How average is perceived as being over
If you actually take a close look at the numbers, it turns out that of the people who identified as middle class in 2008, nearly a third of them now identify as lower middle or lower class.1 This is even more dramatic than it seems. Class self-identification is deeply tied up with culture, not just income, and this drop means that a lot of people—about one in six Americans—now think of themselves as not just suffering an income drop, but suffering an income drop they consider permanent. Permanent enough that they now live in a different neighborhood, associate with different friends, and apparently consider themselves part of a different culture than they did just six years ago.
There is more here, from Kevin Drum.
Does Medical Malpractice Law Improve Health Care Quality?
Maybe not so much. That is a new paper by Michael Frakes and Anupam B. Jena, the abstract is here:
Despite the fundamental role of deterrence in justifying a system of medical malpractice law, surprisingly little evidence has been put forth to date bearing on the relationship between medical liability forces on the one hand and medical errors and health care quality on the other. In this paper, we estimate this relationship using clinically validated measures of health care treatment quality constructed with data from the 1979 to 2005 National Hospital Discharge Surveys and the 1987 to 2008 Behavioral Risk Factor Surveillance System records. Drawing upon traditional, remedy-centric tort reforms—e.g., damage caps—we estimate that the current liability system plays at most a modest role in inducing higher levels of health care quality. We contend that this limited independent role for medical liability may be a reflection upon the structural nature of the present system of liability rules, which largely hold physicians to standards determined according to industry customs. We find evidence suggesting, however, that physician practices may respond more significantly upon a substantive alteration of this system altogether—i.e., upon a change in the clinical standards to which physicians are held in the first instance. The literature to date has largely failed to appreciate the substantive nature of liability rules and may thus be drawing limited inferences based solely on our experiences to date with damage-caps and related reforms.
There is an ungated version of the paper here.
Assorted links
1. More Pentagon chatter about robots. And man-machine co-authored sonnet. Video about robots who attend weddings.
2. Should we allow state-based visas? I wrote back to Adam Ozimek: “thanks, I will link to this, suppose I don’t yet have an original comment as to whether the more immigrants vs. potential balkanization trade-off is worth it…”
3. What characterizes the 2013-2014 job market stars in economics?
4. Economic development and the dangers of stories.
5. The business model behind Vox. And are the best things in life W.E.I.R.D.?
Assortative mating and income inequality
Jeremy Greenwood, Nezih Guner, Georgi Kocharkov and Cezar Santos have a new NBER Working Paper, the abstract is this:
Has there been an increase in positive assortative mating? Does assortative mating contribute to household income inequality? Data from the United States Census Bureau suggests there has been a rise in assortative mating. Additionally, assortative mating affects household income inequality. In particular, if matching in 2005 between husbands and wives had been random, instead of the pattern observed in the data, then the Gini coefficient would have fallen from the observed 0.43 to 0.34, so that income inequality would be smaller. Thus, assortative mating is important for income inequality. The high level of married female labor-force participation in 2005 is important for this result.
That is quite a significant effect. There are ungated versions of the paper here. Here is a related post by Alex.
Addendum: Kevin Drum offers additional comment.
Wealth and PISA scores: why doesn’t money help U.S. performance more?
The data was provided to The WorldPost by Pablo Zoido, an analyst at the Organisation for Economic Co-operation and Development, the group behind PISA. It shows that students’ wealth does not necessarily make them more competitive on an international scale. In the United States, for example, the poorest kids scored around a 433 out of 700 on the math portion of PISA, while the wealthiest ones netted about a 547. The lower score comes in just below the OECD average for the bottom decile (436), but the higher score also comes in below the OECD average for the top decile (554).
“At the top of the distribution, our performance is surprisingly bad given our top decile is among the wealthiest in the world,” said Morgan Polikoff, a professor at the University of Southern California’s School of Education who reviewed the data.
The data also makes for some jarring comparisons: Canada’s fourth decile performs as well as Chile’s top socioeconomic tier. Taiwan’s bottom sliver performs about as well as Montenegro’s wealthiest 10 percent. Vietnam’s bottom 10 percent slightly eclipses Peru’s top 10 percent. And the poorest kids in Poland perform about on par with Americans in the fourth decile.
The article is by Diehm and Resmovitz, pictures at the link, hat tip goes to @ModeledBehavior. One possible implication is that the so-so U.S. performance on these tests is about culture in a way that just doesn’t reduce to poverty for the lower deciles.
Are recessions a good time to boost the minimum wage?
One empirical regularity is that many minimum wage boosts come during recessions or downturns, as many of you pointed out here. Yet I take this repeated pattern to be an argument for having a low, zero, or quite “fettered” minimum wage.
Let’s think through the economics. One of the main pro-minimum wage arguments — arguably the #1 argument — cites labor market monopsony. Let’s say you have a monopsonistic employer who holds back on bidding for more labor, out of fear that hiring more labor raises the price paid on all labor units of a certain quality (by assumption, there is no perfect price discrimination here). The minimum wage can get you out of this trap. By forcing the higher wage on all workers in any case, the employer now doesn’t hesitate to hire more of them because the “fear of bidding up the price of labor” effect is gone or diminished. And that is how, in some situations, a higher minimum wage can boost employment.
Now let’s say the economy is in a demand-driven downturn, which creates a surplus in the labor market. Now, to get more workers, the monopsonist firm does not have to raise the wage and it can get more workers at the prevailing wage. But employers just don’t want more workers, because of demand-side constraints. So employers could in fact hire more workers without pushing up wage rates at all, once again that is for all units of labor of a particular quality. Yes there is still monopsony, but the potential wage effects of hiring more labor are muted by the labor surplus. And that means boosting the minimum wage won’t create the beneficial hiring effects which operate in the more traditional monopsony scenario, explained in the paragraph directly above.
In other words, if you think we are now seeing a slow labor market for demand-side reasons, you should be skeptical of the monopsony argument for minimum wage hikes, at least for the time being.
By the way, demand-side problems often wreck the notion that the EITC and minimum wage are complements.
The bottom line is that a lot of the arguments for a higher minimum wage are inconsistent with or in tension with a demand-driven labor market slowdown. And I don’t exactly see the world rushing to point this out.
Here is my earlier argument that slow labor markets are the worst times to boost minimum wages. Here is my earlier post drawing a parallel between minimum wages (government-enforced sticky wages) and privately-enforced sticky wages. Here is an excerpt from that post:
I know many economists who will argue: “let’s raise the state-imposed minimum wage. Employers will respond by creating higher-productivity jobs, or by paying more, and few jobs will be lost.” I do not know many Keynesians who will argue: “In light of the worker-imposed minimum wage, employers will respond by creating higher-productivity jobs, or by paying more, and few jobs will be lost.”
Addendum: By the way, here are some graphs and regressions about the minimum wage and recessions, from Kevin Erdmann. I think he is attempting the impossible, but you still might find it instructive to look at some of the pictures.
The new Ezra Klein venture at Vox
You can find Ezra’s words here. Do read the whole thing, here is one excerpt:
Today, we are better than ever at telling people what’s happening, but not nearly good enough at giving them the crucial contextual information necessary to understand what’s happened. We treat the emphasis on the newness of information as an important virtue rather than a painful compromise.
The news business, however, is just a subset of the informing-our-audience business — and that’s the business we aim to be in. Our mission is to create a site that’s as good at explaining the world as it is at reporting on it.
Matt Yglesias, Dylan Matthews, and Melissa Bell (and others to follow) will be coming along. Here is David Carr on the venture.
Addendum: The jobs ad is quite useful:
Project X (working title) is a user’s guide to the news produced by the beat reporters and subject area experts who know it best.
We’ll have regular coverage of everything from tax policy to True Detective, but instead of letting that reporting gather dust in an archive, we’ll use it to build and continuously update a comprehensive set of explainers of the topics we cover. We want to create the single best resources for news consumers anywhere.
We’ll need writers who are obsessively knowledgeable about their subjects to do that reporting and write those explainers — as well as ambitious feature pieces. We’ll need D3 hackers and other data viz geniuses who can explain the news in ways words can’t. We’ll need video producers who can make a two-minute cartoon that summarizes the Volcker rule perfectly. We’ll need coders and designers who can build the world’s first hybrid news site/encyclopedia. And we’ll need people who want to join Vox’s great creative team because they believe in making ads so beautiful that our readers actually come back for them too.
Sound like you? Then apply now.
And Ezra explains more here.
Meeting one’s higher calling?
From Madurai, Robyn Eckhardt reports:
Onion, cauliflower, fenugreek, garlic, egg white, potato, mushroom and masala are just some of the variations on dosa offered by the 49-year-old Mr. Karthikeyan, who took over the business from his father after earning a master’s degree in economics. “What could I do? There was no one else,” he explained as he unhurriedly worked five griddles simultaneously — four for dosai and one for fried dishes like masala powder-seasoned hard-boiled eggs with onion, cilantro and curry leaves. “Back then, a dosai cost a quarter of a rupee,” he said. Today Ayyappan charges 10 rupees and up.
There is more here, via these sources.
Assorted links
Economic data on hitmen
The sample is pretty limited, but here is what they find:
The killers typically murder their targets on a street close to the victim’s home, although a significant proportion get cold feet or bungle the job, according to criminologists who examined 27 cases of contract killing between 1974 and 2013 committed by 36 men (including accomplices) and one woman.
…The reality of contract killing in Britain tended to be striking only in its mundanity, according to David Wilson, the university’s professor of criminology. He said: “Far from the media portrayal of hits being conducted inside smoky rooms, frequented by members of an organised crime gang, British hits were more usually carried out in the open, on pavements, sometimes as the target was out walking their dog, or going shopping, with passersby watching on in horror.”
Researchers found that the average cost of a hit was £15,180, with £100,000 being the highest and £200 the lowest amount paid. The average age of a hitman was 38 with the youngest aged 15 and the oldest 63.
The youngest, Santre Sanchez Gayle from north London, shot dead a young woman at point-blank range with a sawn-off shotgun in 2010 after she answered her front door. The oldest was David Harrison who, also in 2010, shot the owner of a skip-hire business in his Staffordshire home.
Most hits involved a gun, with three victims stabbed, five beaten to death and two strangled. The most conspicuous weapon was used in the killing of David King, a widely feared underworld figure known as “Rolex Dave”, who in 2003 was shot five times as he emerged from a Hertfordshire gym by hitman Roger Vincent and his accomplice David Smith, both 33. The killing was the first time an AK-47 assault rifle – apparently belonging to the Hungarian prison service – had been used on a British street.
For the pointer I thank Mike Brown. By the way, those records are focused on Birmingham, England, which perhaps is not like Lodi, New Jersey in this regard.
The original work is cited as appearing in the Howard Journal of Criminal Justice, but I do not seem to find the article at that link.
In defense of Los Angeles as a superb walking city
I am shocked that so many people in the comments, and on Twitter, scoffed at this notion which I put forward the other day.
First, in Los Angeles the weather is almost always very good for walking. That is a big plus, to say the least. It is not just that the average quality of experience is high, but you can make advance plans to be walking and arrange your life accordingly.
To be concrete, here are a few of the many splendid walks in the greater Los Angeles area: Almost anywhere in mid-Wilshire, downtown Santa Monica, Melrose, central Westwood, Beverly Hills, a blossoming Downtown (just don’t jaywalk), Pasadena and Glendale, most residential parts of Hollywood, almost any beach locale (and there are many), and even (limited) parts of Sunset. How many cities have great walks where you can be on the beach and/or see the mountains? Or where you can stop for first-rate ethnic food almost anywhere?
I will grant that Santa Monica Boulevard is not ideal for walking on many of its parts, nor is all of Culver City. Is Manhattan’s Park Ave. always so fascinating?
My personal favorite walk is to start somewhere such as Olympic and walk up Vermont, exploring side streets along the way and stopping for Asian food or pupusas. My two favorites car drives are Sunset and then Griffith Park all the way down to the bottom of Western, or vice versa, stopping for Belizean food along the way.
Here is my earlier post on which are good walking cities, London wins the overall #1.
*Duty: Memoirs of a Secretary at War*
That is the new Robert M. Gates book, which of course has been widely reviewed. I was very impressed with this work. I read it as a meditation on the question of what kinds of martial virtue (or lack thereof) are possible in our contemporary age, updating Herodotus, Thucydides, and Plutarch through the medium of the reigns and rules of the two Bushes, Cheney, Rice, Obama (most of all), Hillary, Biden, and of course Gates himself with a bit of Petraeus tossed in.
Here is one excerpt:
I was put off by the way the president closed the meeting. To his very closest advisers, he said, “For the record, and for those of you writing your memoirs, I am not making any decisions about Israel or Iran, Joe [Biden], you be my witness.” I was offended by his suspicion that any of us would ever write about such sensitive matters.
And this:
As is usual when the president makes a momentous decision, the White House wanted key cabinet members blanketing the Sunday talk shows…As I was flying back to Washington on March 25, the White House communications gurus proposed I go on all three network shows the next Sunday to defend the president’s decision on Libya. Exhausted by the trip, I agreed to do two of the three. then I took a call from Bill Daley, who pushed me hard to do the third show. I told Daley I’d make him a deal — I would do the third show if he’s agree to get funding for the Libya operation included in the Overseas Contingency Operations (OCO) appropriation (the war supplemental). I said, “I’ll do Jake Tapper if you’ll do OMB.” Daley whined, “I thought it would cost me a bottle of vodka.” I shot back, “Bullshit. It’s going to cost you $1 billion.” Daley had the last laugh. The president and OMB director Jack Lew refused to approve moving the Libya funding into the OCO. The Defense Department had to eat the entire cost of the Libya operation.
And finally, this:
As I had told President Bush and Condi Rice early in 2007, the challenge of the early twenty-first century is that crises don’t come and go — they seem to come and stay.
The book has come under a good deal of criticism for its revelations about a sitting president and commander-in-chief and for its communication of inside discussions, which presumably at the time were considered to be confidential. I am not sufficiently informed about the appropriate norms to make a final judgment here, but I can readily imagine that Gates is in this regard quite in the wrong. Good books are not always based on good behavior. Furthermore, the overall portrait of Obama is, in my view, quite a favorable one and indeed I would say a profound one (the same cannot be said for Biden or for Congress).
Assorted links
1. Good slides on emerging markets and liquidity, by Hyun Song Shin (pdf).
2. How to make people feel comfortable with driverless cars.
3. Is it the elites who drive polarization?
4. The Great Language Game. I did very well at this, so well that I got bored and stopped playing.
5. The world’s first robot theme park.
6. Ross Douthat tweet on social mobility.
7. Placebo sleep?
Harford (and Tabarrok) on Macroeconomics
Tim Harford gave an excellent talk at Cato on his new book The Undercover Economist Strikes Back.
You may have heard recently that the richest 85 people in the world have more wealth than the bottom 3.5 billion. Tim began by pointing out that his 2 year old also has more wealth than the bottom 2 billion since his 2-year old has no debt. Later in the talk Tim gave a brilliant explanation for how and why economists began to treat data like an unfaithful spouse. Watch for that!
Tim’s talk begins around the 7:20 mark. I come in around the 34:00 mark and after saying some more nice things about Tim’s book I have some critiques focusing on how long can wages and prices really be sticky and also giving a brief introduction and defense to “Real Business Cycle” theory especially the recent sectoral approaches of Gabaix and also Acemoglu et al.
At the link you can also find links for iTunes and downloadable formats. CSpan also covered the event.
Where is the licensing burden heaviest?
Adam Ozimek reports:
…consider the Institute for Justice’s excellent report on occupational licensing. The top 10 worst ranked jobs in terms of average licensing burden are as follows:
1. Preschool teacher
2. Athletic trainer
3. Earth driller
4. Cosmetologist
5. Barber
6. School bus driver
7. HVAC Contractor
8. Skin Care Specialist
9. Pest Control Applicator
10. Bus Driver
And from Virginia Postrel on Twitter:
Sting catches Charleston rickshaw driver giving illegal tour, $1,092 fine for talking history w/o a license http://buff.ly/1cTeo02
@ij