral, how is it exactly that you avoid becoming yourself “anti-democratic”?  Even though at the same time you are cursing everything you don’t like as “anti-democratic” too?

The Distributional Effects of Student Loan Forgiveness

Even worse than you thought:

We study the distributional consequences of student debt forgiveness in present value terms, accounting for differences in repayment behavior across the earnings distribution. Full or partial forgiveness is regressive because high earners took larger loans, but also because, for low earners, balances greatly overstate present values. Consequently, forgiveness would benefit the top decile as much as the bottom three deciles combined. Blacks and Hispanics would also benefit substantially less than balances suggest. Enrolling households who would benefit from income-driven repayment is the least expensive and most progressive policy we consider.

That is from a working paper by Sylvaine Catherine and Constantine Yanellis.  It is sad that such material even needs to be posted.  I hope you are not taken in by Dube-ous ideas to the contrary!

Monday assorted links

1. “…university undergraduates in an experimental setting are not able to comprehend the Title IX policies designed to protect them.

2. Environmental policies in ancient Athens.

3. Are thousands of Japanese making a transition to Jainism?

4. Nihal Sarin: India’s speed chess genius.

5. Sedona, AZ will pay local residents not to use homes as Airbnb rentals.

6. An audio introduction to Nick Bostrom.

7. Oxford, ancient and modern.

8. “Our analysis of open-source data reveals China’s strategic points of interest: locations of economic importance, potential military locations, and key digital infrastructure such as submarine cable landing stations.

A college degree ain’t what it used to be

Labor market outcomes for young college graduates have deteriorated substantially in the last twenty five years, and more of them are residing with their parents. The unemployment rate at 23-27 year old for the 1996 college graduation cohort was 9%, whereas it rose to 12% for the 2013 graduation cohort. While only 25% of the 1996 cohort lived with their parents, 31% for the 2013 cohort chose this option. Our hypothesis is that the declining availability of ‘matched jobs’ that require a college degree is a key factor behind these developments. Using a structurally estimated model of child-parent decisions, in which coresidence improves college graduates’ quality of job matches, we find that lower matched job arrival rates explain two thirds of the rise in unemployment and coresidence between the 2013 and 1996 graduation cohorts. Rising wage dispersion is also important for the increase in unemployment, while declining parental income, rising student loan balances and higher rental costs only play a marginal role.

That is from a new NBER paper by Stefania Albanesi, Rania Gihleb, and Ning Zhang.

What are higher university endowments good for?

Estimates reveal that growing endowments generate large and persistent increases in spending overall and for instruction, student services, and administration in particular. However, wealthier colleges and universities do not increase the number of students they serve or the fraction of students receiving aid, and only modestly increase the generosity of aid packages. Instead, these institutions offset higher freshman yield rates by becoming more selective and enrolling fewer low-income students and students of color. Overall, colleges and universities appear to use greater endowment wealth to increase spending and to become more selective, resulting in higher institutional rankings, but do not increase the size or diversity of their student bodies.

Here is the full paper by George Bulman.  Ahem!  Amazing what a con they are pulling off…

Indonesia is doing OK

The rupiah, down only 3.8%, is the third best-performing Asian currency this year. It’s all the more remarkable considering Bank Indonesia has resisted following the Fed and only began raising interest rates this week, by a modest 25 basis points.

Its stock market is another winner. The iShares MSCI Indonesia ETF is up 5.6% this year, beating the S&P 500 Index’s 13.1% drop. As a result, even though foreigners have been selling holdings of government bonds, robust equity demand has helped stabilize Indonesia’s portfolio flows…

The conflict in Ukraine has pushed up prices of palm oil and coal, which Indonesia exports. These two commodities alone improved the country’s current account by 2.4% of its gross domestic product since 2019, with one-third coming from palm oil and the rest from elevated coal prices, according to HSBC Holdings Plc. Indonesia now has a solid current-account surplus for the first time since 2011.

Here is more from Shuli Ren of Bloomberg.

Sunday assorted links

1. Lex interviews Magnus.  Who claims he has impostor syndrome.

2. “She had come to exemplify a medical practice common among her generation: the simultaneous use of multiple heavy-duty psychiatric drugs.” (NYT)

3. Christian Zeal and Activity (John Adams).

4. The ongoing fight for octopus rights (NYT).

5. Why are there no awesome Silicon Valley types in their 20s right now? (FT) Has the well run dry?  Or something else?

6. Public sector R&D and growth.

7. New inhaled Covid-19 therapeutic blocks viral replication in the lungs.

What should I ask Mary Gaitskill?

I will be doing a Conversation with her.  Here is Wikipedia:

Mary Gaitskill (born November 11, 1954) is an American novelist, essayist, and short story writer. Her work has appeared in The New YorkerHarper’s MagazineEsquireThe Best American Short Stories (1993, 2006, 2012, 2020), and The O. Henry Prize Stories (1998, 2008). Her books include the short story collection Bad Behavior (1988).

I consider The Mare, Veronica, and Lost Cat (among others) to be some of the best and most insightful American fiction of recent times.  She is um…frank, and has held a series of actual jobs in her lifetime, including stripper and sex worker.  She was also a teenage runaway.

Here is the The New Yorker covering her new Substack.  Here is a Guardian profile:

Mary Gaitskill’s fiction is often called cold, or even brutal, but I have always loved it for nearly opposite reasons: its tender attention to the complexities of human emotion, and the compassion it coaxes from clear-eyed perception.

So what should I ask her?