I’ve been teaching hundreds of students the principles of economics using Modern Principles of Economics and its online course management system and the response has been excellent. Most students like the class but what always surprises me is that some students like the online class better than any other class they have ever taken. A good lesson about different learning styles. Some reviews:
- I wanted to say thank you for the way you teach your class. I just started it and it is way better than I expected. The videos you made are why I’m thanking you. In high school I would always have to go home and watch videos explaining what the teacher taught us….your class is already the best class I have taken in my life because it fits the way I learn. I’ve never really written an email like this so forgive me if it breaks the usual business casual email approach. Thank you again!
- I am a student a George Mason…I would like to say that these classes are the best online classes I have taken and wish all my classes would be like this! Especially with Mason being mostly online and all of my classes being online this semester, I think that this class’s design should be an outline for other online classes. The videos themselves are very well edited and can be fun to watch! Instead of just watching a PowerPoint online and taking notes, being able to see the professor speak, while incorporating graphs, and even animations makes the class much more enjoyable, and in my case easier to absorb. Another aspect I wish all online classes did is giving quizzes along with the videos to check information learned. Speaking from my experience in your previous class the “Learning Curve” and other pre-test activities did wonders for me when preparing for chapter tests and exams. Overall, these classes are a great experience and I look forward to this semester in Econ 104! As a little side note, my favorite videos/lessons from last semester where the ones where you and Professor Cowen would debate over subjects learned in class. It gave useful insight and thinking to both sides of the argument.
- I really liked how it was set up with the videos. As someone who has diagnosed ADHD, this type of online class, and class in general has made it so much easier for me to constantly go back on videos to hear what the professors were saying and trying to teach us. Honestly best class experience I’ve ever had, and I wish more were like it.
- Prof. Tabarrok’s videos that accompanied our course material were of high quality. Even though this was a distance learning course, I felt that I got an in depth lecture for each section of the course. I did not feel that I was left to read the book myself; it was like I had great in-person lecture that I could re watch again and again.
- Since this is an online course, I expected it to be very short cut and not interactive. This course was the total opposite. Being able to watch videos about professors genuinely teaching economics and answering questions while following the video was so helpful.The aspects of the course allowed me to connect with different imperative issues & solutions across the world.
I’d shout it from the rooftops but my voice has become hoarse.
WBUR: In August, more than 100 New England colleges launched a massive experiment: What happens if you bring students back to petri dish campuses in the midst of a pandemic, but put huge energy into prevention culture and testing them once or twice a week?
The colleges partnered with the Broad Institute, a research giant that pivoted to mass coronavirus testing, in hopes the proposition could work well enough to salvage at least a partially on-campus fall.
As many students head home or settle back into their childhood bedrooms, the interim results of the experiment are now clear. The data show “that asymptomatic testing does work,” says Dr. Paula Johnson, president of Wellesley College and a leader of the group that put together the partnership. “And it works in terms of identifying cases quickly, paired with aggressive contact tracing. You identify a case, you identify the contacts. You pull them out of the system. And that really helps to prevent the spread.”
NYTimes: Amazon added 427,300 employees between January and October, pushing its work force to more than 1.2 million people globally, up more than 50 percent from a year ago. Its number of workers now approaches the entire population of Dallas.
…The scale of hiring is even larger than it may seem because the numbers do not account for employee churn, nor do they include the 100,000 temporary workers who have been recruited for the holiday shopping season. They also do not include what internal documents show as roughly 500,000 delivery drivers, who are contractors and not direct Amazon employees.
Such rapid growth is unrivaled in the history of corporate America….The closest comparisons are the hiring that entire industries carried out in wartime, such as shipbuilding during the early years of World War II or home building after soldiers returned, economists and corporate historians said.
Comparing Amazon’s surge in hiring to that which occurred in wartime is a good reminder that the government failed to create a surge in contract tracers despite the fact that contract tracing saves lives.
I applaud Amazon’s ability to respond to crisis/opportunity. I do, however, worry a little about this but not too much since it’s obviously false.
To grow so much, Amazon also needs to think long term, Ms. Williams said. As a result, she said, the company was already working with preschools to establish the foundation of tech education, so that “as our hiring demand unfolds over the next 10 years, that pipeline is there and ready.”
There is something to be said for tearing it all down and starting again. The flat tax, for example, has long been debated but has never been fully adopted in the United States. After the end of communism, however, many countries in Eastern Europe and Central Asia adopted flat taxes. Brian Wheaton, on the market from Harvard, has a very nice paper which, somewhat surprisingly, is one of the first to really dig into this series of natural experiments.
Between 1994 and 2011,twenty post-communist countries introduced such a tax at varying—but typically quite low—rates as a percentage of income.At their peak, nearly all Eastern European and Central Asian countries had a flat tax in effect.Since 2011, on the other hand, some of these countries have repealed their flat taxes and reverted to a progressive system of income taxation.These policy changes represent an ideal natural experiment through which to test the multitude of claims pertaining to flat taxation.
Using quarterly GDP data on this panel of flat-tax adopters and a difference-in-differences identification strategy, I find that the adoption of a flat tax structure has a strongly significant positive effect of 1.36 percentage points on GDP growth…[lasting about a decade].
Wheaton finds that it wasn’t just lower average tax rates which mattered, holding average rates constant a flatter tax-structure also led to more capital investment and moderately greater labor supply.
Wheaton has many other interesting papers.
‘If rapid antigen tests are so good how come other countries aren’t using them’? is a question I get asked a lot. In fact, India authorized these tests months ago. Slovakia tested most of their population using antigen tests. Germany is using them to protect nursing home residents. Lufthansa is trialing rapid antigen tests on special flights. Rapid antigen tests are now beginning to be available more widely in Europe. Here from a twitter thread is a picture of what they look like, it’s just a paper strip inside. You swab your nose (no need for deep cleaning), swirl the swab in a tube with some liquid and then squeeze a few drops of the liquid onto the end of the tester. Results in 15 minutes. They cost about $8 a test.
Why are these tests important? The CDC now says that asymptomatic or pre-symptomatic people account for a majority of infections. Do you get it? How many people without symptoms will get a COVID PCR test, which can be time consuming and expensive? (And how many PCR tests can we run in a timely fashion if people without symptoms get many more tests?) Not that many. But many people without symptoms would get a $8 or less, at-home, 15 minute test. And if some of those people discover that they are infectious and self-isolate for a few days we can drive infection rates down.
We should have had an Operation Warp Speed for tests. We still need funding for a mass rollout and, of course, the FDA needs to approve these tests! (Here is Michael Mina in Time fulminating at the FDA holdup.)
By the way, more than 2800 Americans have died of COVID since Pfizer requested an Emergency Use Authorization for their vaccine. The FDA meets Dec. 10.
Addendum: Here’s me explaining why Frequent, Fast, and Cheap is Better than Sensitive and the difference between infected and infectious.
The Trump tariffs are the biggest change in trade policy since Smoot-Hawley. Whatever the economic merits of the Trump tariffs, they make great material for textbook authors! As we illustrate in the new edition of Modern Principles, drawing on a great paper by Flaaen, Hortaçsu and Tintelnot. The excerpt illustrates our approach throughout our textbook, Modern Principles, modern applications.
Now that you know how to analyze international trade using demand and supply, let’s see how well the theory holds up by looking at what happened in the market for washing machines after the Trump tariffs were put into place in January of 2018. The tariff came in two parts. The first 1.2 million washing machines were taxed at a rate of 20% and all remaining imports were taxed at a rate of 50%. The tariffs were put in place for three years with slight declines (to 18% and 45% and 16% and 40%) in the 2nd and 3rd year respectively. A 50% tariff on washing machine parts was also included to prevent manufacturers from avoiding the duty by shipping parts to the United States for quick assembly.
Before the tariffs were put into place, about 3.8 million washing machines were imported per year. Once the tariffs began, imports declined by 1.2 million units to approximately 2.6 million washing machines per year. Figure X shows the price index for laundry equipment in the United States. Prices for washer and dryers had been declining since at least 2013, but the moment tariffs were imposed prices jumped dramatically. (Slight declines in prices were also seen in 2019 when the tariff rate decreased modestly).
Economists estimate that the tariff increased the price of washing machines by about 12%. That’s actually a smaller increase in price than one might guess from the size of the tariff but it turns out that dryer prices also increased by about 12%. Dryers were not subject to the tariff. So why did dryer prices increase? Washers and dryers are typically bought together in a package. Manufacturers, therefore, tend to focus on the package price and they “smoothed” out the washer tariff over both washers and dryers. Looking at thousands of goods, economists estimated that the Trump tariffs were on average entirely passed on to consumers, just as the simple supply and demand model predicts.
Another important prediction of the supply and demand model is that the tariff will increase the prices of all washing machines, whether produced domestically or imported. When the tariff is first put into place, domestic producers have lower costs than foreign producers and, as a result, they sell more and increase output. As domestic producers increase their output, however, their costs rise until in equilibrium domestic and foreign producers are, once again, selling for the same price. In fact, this is exactly what happened. Domestic producers like Whirlpool raised their prices at least as much as did foreign producers.
The Trump tariffs did have one unexpected consequence. In the model, it’s natural to think of domestic producers as being domestically owned firms, but that is not necessarily the case. Whirlpool, a domestic producer of washing machines, did produce more because of the tariffs but something else happened. The foreign producers, Samsung and LG, expanded their US factories! That’s good for US workers in the washer and dryer industry. Nevertheless, the expansion of Samsung and LG was probably an unwelcome surprise to Whirlpool, which may have expected that the tariffs would give them more of a competitive advantage in the domestic market than they ended up getting.
The increase in domestic production from both domestically owned and foreign owned firms resulted in about 1800 new jobs in the washer and dryer industry. Remember trade policy does not influence the total number of jobs in an economy. The jobs created in the washer and dryer industry came at the expense of jobs lost in US export industries. The new jobs in the protected industry, however, are visible and they are important politically, because the President can point to them as a benefit of his policies. Thus, it’s an interesting question to ask, how much did consumers pay to create these jobs?
The tariffs increased washer and dryer prices by about 12% or $88 each on combined sales of 17.4 million units. The total cost to consumers, therefore, was approximately $1.56 billion per year. The government took in an extra $82.2 million in tariff revenues, which we count as a plus, so the total cost was about $1.46 billion per year. The cost per job created was therefore a whopping $811,000 per job (1.46 billion/1800). Instead of creating jobs by paying more for washers and dryers, US consumers would have been much better off paying each new worker in the laundry industry $100,000 to enjoy a nice vacation!
A very important result from Ahmed, Hoddinott, Abedin and Hossain in The American Journal of Agricultural Economics. Bt eggplant offers a 51% increase in yield, a 37.5% decrease in pesticide use, increased farmer profits and decreased farmer sickness. Wow!
We implemented a cluster randomized controlled trial to assess the impact of genetically modified eggplant (Bt brinjal) in Bangladesh. Our two primary outcomes were changes in yield and in pesticide costs. Cultivation of Bt brinjal raises yields by 3,564 kg/ha. This statistically significant impact is equivalent to a 51% increase relative to the control group. There is a statistically significant fall in pesticide costs, 7,175 Taka per hectare (85 USD per ha), a 37.5% reduction. Yield increases arise because Bt farmers harvest more eggplant and because fewer fruits are discarded because they are damaged. Bt brinjal farmers sell more eggplant and receive a higher price for the output they sell while incurring lower input costs, resulting in a 128% increase in net revenues. Bt brinjal farmers used smaller quantities of pesticides and sprayed less frequently. Bt brinjal reduced the toxicity of pesticides as much as 76%. Farmers growing Bt brinjal and who had pre‐existing chronic conditions consistent with pesticide poisoning were 11.5% points less likely to report a symptom of pesticide poisoning and were less likely to incur cash medical expenses to treat these symptoms. Our results are robust to changes in model specification and adjustment for multiple hypothesis testing. We did not find evidence of heterogeneous effects by farmer age, schooling, or land cultivated. Bt brinjal is a publicly developed genetically modified organism that conveys significant productivity and income benefits while reducing the use of pesticides damaging to human and ecological health.
Hat tip: Marc Bellemare.
Why is Facebook free? Why are credit cards less than free? Why do singles bars sometimes have women drink free nights but never men drink free nights? All of these questions are in the domain of platform economics. Platform economics is new. Tirole and Rochet practically invented the field with a seminal paper in 2003–and that paper was one of the reasons Tirole won the Nobel prize in 2014. Despite being new, platform economics deals with goods which are fundamental to the modern economy. Thus, Tyler and I thought that it was incumbent upon us to teach some of the intuition behind platform economics in Modern Principles of Economics. But students have enough new material to learn, so we set ourselves a challenge–explain the intuition of platform economics using principles that the students already know. Surprisingly, platform economics can be taught with just two principles: externalities and elasticities.
In our chapter on externalities we offer the students a puzzle. Why do some firms offer their workers free flu shots? The answer, as memorably illustrated in this video, is that the firm “internalizes the externality.” When one worker gets a flu shot, other workers at the firm are less likely to get sick. In principle, the workers could subsidize one another to achieve the efficient outcome but transactions costs makes that solution impractical (the Coase theorem). The firm, however, is already involved in transactions with all the workers and, as a result, it can subsidize flu shots and reap the benefits of workers taking fewer sick days. How much the firm should subsidize flu shots depends on the elasticity of flu shots with respect to the price and on the elasticity of sick days with respect to vaccinated workers.
Now what does this have to do with Facebook? Well think about seeing ads as a bit like getting a flu shot–seeing ads has a benefit to you but it’s also a bit of a pain so if you had a choice you might not watch that many ads. But advertisers want you to see ads–in other words, Facebook users who see ads create a positive externality for advertisers. The platform firm, Facebook, internalizes this externality and that means subsidizing ad-seeing by selling Facebook at a zero price to readers and instead charging advertisers. As we put it in Modern Principles:
Imagine that Facebook begins with a positive price for both readers and advertisers (PR>0 and PA>0). Readers, however, are likely to be sensitive to the price so a small decrease in price will cause a large increase in readers (very elastic demand). Thus, imagine that Facebook lowers the price to readers and thus increases the number of readers. With more readers, Facebook can charge its advertisers more, so PA increases. Indeed, if the demand for advertisers increases enough, it can even pay Facebook to lower the price to readers to zero! Thus, the key to Facebook’s decision is how many more readers it will get when it lowers the price (the reader elasticity), how much those readers are worth to advertisers (the externality of readers to advertisers) and how high can it increase the price to advertisers (the advertiser elasticity).
More in the textbook!
The new edition of Modern Principles is here! We take our title, Modern Principles of Economics, seriously. Other textbooks stick with the market for ice cream year after year but when it comes to new editions we don’t just add a box or two–we rewrite entire chapters with new examples and applications and we cut older material to make way for the new.
In the new edition we introduce platform economics and we use it to explain why Facebook is free; we have new material applying the elasticity of supply to understand why housing is so expensive in some cities; we have rewritten the chapter on trade to take into account the China shock and the China trade-war shock including the implications for politics; we have new material on pollution and a carbon tax; new material on the declining labor force participation rate of men and new material on supply chains and bottlenecks. Of course, there is also new material on pandemics although we had material on pandemics in the very first edition!
Modern Principles of Economics is by far the best textbook for teaching online (or offline!). Not only do you get over a hundred professionally produced videos, like this one on price ceilings and price coordination, you also get Achieve, the excellent new course management system that integrates e-book, tutorials, quizzes, exams, assessment and much more so that you can get up and running online overnight.
I’ll be covering some of the new material in Modern Principles this week.
Vitamin D supplementation is cheap. Walking in sunlight is even cheaper. I’ve been doing more of both since the beginnings of the pandemic. Slusky and Zekhauser add to the evidence:
Sunlight, likely operating through the well-established channel of producing vitamin D, has the potential to play a significant role in reducing flu incidence. A recent meta-analysis of 25 randomized controlled trials of vitamin D supplementation (Martineau et al. 2017) demonstrated significant benefits of such supplements for reducing the likelihood that an individual will contract an acute upper respiratory infection. The current study considers sunlight as an alternate, natural path through which humans can and do secure vitamin D. This study’s findings complement and reinforce the Martineau et al. findings.
Our major result is that incremental sunlight in the late summer and early fall has the potential to reduce the incidence of influenza. Sunlight had a dramatic effect in 2009, when sunlight was well below average at the national level, and the flu came early. Our result is potentially relevant not just to the current COVID-19 pandemic, but also to a future outlier H1N1 pandemic. The threat is there; some H1N1 viruses already exist in animals (Sun et al. 2020). One must be cautious, though, with generalizations, given the unique economic circumstances (e.g., a 25-year high unemployment rate) in the fall of 2009.
A remaining question is whether sunlight matters more broadly for flu, or whether it is unique to H1N1. While we lack a counterfactual of an early flu from a different strain, we do have two pieces of evidence to suggest that the effect is broader than just H1N1. First, as described throughout the paper, the Martineau et al. study about the relationship between Vitamin D and upper respiratory infections are not specific to H1N1. Second, with granular, county level data, we do see strongly statistically significant negative effects of fall sunlight on influenza for years other than 2009 (see Columns (2) and (3) of Panel of Table 7). Therefore, apart from its methodological contributions, this study reinforces the long-held assertion that vitamin D protects against acute upper respiratory infections. One can secure vitamin D through supplements, or through a walk outdoors, particularly on a day when the sun shines brightly. When most walk, herd protection provides benefit to all.
The Scots are giving out free vitamin D to people stuck indoors. My view is that Vitamin D supplementation is worthwhile but where and when possible the sunlight approach is better as the effect may work through mechanisms beyond vitamin D.
Hat tip: The sunny Kevin Lewis.
Judge Richard Neely, former head of the WV Supreme Court, held a special place in my heart. I never met the man but early on in my career, Eric Helland and I wrote a paper on elected judges and tort awards (PDF):
We argue that partisan elected judges have an incentive to redistribute wealth from out‐of‐state defendants (nonvoters) to in‐state plaintiffs (voters). We first test the hypothesis by using cross‐state data. We find a significant partisan effect after controlling for differences in injuries, state incomes, poverty levels, selection effects, and other factors. One difference that appears difficult to control for is that each state has its own tort law. In cases involving citizens of different states, federal judges decide disputes by using state law. Using these diversity‐of‐citizenship cases, we conclude that differences in awards are caused by differences in electoral systems, not by differences in state law.
While researching the paper I found this quote from Neely and when I read it I knew we were going to be published in a good journal:
As long as I am allowed to redistribute wealth from out-of-state companies to injured in-state plaintiffs, I shall continue to do so. Not only is my sleep enhanced when I give someone’s else money away, but so is my job security, because the in-state plaintiffs, their families, and their friends will reelect me. (Neely 1988, p. 4).
That is what you call anecdotal gold.
To be clear, when Neely was looking for a law clerk he advertised:
“America’s laziest and dumbest judge” seeks “a bright person to keep (the judge) from looking stupid,” and gave preference to University of Virginia law students “who studied interesting but useless subjects at snobby schools.”
Neely spoke brutally honestly to break conventions and reveal underlying truths. Thank you Judge Neely for your candor as it surely helped me in my career.
In this article, Erik Parens urges me and other scientists working in the field of social genomics to “curb [our] optimism” regarding how genetic discoveries could be used to advance progressive and egalitarian social goals. In my view, however, it is Parens and other critics of social genomics who need to curb their optimism, in two ways.
First, Parens is overly optimistic that social science can ever hope to be successful without genetics. In reality, social scientists have failed, time and time again, to produce interventions that bring about lasting improvements in people’s lives. There are many reasons for that failure. But one reason is that many scientists continue to engage in what the sociologist Jeremy Freese has called a “tacit collusion” to avoid reckoning, in their research designs and in their causal inferences, with the fact that people are genetically different from one another.
All interventions and policies are built on a model of how the world works: “If I change x, then y will happen.” A model of the world that pretends all people are genetically the same, or that the only thing people inherit from their parents is their environment, is a wrong model of how the world works. The more often our models of the world are wrong, the more often we will continue to fail in designing interventions and policies that do what they intend to do. The goal of integrating genetics into the social sciences is not to design boutique educational interventions tailored for children’s genotypes. It is to help rescue us from our current situation, where most educational interventions tested don’t work for anyone. This track record of failure plays directly into the hands of a right-wing that touts the ineffectiveness of intervention as evidence for its false narrative of genetic determinism.
Second, Parens and other critics are overly optimistic that their strategy of disapproval, discouragement, and disavowal of genetic research will be effective in neutralizing the pernicious ideologies of the far-right. What is the evidence that this strategy actually works? Herrnstein and Murray published “The Bell Curve” when I was 12 years old; Murray published “Human Diversity” when I was 37 years old; and in all that time, the predominant response from the political left has remained pretty much exactly the same – emphasize people’s genetic sameness, question the wisdom of doing genetic research at all, urge caution. Yet, the far-right is ascendant. In my view, the left’s response to genetic science simply preaches to its own choir. Meanwhile, this strategy of minimization allows right-wing ideologues to offer to “red-pill” people with the “forbidden knowledge” of genetic results.
What the left hasn’t done (yet) is formulate a messaging strategy that (a) reconciles the existence of human genetic differences with people’s moral and political commitments to human equality, and (b) is readily comprehensible outside the confines of the ivory tower. Reminding people that genes are a source of luck in their lives has the potential to be that message. Parens characterizes me as making a “generous hearted but large leap” to expect that portraying genes as luck will change people’s minds, but economic research suggests that reminding people of the role of luck in their lives does, in fact, make them more supportive of redistribution.
Overall, this article portrays me and others working in this space as “soft-pedaling” the dangers of social genomics being appropriated by the far right. But I am fully cognizant of the dangers. Parens is the one who is soft-pedaling. He is soft-pedaling the enormous damage done to progress in psychology, sociology, and other social sciences – fields that are tasked with improving people’s lives – by their refusal to engage with genetics. And, he is soft-pedaling the danger of simply continuing the left’s decades-old, easily-“red-pilled” rhetorical strategy at a time with right-wing ideologies are on the rise globally.
There is good news and there is bad news.
Let’s start with the good news.The early results from the Pfizer vaccine are very good, 90% efficacy. That will probably fall a bit but it’s very good news not just for the Pfizer vaccine but for most of the vaccines in the pipeline which target the spike protein.
The Pfizer vaccine does require very cold storage which means it won’t work for large parts of the world. A distribution plan is in place for most of the United States and Pfizer already has 50 million doses, which can cover ~25 million people, in storage.
Many thousands of people are dying every week so Pfizer should apply for and the FDA should issue a EUA without further delay.
One issue is, given limited supply, how to distribute the vaccine. I have suggested we randomize distribution across hospitals, police and fire stations, and nursing homes (see also my piece in Bloomberg with Scott Kominers, The Case for a COVID Vaccine Lottery.) A vaccine lottery is fair, it will make distribution easier by limiting the number of vaccination locations and it will in essence create a very large clinical trial. With millions of participants we will be better able to make fine distinctions between the vaccine’s safety and efficacy in different populations and the results will come in quickly. Thus, if we randomize and collect data, limited capacity has a silver lining.
Second issue. Manufacturing capacity. Pfizer will have enough capacity to produce 1.3 billion doses in 2021 which sounds like a lot but it’s a two dose vaccine and there will be losses in distribution so maybe 500 million people vaccinated. We need to vaccinate billions.
The cost to the world economy of COVID is in the trillions so we want to vaccine a lot faster. Faster than private markets are willing to go. There are other vaccines in the pipeline but we still need to ramp up capacity. Increasing capacity is something that Michael Kremer, Susan Athey, myself and others at Accelerating Health Technologies have been working on since the beginning of the crisis. It’s not too late to do more.
Third issue is testing. Trump got it into his head that more tests means more cases when in fact a lot more tests means fewer cases. There is a Laffer curve for testing. Our failure to get ahead of the virus with tests has meant hundreds of thousands of excess deaths. We are still failing this test. Winter is coming. Infections and deaths are both rising.
Biden won’t be president until late January but there are things he can do now. In particular, Congress already allocated $25 billion to testing in April—that was far too little. We spent trillions on relief and comparatively little fighting the virus. But here is the real shocker, most of the $25 billion allocated in April hasn’t been spent. Let me say that again, most of the money allocated for testing in April has not been spent. Biden can signal today that that money and more will be spent. He can also signal, as in fact he has, that he wants rapid antigen tests approved.
Rapid antigen tests are cheap, paper strip tests that can check for infectiousness and are ideal to getting things like the schools running again.
Even if we start vaccinating this year, we won’t vaccinate a majority of the US population until well into 2021. That’s true but what’s underappreciated is that testing, masks, social distancing and vaccines are complementary. The more people are vaccinated, for example, the greater our testing capacity rises relative to the population at risk.
The pandemic is getting worse not better but we did flatten the curve, albeit imperfectly, and now if we can summon the will, we have the tools including rapid antigen tests, vaccines and monoclonal antibodies to really crush the virus.
Graduating in a recession can be rough. Wages start lower and advance more slowly. It’s hard to get hired at a top firm which means it takes longer to get on a rapid ascent career path. As Till von Wachter notes in a review of the long-term consequences of initial labor market conditions, failure to takeoff leads to choices which often makes things worse.
…initial labor market conditions persistently increases excessive alcohol consumption (Maclean 2015) and leads to higher obesity and more smoking and drinking in middle age (Cutler, Huang, and Lleras-Muney 2015)…College graduates entering during the 1980s recession experience higher incidence of heart attacks in middle age (Maclean 2013). Following all labor market entrants from these cohorts, Schwandt and von Wachter (2020) find that starting in their late 30s, unlucky entrants begin experiencing a gap in mortality compared to luckier peers that keeps increasing in their 40s, driven by higher rates of heart disease, liver disease, lung cancer, and drug overdoses.
…Marital patterns of unlucky cohorts are affected from the time they enter the labor market up into middle age, when these cohorts have fewer children (Currie and Schwandt 2014), are more likely to have experienced a divorce, and are more likely to live on their own (Schwandt and von Wachter 2020). Initial labor market conditions also have been found to have effects on attitudes towards economic success and the role of the government (Giuliano and Spilimbergo 2014) and to lead to increasingly lowering individuals’ self esteem (Maclean and Hill 2015).
Don Peck had a good popular survey of these effects in The Atlantic in 2010 that remains vital:
Andrew Oswald, an economist at the University of Warwick, in the U.K., and a pioneer in the field of happiness studies, says no other circumstance produces a larger decline in mental health and well-being than being involuntarily out of work for six months or more. It is the worst thing that can happen, he says, equivalent to the death of a spouse, and “a kind of bereavement” in its own right. Only a small fraction of the decline can be tied directly to losing a paycheck, Oswald says; most of it appears to be the result of a tarnished identity and a loss of self-worth. Unemployment leaves psychological scars that remain even after work is found again, and, because the happiness of husbands and the happiness of wives are usually closely related, the misery spreads throughout the home.
Especially in middle-aged men, long accustomed to the routine of the office or factory, unemployment seems to produce a crippling disorientation. At a series of workshops for the unemployed that I attended around Philadelphia last fall, the participants were overwhelmingly male, and the men in particular described the erosion of their identities, the isolation of being jobless, and the indignities of downward mobility.
Of course, most people who graduate during a recession do just fine in the grand scheme of things.You could have graduated in Sierra Leone. But if you want to be on a rapid ascent career path remember that your first job is not your last job, look for opportunity, and be prepared to take a risk and switch jobs early. Stay off drugs and alcohol.
Diana Fleischman analyzes the economics of sex robots.
When the sex ratio changes, so too do sexual norms; sex robots are going to emulate an increase in the ratio of women to men. Contrary to a prediction based on the idea that men would wield greater patriachal control if they were in higher numbers, a larger percentage of women relative to men on University campuses is associated with women who are more likely to have casual sex and less likely to be virgins. When there are more men than women, women are much less likely to have casual sex. The majority sex (in this case men) competes for the minority sex (in this case women) and the minority sex calls the shots. When there is a female majority in the population, women compete for access to mates with casual sex. Whereas a male majority competing for access to scarce women compete with long-term commitment.
Sex robots will emulate a majority women ratio, shifting women to compete for men’s attention by requiring less courtship and commitment in exchange for sex. The long-term ramifications are unclear, especially the way long-term technologies and cultural norms will interact. Perhaps women will discover they have to make the costs of courtship both low and transparent to compete with sex robots. Or, perhaps, new technology could enable women to recombine their genes with one another, making men enamored with sex robots (or men generally) totally redundant.
Much more of interest at the link.