After looking at education and health care and doing a statistical analysis covering 139 industries, Helland and I conclude that a big factor in price increases over time in the rising price of skilled labor. Many industries use skilled labor, however, and even so prices decline so that cannot be a full explanation. Moreover, why is the price of skilled labor increasing? The Baumol effect answers both of these questions. In this post, I’ll explain the effect drawing from Why Are the Prices so D*mn High.
The Baumol effect is easy to explain but difficult to grasp. In 1826, when Beethoven’s String Quartet No. 14 was first played, it took four people 40 minutes to produce a performance. In 2010, it still took four people 40 minutes to produce a performance. Stated differently, in the nearly 200 years between 1826 and 2010, there was no growth in string quartet labor productivity. In 1826 it took 2.66 labor hours to produce one unit of output, and it took 2.66 labor hours to produce one unit of output in 2010.
Fortunately, most other sectors of the economy have experienced substantial growth in labor productivity since 1826. We can measure growth in labor productivity in the economy as a whole by looking at the growth in real wages. In 1826 the average hourly wage for a production worker was $1.14. In 2010 the average hourly wage for a production worker was $26.44, approximately 23 times higher in real (inflation-adjusted) terms. Growth in average labor productivity has a surprising implication: it makes the output of slow productivity-growth sectors (relatively) more expensive. In 1826, the average wage of $1.14 meant that the 2.66 hours needed to produce a performance of Beethoven’s String Quartet No. 14 had an opportunity cost of just $3.02. At a wage of $26.44, the 2.66 hours of labor in music production had an opportunity cost of $70.33. Thus, in 2010 it was 23 times (70.33/3.02) more expensive to produce a performance of Beethoven’s String Quartet No. 14 than in 1826. In other words, one had to give up more other goods and services to produce a music performance in 2010 than one did in 1826. Why? Simply because in 2010, society was better at producing other goods and services than in 1826.
The 23 times increase in the relative price of the string quartet is the driving force of Baumol’s cost disease. The focus on relative prices tells us that the cost disease is misnamed. The cost disease is not a disease but a blessing. To be sure, it would be better if productivity increased in all industries, but that is just to say that more is better. There is nothing negative about productivity growth, even if it is unbalanced.
In this post, I will discuss some implications of the fact that productivity is unbalanced. See the book for more discussion and speculation about why productivity growth is systematically unbalanced.
The Baumol effect reminds us that all prices are relative prices. An implication is that over time prices have very little connection to affordability. If the price of the same can of soup is higher at Wegmans than at Walmart we understand that soup is more affordable at Walmart. But if the price of the same can of soup is higher today than in the past it doesn’t imply that soup was more affordable in the past, even if we have done all the right corrections for inflation.
We can see this in the diagram at right. We have a two-good economy, Cars and Education. The production possibilities frontier shows all the combinations of Cars and Education that we can afford given our technology and resources at time 1 (PPF 1). Now suppose society chooses to consume the bundle of goods denoted by point (a). The relative price of Cars and Education is given by the slope of the PPF at that point. That price/slope tells us if we give up some education how many more cars can we get? In a market economy the price has to be given by the slope of the PPF because that is the only price at which people will willing consume the bundle of goods at point (a), i.e. it’s the equilibrium price.
Now at time 2, productivity has increased which means that with the same resources we can now have more of both goods. Productivity of Car production has increased more than that of Education production, however, so the curve shifts out more towards Cars than towards Education. Suppose society continues to consume Cars and Education in the same proportions, i.e. at point (b). The price of education must increase–and all that means is that if we give up a unit of education at point b we will get more cars than before which is the same as saying that if we want more education at point b we must give up more cars than before, i.e. the price has increased.
Notice, however, that although the price of education has increased, education is not less affordable. Indeed, at point (b) we are consuming more of both goods–broadly speaking this is exactly what has happened–namely, the price of education has increased and we now consume more of it than ever before.
When we recognize that all prices are relative prices the following simple yet deep facts follow:
- If productivity increases in some industries more than others then, ceteris paribus, some prices must increase.
- Over time, all real prices cannot fall.
In Figure 22 the economy moves from point (a) to point (b). If we graph the same transition over time it will look something like Figure 23.
Looking at such graphs, our attention naturally is drawn to the rising cost of education. Why are costs rising so quickly? Entranced by such graphs, we may enter into a detailed analysis of the special factors of education—regulation, unionization, government purchases, insurance, international trade, and so forth—to try to explain the dramatic increase in costs. Yet the rising costs in the education sector are simply a reflection of increased productivity in the car sector. Thus, another deep lesson of the Baumol effect is that to understand why costs in the stagnant sector are rising, we must look away from the stagnating sector and toward the progressive sector.
Finally, there is one other addition to the Baumol effect which is not often recognized but worth drawing attention to. In Figure 22, I assumed that preferences were such that people wanted to consume the same ratio of goods over time so we moved from point (a) to point (b). But suppose that as we get wealthier we get tired of more cars and would like relatively more education so we move towards point (d). As we move from point (b) to point (d) we are taking resources away from car production, resources which were probably well-suited to making cars, and instead moving them towards education where they are probably less well suited. As a result as we move from point (b) to point (d) we are driving up the price of education as we try to turn auto workers into teachers. In this case, the Baumol effect gets magnified. We could alternatively move from point (b) to point (c) which would turn teachers into less productive auto workers thus driving down the price of education (i.e. increasing the price of cars). Thus, depending on preferences, the Baumol effect can be magnified or ameliorated.
As a society it appears that with greater wealth we have wanted to consume more of the goods like education and health care that have relatively slow productivity growth. Thus, preferences have magnified the Baumol effect.
Next week, I will wrap up the discussion by explaining some features of the data that the Baumol effect fits much better than do other theories.
Addendum: Other posts in this series.
In this paper, I estimate the causal effect of increased exposure to online social networks during college on future labor market outcomes.
Using quasi-random variation from Facebook’s entry to college campuses during its infancy, I exploit a natural experiment to determine the relationship between online social network access and future earnings.
I find a positive effect on wages from Facebook access during college. This positive effect is largest in magnitude for female students, and students from lower-middle class families.
I provide evidence that this positive effect from Facebook access comes through the channel of increased social ties to former classmates, which in turn leads to strengthened employment networks between college alumni.
My estimates imply that access to Facebook for 4 years of college causes a 2.7 percentile increase in a cohort’s average earnings, relative to the earnings of other individuals born in the same year. This translates to an average nominal wage increase of $3,000-$5,000 in 2014.
To be clear, some of that could be a wage distribution effect. Still, this paper points to the possibility of some very real networking and matching gains from the use of Facebook, and perhaps those gains do not favor traditional elites.
For the pointer I thank the excellent Kevin Lewis.
That is the new and very interesting forthcoming book by Janek Wasserman, focusing on the history of the Austrian school of economics and due out in September. A few comments:
1. It is the best overall history of the Austrian school.
2. It is in some early places too wordy, though perhaps that is necessary for the uninitiated.
3. I don’t think actual “Austrian school members” will learn much economics from it, though it has plenty of useful historical detail, far more than any other comparable book. And much of it is interesting, not just: “Adolph Wagner and Albert Schaeffler taught in the Austrian capital in the 1860s and early 1870s, but quarrels with fellow incumbent Lorenz von Stein led to their departure.”
4. Even a full decade after its release in 1871, Menger’s Principles was not achieving much attention outside of Vienna.
5. The early Austrians favored progressive taxation and fairly standard Continental approaches to government spending.
6. The Austrian school of those earlier times was in danger of disappearing, as Boehm-Bawerk was working in government and the number of “Austrian students” was drying up, circa 1905.
7. The very first articles of Mises were empirical, and covered factory legislation, labor law, and welfare programs.
8. Wieser and some of the others lost status with the fall of the Dual Monarchy after WWI; Wieser for instance no longer had a House of Lords membership. Schumpeter and Mises responded to these changes by writing more for a broader public, often through newspapers (not blogs). Mises’s market-oriented views seemed to stem from this time.
9. Hayek in fact struggled in high school, though his grandfather had gone on Alpine hikes with Boehm-Bawerk.
10. The Lieder of the original Mises circle were patterned after the poems of Karl Kraus, and one of them mentioned spaghetti and risotto.
11. Much of this book is strong evidence for the “small group” theory of social change.
12. The patron institution for Hayek’s business cycle research of 1927 to 1931 was partly sponsored by the Rockefeller Foundation.
13. By the mid-1930s, Mises, Tinbergen, Koopmans, and Nurkse were all living in Geneva. There was a Vienna drinking song saying farewell to Mises.
14. I wonder how these guys would have looked as Emergent Ventures applicants. [“We’re going to run away from the Nazis and recreate anew our whole school of thought in America, with thick Austrian accents…and with a night school class at NYU to boot.”]
15. The Austrian school eventually was reborn in the United States, which accounts for many more chapters in this book, some of them concerned with the ties between the Austrian school and libertarianism. There are some outright errors of fact in this section of the book, sometimes involving matters I was involved with personally (and which are non-controversial, not a question of “taking sides”). I think also the latter parts of the book do not quite grasp the extensive influence of the Austrian school on America, extending up through the current day, and covering such diverse areas as regulatory policy and tech and crypto.
Nonetheless, recommended as an important contribution to the history of economic thought.
There was some head-scratching this week, as data showed Japan’s economy growing by 2.1% in the first quarter at an annualised rate, defying expectations of a slight contraction. Most of the growth was explained by a huge drop in imports. Because they fell at a faster rate than exports, gdp rose.
Nope. Imports do not influence Gross Domestic Product, at least not in the mechanical way suggested by The Economist. Here’s how Tyler and I explain it in Modern Principles:
It’s important to remember the Domestic in Gross Domestic Product. When we add C+I+G we are adding up all national spending but some of that spending was on imports, goods that were not produced domestically. So we subtract imports from national spending to get national spending on domestically produced goods, C+I+G – Imports.
…Here is a mistake to avoid. The national spending approach to calculating GDP requires a step where we subtract imports but that doesn’t mean that imports are bad for GDP! Let’s consider a simple economy where I, G, and Exports are all zero and C=$100 billion. Our only imports come from a container ship that once a year delivers $10 billion worth of iPhones. Thus when we calculate GDP we add up national spending and subtract $10 billion for the imports, $100-$10=$90 billion. But suppose that this year the container ship sinks before it reaches New York. So this year when we calculate GDP there are no imports to subtract. But GDP doesn’t change! Why not? Remember that part of the $100 billion of national spending was $10 billion spent on iPhones. So this year when we calculate GDP we will calculate $90 billion-$0=$90 billion. GDP doesn’t change and that shouldn’t be surprising since GDP is about domestic production and the sinking of the container ship doesn’t change domestic production.
If we want to understand the role of imports (and exports) on GDP and national welfare. We have to go beyond accounting to think about economics. If we permanently stopped all the container ships from delivering iPhones, for example, then domestic producers would start producing more cellphones and that would add to GDP but producing more cellphones would require producing less of other goods. If we were buying cellphones from abroad because producing them abroad requires fewer resources then GDP would actually fall—this is the standard argument for trade that you learned in your microeconomics class. The standard answer could change, however, if there were lots of unemployed resources, an issue we will discuss in Chapter 32 and later chapters. The point we want to emphasize here is not whether trade is ultimately good or bad but rather that Y+C+I+G+NX is an accounting identity that can’t by itself answer this question.
Here is the announcement. Presumably they wish to claw back some of the quantity going to the ever-multiplying number of AEA journals and to thus avoid being an afterthought. Will the average quality of JPE article decline? I suppose by one definition it has to, but in such a rapidly specializing discipline, who will notice? Is it really so clear which pieces come close but don’t quite deserve to belong in the JPE? I for one could not pass this “blind taste test” in my role as a JPE reader, and I have been following the rag for decades.
As a polar experiment, what if they put out an issue every day, and in essence the top journals took all the published pieces? Then the notion of having a “top three” hit (or whatever) would dwindle and people actually would have to judge the work. A modest move in that direction should be just fine, said the daily blogger.
In the meantime, the leading lights of the profession — most of all in the earlier parts of their careers — should be prepared for that much more refereeing. Ay!
In Why Are The Prices So D*mn High? Helland and I examine lower education, higher education and health care in-depth and we do a broader statistical analysis of 139 industries. Today, I will make a few points about education. First, costs in both lower and higher education are rising faster than inflation and have been doing so for a very long time. In 1950 the U.S. spent $2,311 per elementary and secondary public school student compared with $12,673 in 2013, over five times more (both figures in $2015). The rate of increase was fastest in the 1950s and 1960s–a point to which I will return later in this series.
College costs have also increased dramatically over time. For this book, we are interested in costs more than tuition because we want to know what society is giving up to produce education rather than who, in the first instance, is paying for it. Costs are considerably higher than tuition even today, although in recent years tuition has been catching up. Essentially students and their parents have been paying an increasing share of the increasing cost of higher education. Moreover, as with lower education, costs have been rising for a very long period of time.
I will take it as given that the explanation for higher costs isn’t higher quality. The evidence on tests scores is discussed in the book:
It is sometimes argued that how we teach has not changed but that what we teach has improved in quality. It is questionable whether studies of Shakespeare have improved, but there have been advances in biology, computer science, and physics that are taught today but were not in the past. However, these kinds of improvements cannot explain increases in cost. It is no more expensive to teach new theories than old. In a few fields, one might argue that lab equipment has improved, which it certainly has, but we know from figure 1 that goods in general have decreased in price. It is much cheaper today, for example, to equip a classroom with a computer than it was in the past.
The most popular explanation why the cost of education has increased is bloat. Elizabeth Warren and Chris Christie, for example, have both blamed climbing walls and lazy rivers for higher tuition costs. Paul Campos argues that the real reason college costs are growing is “the constant expansion of university administration.” Redundant administrators are also commonly blamed for rising public school costs.
The bloat theory is superficially plausible. The lazy rivers do exist! But the bloat theory requires longer and lazier rivers every year, which is less plausible. It’s also peculiar that the cost of education is rising in both lower and higher education and in public and private colleges despite very different competitive structures. Indeed, it’s suspicious that in higher education bloat is often blamed on competition–the “amenities arms race“–while in lower education bloat is often blamed on lack of competition! An all-purpose theory doesn’t explain much.
More importantly, the data reject the bloat theory. Figure 8 shows spending shares in higher education. Contrary to the bloat theory, the administrative share of spending has not increased much in over thirty years. The research share, where you might expect to find higher lab costs, has fluctuated a little but also hasn’t risen much. The plant share which is where you might expect to find lazy rivers has even gone down a little, at least compared to the early 1980s.
Nor is it true that administrators are taking over the public schools, see Figure 10.
Compared with teachers and other staff, the number of principals and administrators is vanishingly small, only 0.4 per 100 students over the 1950–2015 period. It is true, if one looks closely, that the number of principals and administrators doubled between 1970 and 1980. It is unclear whether this is a real increase or a data artifact (we only have data for 1970 and 1980, not the years in between during this period). But because the base numbers are small, even a doubling cannot explain much. A bloated little toe cannot explain a 20-pound weight gain. Moreover, the increase in administrators was over by 1980, but expenditures kept growing.
If bloat doesn’t work, what is the explanation for higher costs in education? The explanation turns out to be simple: we are paying teachers (and faculty) more in real terms and we have hired more of them. It’s hard to get costs to fall when input prices and quantities are both rising and teachers are doing more or less the same job as in 1950.
We are not arguing, however, that teachers are overpaid!
Indeed, it is part of our theory that teachers are earning a normal wage for their level of skill and education. The evidence that teachers earn substantially above-market wages is slim. Teachers’ unions in public schools, for example, cannot explain decade-by-decade increases in teacher compensation. In fact, most estimates find that teachers’ unions raise the wage level by only approximately 5 percent. In other words, teachers’ unions can explain why teachers earn 5 percent more than similar workers in the private sector, but unions cannot explain why teachers’ wages increase over time.
If the case for unions as a cause of rising teacher compensation in public schools is weak, it is nonexistent for increased compensation for college faculty, for whom wage bargaining is done worker by worker with essentially no collective bargaining whatsoever.
A signal to where we are heading is this:
If increasing labor costs explain the increasing price of education but teachers are not overpaid relative to similar workers in other industries, then increasing labor costs must lead to higher prices in the education industry more than in other industries.
Read the whole thing. Next up, health care.
Addendum: Other posts in this series.
Why have some prices increased since 1950 by a factor of four while other prices have decreased by a factor of four? Technology is making so many goods and services much cheaper than in the past–that seems to be the normal situation–so why do some industries seem not only to be not progressing but actually retrogessing? As Scott Alexander put it, why are some industries so weird?
Those are the questions that motivated my latest piece, a short book with Eric Helland just released by the Mercatus Center titled, Why are the Prices so D*mn High?
In approaching this question I had some ideas in mind. I assumed that regulation, bloat and bureaucracy, monopoly power and the Baumol effect would each explain some of what is going on. After looking at this in depth, however, my conclusion is that it’s almost all Baumol effect. That conclusion radically changes one’s evaluation of price increases and decreases over the long run and it changes what, if anything, one might try to do to address such price changes.
Next week I will examine some of the evidence that pushes me towards this verdict. I’ll also take a closer look at the Baumol effect, which is mistakenly called the cost disease.
Let’s note here, however, what we need to explain. For the most part, we don’t see quick, big changes in prices that then level off. That in itself is interesting since policy tends to be discontinuous. We might expect a big regulation, for example, to cause a big increase in prices as industries adjust but then growth should return to normal. Instead, what we see and need to explain is slow, steady rising relative prices that happens over decades. Indeed, in some cases, such as education, prices have been increasing faster than average for more than a century! Puzzle over that over the long weekend. More next week!
Addendum: Other posts in this series.
That is the new book by David Epstein, the author of the excellent The Sports Gene. I sometimes say that generalists are the most specialized people of them all, so specialized they can’t in fact do anything. Except make observations of that nature. Excerpt:
In an impressively insightful image, Tetlock described the very best forecasters as foxes with dragonfly eyes. Dragonfly eyes are composed of tens of thousands of lenses, each with a different perspective, which are then synthesized in the dragonfly’s brain.
I am not sure Epstein figures out what a generalist really is (and how does a generalist differ from a polymath, by the way?), but this book is the best place to start for thinking about the relevant issues.
For a forthcoming Conversations with Tyler, no associated public event. Your counsel and extreme wisdom are appreciated as always.
Here is good coverage from Dylan Matthews, here is one excerpt:
[Chetty’s] Ec 1152 is an introduction to that kind of economics. There’s little discussion of supply and demand curves, of producer or consumer surplus, or other elementary concepts introduced in classes like Ec 10. There is no textbook, only a set of empirical papers. The material is relatively cutting-edge. Of the 12 papers students are required to read, 11 were released in 2010 or after. Half of the assigned papers were released in 2017 or 2018. Chetty co-authored a third of them.
Why not excerpt the cameo of me?:
…fellow traditionalist Tyler Cowen…told me he’s excited about the class. “I am for experimentation, and more of it in academia, and for that reason I approve,” he writes. “Of course it was not what I do, which is more traditional micro, more theory, less overlap with sociology. If the instructor is great, that is really what matters.”
There is much more at the link. And here is Daniel Simonsen, Norwegian comic.
Very much a fun one, here is the audio and transcript, here is part of the opening summary:
Do we overrate the importance of doctors? What’s the importance of IQ versus EQ in the practice of medicine? What are the prospect for venture capital in biotech? How should medical training be changed? Why does he think the conventional wisdom about a problem tends to be wrong? Would immortality be boring? What would happen if we let parents genetically engineer their kids?
Tyler questions Emanuel on these topics and more, including the smartest thing his parents did while raising him, whether we have right to medical self-defense, healthcare in low- versus high-trust institutions, and much more.
Here is one excerpt:
COWEN: How can we improve medical education?
EMANUEL: Cut it down. Make it shorter.
COWEN: Cut it down? Why does that make it better? Or does it just make it cheaper?
EMANUEL: No, I think it will make it better. So, we have a lot of memorization, a lot of . . . So, let’s go back to the start. The four years of medical school: two years of preclinical in the classroom learning about biochemistry, genetics, anatomy, microbiology; and the two years of clinical time in the hospital, on the wards.
That dates from 1910. We haven’t really updated it much, except in this one way: we’ve cut down the preclinical time because — less of it — and it changes so fast, by the time you learn it in medical school, get out as a doctor, it’s out of date, A; and B, it’s more or less irrelevant to managing most patients…
And then, by the way, in med school, spending your time in a hospital is not the future. The future of American medicine is out of the hospital. So we need more rotations, more experiences for students out of the hospital.
No med school has made that big shift, and those are the shifts that are going to have to happen over the next 15 or so years.
COWEN: Is there a right to medical self-defense that should override FDA bans on drugs and medical devices? I want to try something that’s not approved —
EMANUEL: No. I don’t like that.
COWEN: I’m saying it’s my body. But why don’t you like it?
EMANUEL: No, no, no, no, no, no, no, no, no, Tyler.
COWEN: Now, you’ve written a much-misunderstood article about how hard you would try yourself to live past the age of 75. Would not the suspense of world and national history always keep you wanting a bit more extra time?
So, say I’m 75. I’ve decided I agree with you, but the NBA Finals aren’t over yet. I want to see game seven. I want the Mueller report to come out. Isn’t there always something?
And then, it’s kind of intransitivity of indifference. Every day there’s something, and you just keep on hanging on, even if one accepts your arguments in the abstract. Can you talk me out of that?
EMANUEL: No, no, Tyler, I think you’re exactly right. That’s why people do hang on. It’s because . . . you know, so I talked to my father, who — he says, “Zeke, you’re absolutely right. I’ve become slower, physically slower, mentally slower. My life” . . . what ends up happening is your life cones down, and you begin to overvalue certain small things. Like the NBA Finals. Like what’s in the Mueller report.
We all know, from any cosmic standpoint — even not a cosmic standpoint, just a 2,000-foot standpoint — most of those things are not irrelevant. It’s really cool to know.
You often ask — and this happens to me all the time. I teach undergraduates. Pretty smart undergraduates. Very smart undergraduates. MBA students, nurses, doctors, right? They have no understanding of history. So, whoever finishes in the NBA Finals, in five years, people have forgotten.
Recommended, interesting throughout.
In April, Harvard University’s economics department for the first time led a Personal Finance workshop series for undergraduates. In May, Princeton students attended the university’s inaugural Financial Literacy Day, complete with T-shirts and consultations.
“I do think this is an environment that is very stressful for many students,” said John Y. Campbell, an economics professor at Harvard who taught the workshop. “There are long-term trends like the increase in inequality, rising student debt—they make students very mindful of the challenges they’re going to face.”
Kian Mintz-Woo, a postdoctoral research associate at Princeton who participated in the Financial Literacy Day, said he craves this kind of formalized instruction.
“We’re a generation that’s really shaped by some really poor macroeconomic decisions and it’s harder for us to think that there’s sort of exogenous progress in our lives and our livelihoods,” he said.
The Ivys are part of a growing trend to teach students about money. In the last decade, community colleges, public schools and state universities have started offering personal-finance programs to meet student demand, according to the Financial Security Project at Boston College.
More states are recognizing the importance of financial literacy at the high-school level. Nineteen states now mandate high schools to educate students on basic financial knowledge before they graduate, up from 17 states in 2018 and 13 in 2011, according to the Council for Economic Education.
That is from Julia Carpenter in the WSJ.
I hope your head doesn’t explode, but it seems to me that Harvard and Matt Yglesias are right about the dismissal of Sullivan from his Winthrop House post at Harvard. Matt explains:
Sullivan isn’t a public defender who’s simply taking the clients assigned to him. He’s not even a full-time criminal defense lawyer who just takes whichever clients happen to come through his door. He’s a busy guy who has classes to teach, a dorm to administer, and various other demands on his time. While it’s obviously true that all criminal defendants have a right to an attorney, it’s equally obvious that criminal defendants don’t have a particular right to Ronald Sullivan’s services.
Now, I don’t doubt that Harvard may have acted for what in part are the wrong reasons, namely asymmetric treatment of left-and right wing causes and cases. Still, it seems reasonable to me that Harvard insists that its faculty dorm administrators face a minimum of outside distractions, especially controversial distractions, without having to judge whose fault is the controversy (Sullivan’s fault? Harvard’s fault? the fault of the possibly “snowflaky” students?). Maybe Harvard would have been unfair and inconsistent had another, non-Weinstein defendant been involved, still that does not make Sullivan’s dismissal the wrong decision.
On top of that, having “snowflake” students in the dorm is still a reason to make Sullivan choose either the dorm or the legal case — complainers don’t always have to be correct for their wishes to have some validity. It really is about helping students focus on their studies, and sometimes that might mean removing distractions which distract for maybe not entirely rational reasons. Furthermore, in this case maybe the distraction was rational to some extent (I genuinely do not know on that one as I do not have direct information, Matt thinks yes but in my view leaps to quickly to that conclusion).
Let’s say I hired a TA for my Econ 101 class, and then I learned that TA would be defending Edward Snowden in his or her spare time. Probably I would ask for another TA! And that has nothing to do with my view of Snowden, one way or the other, or whether my students have rational views of Snowden or not (I genuinely do not know if they do).
With the Sullivan/Weinstein episode, it is not difficult to imagine the media becoming “too interested” in Winthrop House and Sullivan’s role, for media-prurient reasons, and to the detriment of student focus. It is not crazy for Harvard to choke this off before it gets started, with no animus required toward Sullivan or any particular defendant.
Note also this from Matt:
At least some of the heat around this topic stems from a measure of confusion among the general public as to what the job of faculty dean amounts to. It sounds like a lofty academic post but actually is closer to being a kind of glorified RA — though even this is arguably an overstatement of the role.
Overall, I don’t think this is the right cause for free speech advocates, opponents of PC in universities, etc. It seems to me like a private institution making an entirely defensible governance decision, on a matter which does quite genuinely fall under its governance purview.
I will be doing a Conversations with Tyler with him, if you need it here is some background information. So what should I ask?
People were outraged in 2014 when Facebook revealed that it had run “psychological experiments” on its users. Yet Facebook changes the way it operates on a daily basis and few complain. Indeed, every change in the way that Facebook operates is an A/B test in which one arm is never run, yet people object to A/B tests but not to either A or B for everyone. Why?
In an important and sad new paper Meyer et al. show in a series of 16 tests that unease with experiments is replicable and general. The authors, for example, ask 679 people in a survey to rate the appropriateness of three interventions designed to reduce hospital infections. The three interventions are:
Badge (A): The director decides that all doctors who perform this procedure will have the standard safety precautions printed on the back of their hospital ID badges.
Poster (B): The director decides that all rooms where this procedure is done will have a poster displaying the standard safety precautions.
- A/B: The director decides to run an experiment by randomly assigning patients to be treated by a doctor wearing the badge or in a room with the poster. After a year, the director will have all patients treated in whichever way turns out to have the highest survival rate.
It’s obvious to me that the A/B test is much better than either A or B and indeed the authors even put their thumb on the scales a bit because the A/B scenario specifically mentions the positive goal of learning. Yet, in multiple samples people consistently rate the A/B scenario as more inappropriate than either A or B (see Figure at right).
Why do people do this? One possibility is that survey respondents have some prejudgment about whether the Badge or Poster is the better approach and so those who think Badge is better rate the A/B test as inappropriate as do those who think Poster is better. To examine this possibility the authors ask about a doctor who prescribes all of his patients Drug A or all of them Drug B or who randomizes for a year between A and B and then chooses. Why anyone would think Drug A is better than Drug B or vice-versa is a mystery but once again the A/B experiment is judged more inappropriate than prescribing Drug A or Drug B to everyone.
Maybe people don’t like the idea that someone is rolling dice to decide on medical treatment. In another experiment the authors describe a situation where some Doctors prescribe Drug A and others prescribe Drug B but which drug a patient receives depends on which doctor is available at the time the patient walks into the clinic. Here no one is rolling dice and the effect is smaller but respondents continue to rate the A/B experiment as more inappropriate.
The lack of implied consent does bother people but only in the explicit A/B experiment and hardly ever in the implicit all A or all B experiments. The authors also show the effect persists in non-medical settings.
One factor which comes out of respondent comments is that the experiment forces people to reckon with the idea that even experts don’t know what the right thing to do is and that confession of ignorance bothers people. (This is also one reason why people may prefer pundits who always “know” the right thing to do even when they manifestly do not).
Surprisingly and depressingly, having a science degree does not solve the problem. In one sad experiment the authors run the test at an American HMO. Earlier surveys had found huge support for the idea that the HMO should engage in “continuous learning” and that “a learning health system is necessary to provide safe, effective, and beneficial patient-centered care”. Yet when push came to shove, exactly the same pattern of accepting A or B but not an A/B test was prevalent.
Unease with experiments appears to be general and deep. Widespread random experiments are a relatively new phenomena and the authors speculate that unease reflects lack of familiarity. But why is widespread use of random experiments new? In an earlier post, I wrote about ideas behind their time, ideas that could have come much earlier but didn’t. Random experiments could have come thousands of years earlier but didn’t. Thus, I think the authors have got the story backward. Random experiments generate unease not because they are new, they are new because they generate unease.
Our reluctance to conduct experiments burdens us with ignorance. Understanding and overcoming experiment-unease is an important area for experimental research. If we can overcome our unease.