The Lucas critique and twin adoption studies

It is odd to cite a twin adoption study, and its results, as a response to a methodological critique of…a twin adoption study.  Nonetheless, the paper Alex cites, and the associated graph, show very readily the problems in interpreting such studies.

If you check out the graph, for a variable such as "religious importance" it shows family transmissibility of about thirty percent, with varying estimates of transmissibility for other religious variables.  That is the result from a data set involving a) parents who try hard to transmit religion with some idea of what to do, b) parents who don't try very hard, and c) parents who try hard and have no idea of what is an effective technique, as they might be advised by a well-informed social scientist. 

Here's the key point.  The original "control" question we were debating was about a) alone, yet in response Alex is putting forth a measure of the marginal efficacy for a-c, namely including the families who aren't trying to transmit.  Obviously the marginal product of the informed, trying families should be higher than the average marginal product for the group as a whole.  At the very least we can take thirty percent as the lower bound here, not the best estimate of the effect we are trying to measure.

The Korean-American Protestant study finds transmissibility of religious fervor, through family influence, of two-thirds.  That paper does not control for genetics, and of course because of genetic similarity family influence will run especially easily and this figure is an overestimate of the net family effect.  You can think of two-thirds as the upper bound here.  If we had commensurable studies (not the case), we would have lower and upper bounds for trying-to-transmit families.

One way to think about the Korean study is to recognize that out of 100 Protestant children, parental inculcation "worked" for 66 of them.  The correct marginal product question is: without that inculcation, how many of those 66 kids would have found their way to a comparably observant religion?  Of course we don't know, but that's the right question to focus upon.

Twin studies encourage you to think in terms of a different question about marginal products: if you had those Protestant families adopt 100 kids, and try to inculcate the same religion, would 66 of them have ended up observant?  Very likely not.  Of course the two thought experiments are quite different, and they give you different measures of marginal product, most of all because there are non-linear interactions between parenting, peers, and genes.  Since most children are not adopted, it is the first thought experiment which gives the more accurate measure of marginal product of parental inculcation of religion. 

What about the religious variables which don't seem very transmissible at all?  Alex cites "born agains," drawing on the same paper.  But this interpretation again mirrors a major drawback of many interpretations of twin adoption studies, namely that they don't reconcile the cross-sectional and the time series comparisons.  Alex is walking a simple pitfall here, as does the paper he cites.

What does this mean in practice?  Born agains (or arguably, their revival) are a relatively recent phenomenon in the United States, dating from the 1970s.  (There is a similar revival in biblical literalism, although perhaps less extreme.)  The study takes adults from the mid-1990s.  That means you will have lots of "born again" descendents who had strongly below average prospects of having had "born again" parents.  The correlation will appear very weak, but this doesn't show the variable is not transmissible going forward.  We simply don't know, at least not from this data set.  

To put this final point another way, the father of Abraham was not a Muslim, and so back then the correlation was zero, but this does not show the family cannot transmit Islam in later periods of time.

I'd like to stress again that when it comes to Bryan's book, I agree with most of his points.  But on religion in particular I don't think Alex is making sound claims.

What are the incentives here?

Although inmate labor is helping budgets in many corners of state government, the savings are the largest in corrections departments themselves, which have cut billions of dollars in recent years and are under constant pressure to reduce the roughly $29,000 a year that it costs to incarcerate the average inmate in the United States.

Senator John Ensign, Republican of Nevada, introduced a bill last month to require all low-security prisoners to work 50 hours a week. Creating a national prison labor force has been a goal since he went to Congress in 1995, but it makes even more sense in this economy, he said.

Not that this could ever affect parole or imprisonment decisions…  I prefer a situation where each prisoner costs the state government a good deal.

The full story is here.

On-line juries

Is your spouse hogging the new car? Or refusing to do the dishes? Now you can take your dispute to an online jury of your peers at a new website called JabberJury.com.

Fast Company calls the website “The People’s Court for the Facebook generation,” while a press release dubs it “a true people’s court.” It’s the brainchild of Chicago entrepreneurs Kevin Wielgus and Angelo Rago, who came up with the idea after Rago settled an argument with his girlfriend by asking bar patrons to weigh in. The dispute: Did his girlfriend have a right to be mad when he refused to visit her father in the hospital? (He was suffering from hemorrhoids, not a life-threatening disease.)

Recent cases posted at the website raise age-old questions such as: Are dogs superior to cats? What’s the need for all those decorative pillows on the bed? And what’s the big deal about chewing with your mouth open?

The full article is here, and for the pointer I thank Eapen Thampy.

How to think about refugee policy

Dave Bieler, a loyal MR reader, asks:

I see that you've provided some commentary on Marginal Revolution about refugee situations, but I'm curious to know what you think about refugee policies – i.e. what is the role of government? What is the role of private insitutions? How can different types of institutions and organizations improve or make worse various situations? Do you have any thoughts or links to articles or books? I think it would make for an interesting blog post!

This question may be more relevant soon, although Muslim refugees from the Middle East do not have the best chances of getting into America.  I have read that one small town in Sweden has taken in more Iraqi refugees than has the entire United States.  Here is Wikipedia on refugees.  I hold a few views:

1. Refugees are deserving of migration toleration when possible, but they are not more deserving than equally destitute non-refugees.

2. Refugees nonetheless capture the imagination of the public to some extent, albeit for a very limited period of time.  Their beleaguered status provides a useful means of framing, to boost migration for humanitarian reasons.  When it comes to private institutions, refugee issues may be a useful way of raising funds, again for humanitarian aid, although again refugees should not be privileged per se, relative to other needy victims.

3. Legal treatment of refugees is inevitably arbitrary and unfair.  There is not and will not be a clear set of rational standards for who gets in and who doesn't.  There are better and worse standards at the extreme points, but don't expect this to ever get rigorous, not even at the level of ideal theory.

4. There always exists some pool of refugees who will help the migration-accepting country, even if you do not believe that about all pools of refugees.  Let's take in some Egyptian Copts, who possibly are in danger now.  Some groups of African migrants have done quite well in the United States and we can take in more oppressed women from north Africa.  In other words, "immigration skepticism" may redirect the direction of refugee acceptance, but it need not discriminate against the idea of taking in refugees.

5. Optimal refugee policy is most of all an exercise in public relations, as ruled by the idea of the optimal extraction of sympathy.  Explicit sympathy from the public cannot be expected to last very long.  In the best case scenario, sympathy for the refugees is replaced by fruitful indifference, so as to avoid "refugee fatigue."

See my earlier remarks on sovereigntyHere is an argument against admitting refugees; I don't agree with it.

The Pippi Longstocking essay and gay adoption in Sweden

Thanks to Jayme Lemke, it has fallen into my clutches; the previous summary reference was here.  The essay by Henrik Berggren and Lars TrägÃ¥rdh, is interesting throughout.  It has useful insights on Sweden, statism, how collectivism and individualism interact, what architecture reflects, and why many things are not always as they seem.  Here is one good passage with a different slant than what I already covered:

While it is obviously true that gay marriage remains a highly controversial issue in the US, what is often over-looked is that adoption of children by gays is not prohibited but indeed rather common.  In Sweden the opposite is true: gay marriage or partnership is today relatively uncontroversial (although an opposition of course exists there as well), where the adoption of children by single or couples gays remains a problematic issue.

One way of understanding this difference is to see that while in the US marriage is a highly public matter, and the family a sacred institution, children are by and large seen as a kind of private property, or something to which every adult individual has a right.  In Sweden, on the other hand, the family is a private matter, while it is the child who is the public matter.

Can Swede readers attest to this?  This short BBC bit seems to confirm.  Gay adoption was legalized in Sweden in 2002, but in 2000 16 children were put up for adoption in Sweden.  As in the Netherlands, it seems that Swedish gays are not always encouraged to adopt abroad, given that the source countries often object.  There is now a Swedish film comedy about gay adoption.

You can find the essay in this unorthodox and stimulating book.  

Response to Alex on parenting and religion, and a bunch of other points on twin studies

Alex is right on one point, that Bryan's book is very important and everyone should read it.  Otherwise, his discusson of Yana indicates that both genes and upbringing matter, which is my point — that both matter.  He mistakenly cites that example against me, rather than against Bryan, who claimed upbringing and inculcation do not matter for language. 

Orthodox Jews are clearly a case where parenting matters for the religion and religiosity of the kids, not just the abstract fact of having the parent or the possible genetic transmission of general religious fervor.  Orthodox Jewish parents are effective, in part, because they inculcate the religion in their children.  Or look at the data on Korean Protestants.  I could spend a whole day finding credible studies on this question and they are not restricted to a few extreme points (though they also don't cover everyone, and probably strict inculcation of Unitarianism won't work).  There is overwhelming evidence that parenting often does transmit religious observance and if twin adoption studies do not show that it is a sign of their limitations.

In the comments, Cournot (not Augustin) nails it:

Tyler is not rejecting the studies. He's rejecting Caplan's interpretation.

Imagine this were a drug and the trials showed that the drug clearly reduced fever in a stat sig group.

However a number of non-statistically significant side effects were observed. Some patients died, got rashes, or became crippled. We also have anecdotal evidence and even some good theory that there may be weird interactions with some subpopulations, but to date no good studies showing these effects have been conducted.

Should I assume that it's safe to take these drugs? I think not.

Indeed, doctors often warn us of side effects even though most of the side effects don't show up as statistically significant in clinical trials.

Tyler is just saying some of the side effects of parenting on kids may well be significant and until clearly proven otherwise, it is unsound to ignore non-statistical anecdotal evidence [TC: there is plenty of statistical evidence also] just because the major studies don't show any effects.

And here is Richard A.:

The Body-Mass Index of Twins Who Have Been Reared Apart

We conclude that genetic influences on body-mass index are substantial, whereas the childhood environment has little or no influence. These findings corroborate and extend the results of earlier studies of twins and adoptees. (N Engl J Med 1990; 322:1483–7.)
http://www.nejm.org/doi/full/10.1056/NEJM199005243222102

IOWs, the reason why white kids of today are much fatter than white kids of the 50s and 60s is due to genetic influences and environment has little or no influence

This shows that the twin studies are flawed.

If that doesn't convince you, ponder the Zoroastrians, an extreme minority in most of the places they have lived.  Parents inculcated religious observance for centuries, yet now that pattern of replication seems to be falling apart and the religion and way of life is in danger.  In other words, now we are viewing the time series evidence (as does Richard A. in the case of body weight).  Parental inculcation can matter a lot, or not so much at all, depending on circumstances.  The very size of that variation suggests two points: a) cross-sectional evidence alone won't pin down the proper genetic component, for instance studying this group today, rather than across time, would overestimate the genetic influence, and b) if the transmissibility can change so quickly we are pushed away from genetic explanations, though of course without abandoning them altogether.  Genes are still very, very important.

In contrast, what do you expect for the heritability of IQ over the generations?  Lead poisoning and the like aside, I expect estimates of that heritability don't change much over time at all.  That is more closely tied to genetics, and the time series evidence confirms it.

Labor history bleg

C.R., a loyal MR reader, writes to me:

I'm writing with a small favor, I was wondering if you could recommend (or ask for recommendations on MR) for a good history of labor unions in the US. I know a lot has  been written especially from the left labor economists, but I don't have the knowledge to sort out the good from the bad. I'm interested in it from a historical perspective (origins and accomplishments) and a current political analysis perspective (what are reasonable claims about the costs&benefits of modern union membership).  The case in Wisconsin has really grabbed my attention and I'm curious about unions as a case study of the creation, growth and changes of institutions.

I know where to go for the standard economics of labor unions, if you wish start with the surveys in Journal of Economic Perspectives (on-line and free) and then go to the Handbook of Labor Economics.  But what about labor history?  What is the best way to approach this often controversial topic?

What can parents influence?

I had been meaning to pen a longer response to Bryan Caplan (he is the one with "a theory of everything" in this area, not I, his theory just happens to have few variables), but I'll focus on two of his claims, as they are indicative of the larger disagreement:

Parents strongly affect what you say your religion is, but have little long-run effect on your intrinsic religiosity or observance.  I don't discuss language, but it's pretty clear how a twin or adoption study would play out: You can make your kid semi-fluent in another language with a lot of effort.

Both claims are false, at least at many commonly available margins.

Take Jews.  If a group of children are born to Orthodox, Conservative, Reform, or liberal parents, their later religious observance will be predicted by both peers and parental upbringing.  (Perhaps genes are a factor too.)  An Orthodox Jewish boy, with Orthodox parents, growing up in an otherwise non-Orthodox Jewish community of peers, is more likely to stay Orthodox than a Reform Jew from the same community is likely to become Orthodox.  And that of course correlates with levels of observance.  I have no formal study to cite, but can I just stamp my feet and scream this is true?  Because it is.  You can imagine numerous variants on this tale, even if it isn't true for all religious denominations.

Bryan has a tendency to concede environmental factors by noting something like "Of course parents can lock a kid in the closet and affect him that way."  He is less likely to admit that a lot of less extreme influences can matter too and that those influences are missed by twin adoption studies, for whatever reason.

Or take language.  Yana speaks Russian.  She learned Russian from Natasha (her mother, and it wasn't hard for her to speak Russian at home), and note that Yana left Moscow before she was two years old.  This is again a common pattern.  The parents matter, even though in most American families you won't see enough cross-sectional variation (most people speak English at home) to always pick this up.  Travel around India for more examples of this phenomenon.

Presumably the twin studies have in their data sets Jews and possibly some Russian immigrants as well.  And yet the twin studies, with their ultimately macro orientation, miss micro mechanisms such as these.  Parents can matter more than the studies suggest.

By treating those studies as an epistemic trump card, Bryan is led to make claims which are indefensible on the face of it.  I stick by my earlier points.  The evidence Bryan is citing for twin adoption studies is simply…the studies themselves.  Where is consilience when you need it?  

Why do millionaires love New Jersey?

Erik Brynjolfsson looks at the data and asks: why do millionaires love New Jersey?  My answer: because it's really, really nice! 

Especially if you are old.  You don't have to live in New York or Philadelphia, and yet you have access to at least one of those cities, possibly both if you buy in Edison.  You can have a splendid house in a nice, leafy neighborhood with reasonable public services, a socially excessive amount of parking, and good restaurants. 

For smart young people, however, the nice parts of New Jersey are very much a net exporter.  The young ones can't afford the nice homes, they want the sex and excitement of the big city, or they want a higher standard of living in some less crowded part of the country.  That in turn makes the nice parts quite "mature", which in turn attracts more old people; have you ever visited Montclair or Upper Saddle River or the nice parts near Princeton?  These towns are perfect  for 59-year-old, slightly boring millionaires (NB: I am not saying that Krugman is boring).

I left New Jersey at age seventeen, never to return, not to live that is.

Duke Summer Institute for the History of Economic Thought

Thanks to a generous grant from George Soros' Institute for New Economic Thinking, the Center for the History of Political Economy…will be hosting a Summer Institute on the History of Economics this summer. The program is designed for students in graduate programs in economics. Students will be competitively selected and successful applicants will receive a stipend for attending. The deadline for applying is March 4.

You should go.  There is more information here.

Hanson interprets Dale and Krueger

Table 4 shows that attending a college with higher SAT scores clearly lowered the wages of women 17-26 years after starting college (in 1976) – a school with a 100-point higher average SAT score reduced earnings by about 6-7%!  The two estimates there are significant at ~0.01% level! (The other three, for other periods after starting college, are significant at the 5% level.)

One obvious explanation is that women at elite colleges married richer classmate men, and so felt less need to earn money themselves. Why don’t the study’s authors want us to hear about that?

Here is much more, interesting throughout.  Robin's versatility as a commentator is one of his most underrated qualities.

Archibald and Feldman respond on education

The discussion, which includes a reply to my previous post, is here, excerpt (but do read their entire response):

Next, we don’t see strong barriers to entry on the institutional side, either. In 1970, eight million students were enrolled in 2,000 American colleges and universities. Today, over 18 million are enrolled in roughly 4,300 institutions, according to the Digest of Educational Statistics. There has been a veritable explosion of places at for-profit and not-for-profit institutions alike. To take one example from the traditional nonprofit sector, the University of Central Florida has mushroomed from a start-up to one of the largest institutions in the nation in a relatively short period of time.

Competition among pre-existing universities has also grown more intense. As Caroline Hoxby has noted, the fraction of students attending schools within their own state has declined steadily since the 1940s.

"The quantity supplied is going up" does not equal "the quantity supplied is not restricted."  There is a lot more non-pasteurized cheese consumed in this country than twenty years ago, but it is still very much restricted. 

Accreditation constraints and social signaling constraints (a market failure, I might add) are two reasons why we don't see more effective competition in the higher education sector.  In what other economic sectors are the major quality players more or less the same decades later?  Apart from adding on a west coast, the list of top players hasn't changed all that much in a century.  There's something funny about this sector which we are not being told about, although I will agree the exact nature of the reputational stickiness remains a bit mysterious.  It is related to why the U.S. edge in higher education remains relatively robust, even when we have lost our edge in many other sectors.  Catch-up is hard.

On UCF, it is ranked #97 among public universities.  It seems to offer reasonable value, as such schools go, but it has hardly turned the market upside down.  George Mason also has grown from small to huge (about 30,000 students).  The question is why this kind of entry hasn't lowered prices.  What I see is lots of "more of the same" competition, little scope to experiment with true cost-cutting and different products, and so growing supply matches demand but has not been a force for major price declines relative to median wages.

The growing polarization of U.S. labor market outcomes has helped, indirectly, subsidize a lot of inefficiency in the upper tiers of U.S. higher education.  People are willing to pay for the ticket, just as the airlines can get away with more inefficiency when travel and migration demands are high. 

If I'm analyzing the high and growing prices for U.S. colleges and universities, I would start with some of these basic observations.