The Brother Earnings Penalty

This paper examines the impact of sibling gender on adolescent experiences and adult labor market outcomes for a recent cohort of U.S. women. We document an earnings penalty from the presence of a younger brother (relative to a younger sister), finding that a next-youngest brother reduces adult earnings by about 7 percent. Using rich data on parent-child interactions, parents’ expectations, disruptive behaviors, and adult outcomes, we provide a first step at examining the mechanisms behind this result. We find that brothers reduce parents’ expectations and school monitoring of female children while also increasing females’ propensity to engage in more traditionally feminine tasks. These factors help explain a portion of the labor market penalty from brothers.

That is by Angela Cooks and Eleonora Patacchin in Labour Economics.  Once again, family niche effects seem to matter.  Via the excellent Kevin Lewis.

Writers vs. entrepreneurs, publishers vs. venture capitalists

Henry Oliver asks:

In what ways are writers and entrepreneurs similar? Why doesn’t publishing have more of a VC structure and attitude? Could authorship be made more productive and better quality with VC in publishing and theatre? Are movies better at this?

Publishing has one feature in common with venture capital, namely that most financed undertakings are failures and the most profitable successes can be hard to predict in advance.  Furthermore, publishers are always on the lookout for the soon-to-be-hot, hitherto unpublished author, the next Mark Zuckerberg so to speak.  And books, like software and also successful social networks, are rapidly scalable.  You can sell millions with a big hit.  But here are a few differences:

1. A lot of VC is person-focused.  The VC company builds a relationship with a young talent, and in some cases the hope is that the second or third business makes it, or that the person can be steered in the proper direction early on.  Authors, in contrast, are more mobile across publishers, and the publisher usually is buying “a book” rather than “a relationship with the author.”  Some wags would say that a publisher is buying a title, a cover, and the author’s social media presence.

2. Entrepreneurs commonly have more than one VC, but authors, for a single book, do not have multiple publishers.

3. For the vast majority of books which do not make a profit, this is evident within the first three weeks of release or perhaps before release altogether.  The publisher may drop its resource commitment to the author very quickly, and even yank the PR people off the case.  This further loosens the bond between the talent (the author) and the funders of the talent (the publisher).  In contrast, VC rounds can last five or ten years, with commitments made in advance and possibly a board seat as part of the deal.

4. Venture capitalists will introduce their entrepreneurs to an entire network of supporting talent and connections.  Publishers will edit and advise on a manuscript, but it is much more of an arm’s length relationship, and a publisher might do very little to bring an author into any kind of network.

5. The major publishing houses are clustered in Manhattan, just as the major venture capitalist firms are clustered in the Bay Area.  But the publishers don’t find a pressing need to have their authors living in or near NYC, though for some other reasons that is convenient for the author doing eventual media appearances.

6. Publishers often care a great deal about an author’s preexisting platforms, such as Twitter followers or ability to get on NPR.  Venture capitalists realize that a very good product can overcome the lack of initial renown.  When Page and Brin started Google, they didn’t, believe it or not, have any Twitter followers at all.  In fact, you couldn’t even Google them.

What else?

The real threats to free speech on campus

That is the topic of my latest Bloomberg column, here is an excerpt:

…being at a state school is hardly a guarantee of tolerance. Teaching at a state university does widen the scope of what a professor can say without being fired. But ongoing student protests or unfavorable treatment from colleagues can make continued employment so unpleasant that a person simply decides to leave. In my experience, most professors aren’t in it for the money — rather, they love their work. Loving your work is a gift that can be taken away rather easily, regardless of whatever formal legal protections there may be.

Or consider the position of a student. You might have the legal right to start a pro-Trump group on campus. But you might be dissuaded from doing so if you fear your professors would respond by writing you mediocre letters of recommendation.

What really matters on campus is what the most obstreperous participants in these debates consider to be acceptable behavior and speech, and how far they will take their protests. These individuals are usually those with relatively little to lose from strident behavior, and perhaps some local status to gain. They may be students, or they may not; they can be student counselors, or faculty members, or even low-level university bureaucrats.

I explain in the piece why my own university, George Mason, has been strong in this regard.  And I am not crazy about the new proposed Trump executive order:

The relevant troublemakers are hardly ever university administrators. Yet they would inevitably become entangled in any tighter federal free-speech regulations. I have found such administrators to be pragmatic and able to see multiple sides of an issue, even if I do not always agree with their stances. Their primary goal is usually to get the rancor and protests to go away, so the business of the university can return to normal. Placing more constraints on their behavior could actually weaken their hand — by limiting their ability to mollify unruly student groups, for instance.

The full piece offers several additional arguments of note, so do read the whole thing.  Here is my conclusion:

I’m all for free speech, whether for public or private schools. But the fight has to be won in the hearts and minds of students and workers, not by the federal government.

Work isn’t so bad

Although we spend much of our waking hours working, the emotional experience of work, versus non-work, remains unclear. While the large literature on work stress suggests that work generally is aversive, some seminal theory and findings portray working as salubrious and perhaps as an escape from home life. Here, we examine the subjective experience of work (versus non-work) by conducting a quantitative review of 59 primary studies that assessed affect on working days. Meta-analyses of within-day studies indicated that there was no difference in positive affect (PA) between work versus non-work domains. Negative affect (NA) was higher for work than non-work, although the magnitude of difference was small (i.e., .22 SD, an effect size comparable to that of the difference in NA between different leisure activities like watching TV versus playing board games). Moderator analyses revealed that PA was relatively higher at work and NA relatively lower when affect was measured using “real-time” measurement (e.g., Experience Sampling Methodology) versus measured using the Day Reconstruction Method (i.e., real-time reports reveal a more favorable view of work as compared to recall/DRM reports). Additional findings from moderator analyses included significant differences in main effect sizes as a function of the specific affect, and, for PA, as a function of the age of the sample and the time of day when the non-work measurements were taken. Results for the other possible moderators including job complexity and affect intensity were not statistically significant.

That is from a new paper by Martin J. Biskup, Seth Kaplan, Jill C. Bradley-Geist, and Ashley A. Membere.  Such meta-analyses have their problems, but I consider other kinds of analysis, with complementary results, in my forthcoming book Big Business: A Love Letter to an American Anti-Hero.

Via Rolf Degen.

Hypnotist markets in everything

Those new service sector jobs:

This hypnotist charges half a bitcoin for helping you remember your lost cryptocurrency password…

“If you’ve got, you know, $100,000, $200,000, $300,000 worth of bitcoin in a wallet and you can’t get access to it, there’s a lot of stress there,” he says. “So it’s not just as simple as saying, okay, we’re going to go do a 30-minute hypnosis session and enhance your memory.”

Miller declined to specify the exact number of participants in his bitcoin password recovery program or how much money he’s recovered, citing client confidentiality. However, he says that there are currently “several people” in his program, who are experiencing varying degrees of success.

Generally, a person who created their password more recently will have an easier time unlocking this memory, he says. Likewise, a client who is feeling low stress will have an easier time remembering their password than one under high stress.

Miller is located in Greenville, South Carolina.

For the pointer I thank Nick Glenn.

Tech and economic growth in the Book of Genesis

That is the topic of my latest Bloomberg column, worth reading as an integrated whole.  Here is one excerpt:

The stories have so much religious significance that it is easy to miss the embedded tale of technology-led economic growth, similar to what you might find in the work of Adam Smith or even Paul Romer. Adam and Eve eat of “the tree of knowledge, good and evil,” and from that decision an entire series of economic forces are set in motion. Soon thereafter Adam and Eve are tilling the soil, and in their lineage is Tubal-Cain, “who forged every tool of copper and iron.”

Living standards rise throughout the book, and by the end we see the marvels of Egyptian civilization, as experienced and advised by Joseph. The Egyptians have advanced markets in grain, and the logistical and administrative capacities to store grain for up to seven years, helping them to overcome famine risk (for purposes of contrast, the U.S. federal government routinely loses track of assets, weapons, and immigrant children). It is a society of advanced infrastructure, with governance sophisticated enough to support a 20 percent tax rate (Joseph instructs the pharaoh not to raise it higher). Note that in modern America federal spending typically has run just below 20 percent since the mid-1950s.

Arguably you can find a story of quantitative easing in Genesis as well. When silver is hard to come by, perhaps because of deflationary forces, the Egyptian government buys up farmland and compensates the owners with grain.

Most of all, in the Genesis story, the population of the Middle East keeps growing. I’ve known readers who roll their eyes at the lists of names, and the numerous recitations of who begat whom, but that’s the Bible’s way of telling us that progress is underway. Neither land nor food supplies prove to be the binding constraints for population growth, unlike the much later canonical classical economics models of Malthus and Ricardo.

There is much more at the link.

The complacent class

The students who had taken over her office were a conscious throwback to the activism of the 1960s, when Hampshire [College] was conceived as an experiment in higher education. Now they were fighting for its survival in a different time, and it was not looking good. The college announced in January that it was facing “tough financial trends” and was looking for a partner to stay afloat…

Founded in 1965 and opened to students five years later, Hampshire, a liberal arts college in western Massachusetts, is an embodiment of the progressive education principles that arose from the spirit of individualism and self-expression of that era. There are no grades, only narrative assessments, and there are no prescribed majors; students design their own courses of study.

Hampshire and a few dozen other schools founded on similar principles were once the cutting edge of academia. But now, families facing sky-high tuitions are looking for a more direct link between college and career, college officials say. As a result, many of these small, experimental schools are being forced to re-examine their missions, merge with more traditional institutions or, in some cases, shut down.

Here is more from Anemona Hartocollis at the NYT.

The culture and polity that is Arlington, Virginia

Arlington officials say Amazon’s arrival will boost the number of visitors staying in hotels, motels and other lodgings. Starting in June 2019, 15 percent of any increase in its “transient occupancy tax” would go to Amazon, if the company meets specific targets for how much office space the new headquarters facility occupies.

The agreement says Amazon needs to occupy 64,000 square feet of office space by July 31, 2020, in order to qualify for the 15 percent payment. The required amount of space increases to 252,800 square feet by July 31, 2021, and to 5.576 million by July 31, 2034, the last year of incentive payments.

Here is more from WaPo.

Tuesday assorted links

The value of exploitative loans

I show that the same bias that causes someone to take an exploitative loan may also imply that the loan benefits them by causing them to purchase a product or service that they should, but wouldn’t otherwise, buy. I demonstrate the importance of this effect in a study of tax refund anticipation loans. I find that regulation curtailing these loans reduced the use of paid tax preparers and the takeup of the earned income tax credit, which is the second largest federal transfer to low-income households.

That is from a paper by Andrew T. Hayashi, via the excellent Kevin Lewis.

*Publisher’s Weekly* on my next book *Big Business*

My subtitle is A Love Letter to an American Anti-Hero, and here is the review:

Cowen (The Great Stagnation), an economics professor at George Mason University, counters complaints of fraudulent corporate behavior, excessive CEO pay, invasions of privacy, oppressive work culture, and corporate influence on government in this spirited defense of big business. He creatively mines polls, economic data, and even social psychology to argue that big business has, on balance, been unfairly judged. Disarmingly, he acknowledges that it’s not perfect—he criticizes the health care industry, notes that corporate cultures have not responded well to sexual harassment, and recognizes threats to privacy from the technology sector—but then he hedges: health care consolidation, he says, is at least partly the result of government regulation; corporations are now responding to sexual harassment; and traditionally generated gossip may well be a bigger threat than breaches of data privacy. Cowen is a smart, original thinker with a knack for reframing criticisms in the context of a larger, utilitarian perspective (drugs produced by pharmaceutical companies save lives, Google Maps gets us where we want to go) that implicitly endorses the current economic system; he comes off more like a lawyer than an ideologue. This analysis is unlikely to convince readers skeptical of big business of its virtue, but it provides food for thought.

Here is information to purchase the book.

Google decides it is underpaying its men

When Google conducted a study recently to determine whether the company was underpaying women and members of minority groups, it found that more men than women were receiving less money for doing similar work.

The surprising conclusion to the latest version of the annual study contrasted sharply with the experience of women working in Silicon Valley and in many other industries.

In response to the finding, Google gave $9.7 million in additional compensation to 10,677 employees for this year. Men account for about 69 percent of the company’s work force, but they received a disproportionately higher percentage of the money. The exact number of men who got raises is unclear.  [TC: I don’t fully understand the metric here.]

But the study did not tell the whole story of women at Google or in the technology industry more broadly, something that company officials acknowledged.

That is from Daisuke Wakabayashi at The New York Times.