Nature, Nurture and Income

by  Alex Tabarrok in

Some might suggest that parents treat their biological and adopted children differently and this is what accounts for the difference in incomes.  The interpretation is very uncharitable to the parents who have volunteered to raise an adopted child and I think it implausible.  Moreover, unless every adopted child is treated equally poorly in all families, then we would still expect the income of adoptees to increase with parental income but perhaps starting at a lower level.

The other proviso is that the Holt experiment is only informative for the experimental variation in environment.  In other words, we can tell from the Holt experiment that variation in parental income from around 25 thousand to 175 thousand doen’t have much impact on variation in adopted child income but all these children are raised in the United States so culture and other variables are roughly similar.  In other words, move a child from a poor country to a rich country and you would expect a much bigger treatment effect than moving a child from a poor family to a rich family. 

A Thanksgiving Lesson

by  Alex Tabarrok in

It’s one of the ironies of American history that when the Pilgrims first arrived at Plymouth rock they promptly set about creating a communist society.  Of course, they were soon starving to death.

Fortunately, "after much debate of things," Governor William Bradford ended corn collectivism, decreeing that each family should keep the corn that it produced.  In one of the most insightful statements of political economy ever penned, Bradford described the results of the new and old systems.

[Ending corn collectivism] had very good success, for it made all hands very industrious,
so as much more corn was planted than otherwise
would have been by any means the Governor or any other
could use, and saved him a great deal of trouble, and gave
far better content. The women now went willingly into the
field, and took their little ones with them to set corn;
which before would allege weakness and inability; whom
to have compelled would have been thought great tyranny
and oppression.

The experience that was had in this common course and
condition, tried sundry years and that amongst godly and
sober men, may well evince the vanity of that conceit of
Plato’s and other ancients applauded by some of later
times; that the taking away of property and bringing in
community into a commonwealth would make them happy
and flourishing; as if they were wiser than God. For this
community (so far as it was) was found to breed much confusion
and discontent and retard much employment that
would have been to their benefit and comfort. For the
young men, that were most able and fit for labour and
service, did repine that they should spend their time and
strength to work for other men’s wives and children without
any recompense. The strong, or man of parts, had no
more in division of victuals and clothes than he that was
weak and not able to do a quarter the other could; this
was thought injustice. The aged and graver men to be
ranked and equalized in labours and victuals, clothes, etc.,
with the meaner and younger sort, thought it some indignity
and disrespect unto them. And for men’s wives to be
commanded to do service for other men, as dressing their
meat, washing their clothes, etc., they deemed it a kind of
slavery, neither could many husbands well brook it. Upon
the point all being to have alike, and all to do alike, they
thought themselves in the like condition, and one as good
as another; and so, if it did not cut off those relations that
God hath set amongst men, yet it did at least much diminish
and take off the mutual respects that should be preserved
amongst them. And would have been worse if they
had been men of another condition. Let none object this
is men’s corruption, and nothing to the course itself. I answer,
seeing all men have this corruption in them, God in
His wisdom saw another course fitter for them.

Among Bradford’s many insights it’s amazing that he saw so clearly how collectivism failed not only as an economic system but that even among godly men "it did at least much diminish and take off the mutual respects that should be preserved amongst them."  And it shocks me to my core when he writes that to make the collectivist system work would have required "great tyranny
and oppression."  Can you imagine how much pain the twentieth century could have avoided if Bradford’s insights been more widely recognized?

Seeing is believing (in the free market)

by  Alex Tabarrok in

Everywhere we look it seems that health care is more expensive: prescription drug prices are increasing, costs to visit the doctor are up, the price of health insurance is rising.  But look closer, even closer, closer still.  Don’t see it yet?  Perhaps you should have your eyes corrected at a Lasik vision center.

Laser eye surgery has the highest patient satisfaction ratings of any surgery, it has been performed more than 3 million times in the past decade, it is new, it is high-tech, it has gotten better over time and… laser eye surgery has fallen in price.  In 1998 the average price of laser eye surgery was about $2200 per eye.  Today the average price is $1350, that’s a decline of 38 percent in nominal terms and slightly more than that after taking into account inflation.

Why the price decline in this market and not others?  Could it have something to do with the fact that laser eye surgery is not covered by insurance, not covered by Medicaid or Medicare, and not heavily regulated?  Laser eye surgery is one of the few health procedures sold in a free market with price advertising, competition and consumer driven purchases.  I’m seeing things more clearly already.

Thanks to Jonathan Van Loo for research assistance on this post.

FuturePundit on Space Tourism

by  Alex Tabarrok in

The ever-intelligent Randall Parker – and never so intelligent as when he is agreeing with me! – weighs in on the space tourism debate.  Randall makes two key points in his post:

1938 was 35 years after the first aircraft flight of Orville and
Wilbur Wright on December 17, 1903 at Kitty Hawk North Carolina. Manned
space travel began on April 12, 1961 when a Soviet air force pilot,
Major Yuri A. Gagarin, made an orbit of the Earth. So manned space
travel is over 40 years old. Space travel into Earth’s orbit is orders
of magnitude more dangerous after 40 years than aircraft travel was
when it was only 35 years old….

Newer rockets have been designed in recent years and have unexpectedly
blown up on launch. Rutan’s accomplishment is not as radical as some
media reports present it for a number of reasons. First of all, whether
he has designed a safer spaceship is will not be proven unless and
until it has flown hundreds and even thousands of times without mishap.
Also, and very importantly, SpaceShipOne does not do that much. It can not achieve orbital velocity or decelerate from orbital velocity.
In my view the Scaled Composites SpaceShipOne flight was important
because it demonstrated the potential for prizes to spur innovation. It
also opens up the possibility that that dangerous orbital spacecraft
can be designed and built for much lower costs than NASA and big
aerospace companies typically spend.

Addendum: Randall’s programming work is already in outer-space!

Diversity in Academia?

by  Alex Tabarrok in

Of course not.  The New York Times reports on new survey research by Dan Klein on the voting behavior of academics.  Anthropologists are comfortable living with cannibals in South America but they vote Democrat 30 to 1.   Economists are among the least "biased", they vote Democrat to Republican at about 3 to 1. 

This reminds me of the great Adlai Stevenson line.  A supporter once called out, "Governor Stevenson, all thinking people
are for you!" And Adlai Stevenson answered, "That’s not enough. I need
a majority."

Addendum: Thanks to Vicki White for directing me to the correct quote which I had earlier misattributed.

Romance and Realism in Space Tourism

by  Alex Tabarrok in

Space tourism is romantic but is it realistic?  On the basis of 40 years of data, I argued that rockets are dangerous and show no signs of the sort of safety improvements that are required to sustain a serious space tourism industry.  Response fell into two camps, those who misunderstood the argument and those who wanted to deny it. 

David at Cronaca pointed to the continuing demand to climb Mount Everest despite a fatality rate on the order of 4 percent.  Quite right, but that is precisely my point.  At best and for the foreseeable future space travel will remain akin to climbing Everest, dangerous and uncommon.  Yes, we might see 100 flights a year but that’s not space tourism – tourism is fat guys with cameras.  Branson and Rutan, for example, have predicted that in 10-12 years, 100,000 or more "ordinary people" will fly into space.  No way.

The other type of response is well illustrated by Rand Simberg’s reply at TechCentralStation.  Simberg argues that forty years of data are irrelevant because with SpaceShipOne "everything changed."  According to Simberg, SpaceShipOne is "a complete discontinuity", "an entirely new and different approach", and yes – you saw it coming didn’t you? – "the beginning of a new paradigm."

These are statements of faith not of reason.  Simberg has no data to back these claims because none exist.  Let’s also remember that we have heard this sort of thing many times before.  As far back as the 1960s PanAm was selling advance tickets for its inaugural moon flight.  Need I remind you where PanAm is today?

I admire Rutan and I have little doubt that he has made significant advances in rocket design but what I showed in my article was that safety could have improved by a factor of ten or even 100 and rockets would still be too unsafe to support a large tourism industry.

What’s so great about space tourism anyway?  Even though an increase in rocket safety of a factor of ten is not much when considering the safety of large numbers of people it is very significant when thinking about satellite launches or temporary low-orbit launches.  A reduction of risk of this amount means much lower insurance costs that will open up space to new private development.


Stupid Professor Tricks

by  Alex Tabarrok in

Professors at the Claremont schools are at it again.  Last year a visiting psychology professor sprayed her own car with racial and religious
epithets, slashed her tires and then reported the incident as a
hate crime.  Why?  In order to draw attention to the issue, of course.

More recently, SUVS at adjacent Pomona college were painted with anti-SUV messages like "My SUV wastes 33% more gas than a car" and "Is your image a good reason for people to die."  (The paint is apparently washable).  When the offending students were caught they had a surprising defense: their vandalism was part of an approved class project!

Bizarrely the students were taking a class in German Studies and were given an assignment to "develop your own political voice."  According to the Dean of Students:


Approximately one week before the assignment was due, the students
asked for and received written approval from the professor for several
alternate projects, including the one that was carried out. Considering
that they acted from what they thought was within the parameters of the
class, we believe that they should not be sanctioned for their actions.

The professor claims the approval was "inadvertent."  It doesn’t inspire confidence, however, when one reads the description of another one of her courses:

132 National Socialism and Today’s Media. Ms. Houy. Attempts
to manipulate public opinion have become more effective through mass
media; new communication technologies can empower resistance to such
attempts. This course studies the propaganda machinery of National
Socialism in order to explore current abuses of communication
technologies and imagine ways of resisting such abuses.

Ok Kristallnacht it ain’t but this does suggest the professor knew what she was doing.

Thanks to Right Reason and an anonymous tipster.

Paying for Performance

by  Alex Tabarrok in

The field of education is littered with reforms designed to increase student performance – everything from the "new math," to more teachers to better pay.  Yet the most obvious reform of all has hardly been tried – pay the students to learn.  That’s the simple idea of an impressive young economist, Roland Fryer (earlier I posted on Fryer’s controversial work with Steven Levitt on the causes and consequences of distinctively black names).

Fryer was here on Monday and he told me of a large scale experiment he is running in 24 of the poorest performing New York schools.  Every three weeks students are tested and if they improve they are paid on the order of $20.  Control groups are also tested.  Early results are very encouraging.  No other reform has anywhere near the bang for the buck as paying the students.

As Fryer said to me, ‘for years white parents have been giving their kids money for As, now we are trying the same system for black kids.’   

A Market for Journal Articles

by  Alex Tabarrok in

The current academic publishing system is slow, tedious, and error prone.  David Zetland, a clever economics graduate student at UC Davis, has a better idea.  Zetland suggests that journal publishers should buy manuscripts in an auction.  You probably already have some objections, Where would the money come from?  Why would journal editors buy what they can get for free? etc.  But wait.  Here comes the clever part:

The money paid in the auction would flow not to the author of the paper but to authors cited by the paper and their publishers.  For example, if a journal buys a paper by A.Tabarrok for $1000 which cites an article by T.Cowen published by Oxford University Press and an article by M. Friedman published by the University of Chicago Press then Cowen, Friedman and their publishers would each receive $250 (the author/publisher split could vary.)

The cleverness of the idea now becomes apparent.  Publishers will be willing and able to pay for papers because they expect to earn revenues when in turn those papers are cited.  Publishers will pay $1000 for the paper by A. Tabarrok, for example, if they expect that paper to be cited many times.

Once it gets off the ground, the market for journal articles is self-sustaining and self-fulfilling.

A market established in this way has all kinds of beneficial properties.  Publishers will have an incentive not only to seek out the best papers and pay for them but also to improve those papers in order to make them more citable.  Publishers might offer online data collection and color graphs, for example.  Similarly, if this proposal takes off we might expect a big improvement in the speed and accuracy of the refereeing process.  Who knows, editors might even edit papers!

Senatorial Privilege

by  Alex Tabarrok in

In February we reported on a new study showing that the stock picks of Senators, as revealed in their financial disclosure forms, outperformed the market by a whopping 12 percent.  Insider trading anyone?  Although it’s not clear whether any laws have been broken, Alan Ziobrowski, one of the study’s authors says "there is cheating going on, at a 99 percent level of confidence."

The SEC looked at the study but, surprise, surprise, it seems that they are too busy going after Martha Stewart to have the time to look into evidence that our leaders are using their political power and influence for personal gain.  An article in the Philadelphia Inquirer notes slyly, "the SEC may have little incentive to tangle with the Senate, given their relationship. Senators approve members of the SEC’s governing body, as well as the agency’s budget."

Unfortunately the article is not yet published, it is forthcoming in the Journal of Financial and Quantiative Analysis. 

Thanks to Professor Bainbridge for the pointers.