Sexual Harassment Pay
Economist Joni Hersch applies the theory of compensating differentials to sexual harassment:
Workplace sexual harassment is illegal, but many workers report that they have been sexually harassed. Exposure to the risk of sexual harassment may decrease productivity, which would reduce wages. Alternatively, workers may receive a compensating differential for exposure to sexual harassment, which would increase wages. Data on claims of sexual harassment filed with the Equal Employment Opportunity Commission are used to calculate the first measures of sexual harassment risks by industry, age group, and sex. Female workers face far higher sexual harassment risks. On balance, workers receive a compensating wage differential for exposure to the risk of sexual harassment.
And how much do you get for the risk of a grope? About 25 cents an hour for women and 50 cents an hour for men.
The theory is surely correct although I am not convinced by the evidence which mostly comes from weak data on wages and the differential rate of sexual harassment by industry. I would be more convinced if women's wages fell more in industries with a lot of sexual harassment after increases in prosecution.
Hat tip: Art Carden.
Are TV commercials too loud?
Some people in Canada think so:
Ever noticed that TV commercials seem to be louder than the program? So has Canada's broadcast regulator.
The Canadian Radio-television and Telecommunications Commission has launched a public consultation on the loudness of TV commercials.
What is the equilibrium? Ban loud commercials and people will turn up the volume. First, they won't need to tune down the volume for protection against the commercials, and second the broadcasters might lower the volume on the shows so that the commercials are still louder by contrast.
With a threshold effect (the program has to be at least so loud, or you can't hear it), the average heard volume of commercials could end up louder than before. Imagine the supplier making the program really, really faint, to induce you to make the package louder.
Or if the volume and thus the effectiveness of commercials declines, the real $$ price of cable might go up to compensate. Even with price regulation, the real price can rise by a decline in the quality of programming. Admittedly, especially in the short run, the cable company might just "swallow" the volume change, but in the longer run program quality should be expected to adjust.
I wonder how much of the cost of commercials is the volume, and how much the cost is the voice prosody and the continual feeling that they are trying to intrude, which follows from pacing, mood, speed of talking, and so on. These are other margins where suppliers can adjust.
Probably this change won't much benefit viewers.
What looks difficult but is in fact easy
A request from Nels:
My 8 year old daughter was bemoaning the fact the things that look simple are often difficult. Then she turned to me and asked what things look difficult, but in reality are easy?
When I was ten years old, I thought that "paying bills" was going to be quite difficult. I don't mean generating the income, but rather the literal act of paying the bills. I didn't understand how you would find out where to send the money and also how to keep track of it all. It turns out that the suppliers make that fairly easy for us. They hook up service, or send the magazine, and then they send you the bill. They keep track of it for you. I hadn't read Adam Smith yet.
That said, I'll pay months of a bill in advance to avoid having to deal with it. I can never tell when I have renewed a magazine or not and I puzzle over the game-theoretic problem (how many renewal notices should they send, and do they send, given my rational response is to ignore them for a while?). I probably could not balance a checkbook.
So was I wrong in the first place? Maybe it is really hard!
Which is why I find this question difficult to answer. Even though it looks easy.
*The New Yorker* on Qaddafi, 2006
He believes in desert culture, even though the desert has no culture,” one cosmopolitan resident of Libya’s capital, Tripoli, told me. “He is trying to take life to its childhood.”
Here is the full story, and for the pointer I thank Stan Tsirulnikov.
The economics of travel visas
Bob Lawson and Jayme Lemke write:
This paper examines travel visa restrictions in 188 countries. We measure travel visa requirements (1) facing foreign visitors into a given country and (2) facing citizens of a given nation traveling abroad. Our analysis shows that countries are more likely to impose visas on foreign visitors when they are large, but less likely when they are rich and economically free. Citizens from richer and more populous countries face fewer travel visa requirements when traveling abroad. Countries are less likely to impose visa requirements on similar nations.
Assorted links
1. Turkey vs Egypt.
2. Bryan responds on twin and adoption studies.
3. New results from Dale and Krueger on the value of selective colleges.
4. When public sector workers unionize, a dated but still valuable book.
5. Favorite crime novels of 2010, from an idiosyncratic mind.
6. Via Eric, most tourists take pictures from the same spot.
What is the state employee union wage premium?
How much does collective bargaining matter? On Twitter, Will Wilkinson asks for data. I find this web site specifying the average Virginia state employee to be earning $50,298. Rortybomb says that for Wisconsin the comparable number is $48,267.
Yet Wisconsin had collective bargaining for state employees and Virginia does not. Of course this comparison is a gross one and it is not holding constant the composition of each work force, seniority, cost of living differences, and it also does not seem to pick up possible differences in benefits. Furthermore it does not consider the 48 other states. Yet, crude as this one-to-one comparison may be, it is more empirically sophisticated than most (all?) other discussions I have seen.
This David Blanchflower and Alex Bryson paper (see pp.9-10), using 1980s data, finds a union wage premium, for state employees, of 14.5 percent, with the premium being strongest for unskilled workers, as is the case in the private sector as well. (NB: I am not sure if they are adjusting for differential benefits but I think not.) Alan Krueger tells us that the union/non-union wage gap is smaller in the public sector than in the private sector ("overwhelming evidence").
I'm not pushing any particular answer, I'd just like to put the question on the table. What else do you all know?
Addendum: from Adam Ozimek: "The regression coefficients on page 8 of the report show that the union wage premium is between 15% to 16%, while the public sector wage discount is around 11%, meaning unionized public sector employees are paid 4% to 5% wage premium." Adam also provides further references and discussion.
Libya fact of the day
Investment implications of The Great Stagnation
1. Slow revenue growth means that fiscal crises will be more severe than expected.
2. The deeper point is that the revenue growth/utility growth gradient has fundamentally changed, due to the "real shock" (as they call it) of the internet. Facebook is fun but it doesn't produce a proportional amount of revenue, and ultimately that has implications for asset pricing.
3. The change in this gradient means that a downturn hurts less, and that in turn means we will have more recessions and more asset price bubbles. Investors will take more chances, in part because safe returns are lower and in part because financial loss hurts less, in utility terms, than it used to.
4. Since the MU of money is now lower in downturns, the equity premium will fall. Risk premia will fall. Risk-taking will be less rewarded, because the destruction of one's finances is not as bad as it used to be.
5. If threshold savings is not an issue for you (e.g., needing to save a certain amount to put a kid through college), you should consider higher levels of consumption as a response to The Great Stagnation. Real rates of return on savings will not be fantastic, and risk-taking will be rewarded less. Spending is one sure way to get your money's worth.
6. I have other thoughts on this topic.
Assorted links
The new federalism, New Hampshire style
A lot of governors don't want high-speed rail and at least one state is wondering whether it wants a new hospital:
New Hampshire Public Radio ran a story yesterday about Governor Lynch's request that hospitals in the state stop building new facilities. Normally, governors never miss an opportunity to encourage new business in their state, because in most markets, greater investment leads to better services or lower prices. Finally, policy makers understand that the normal rules don't apply in health care:
[T]hese facilities are driving up utilization and driving up health care costs. Those are costs that we all see in our ever-increasing health insurance premiums. To that, I say enough.
That is from Andrew Samwick. This shows how deeply the current system of both health care finance and American federalism is broken. It is not that the governor was suddenly persuaded by…Robin Hanson. Instead, the shadow value of "money to spend as the governor wants it spent" is rising rapidly and old political equilibria are falling away, in Wisconsin too.
In a nutshell
Not From the Onion: The CIA, the NYTimes and Playboy
In Hiding Details of Dubious Deal, U.S. Invokes National Security the NYTimes today reports on how easily the US government was conned out of millions of dollars for software that could supposedly decode secret al-Qaeda messages being transmitted via bar codes in Al-Jazeera broadcasts. You may recall the terror alert of Christmas 2003 when President Bush ordered dozens of trans-atlantic flights to be cancelled and we were told:
A surge in recent terrorism intelligence points to the possibility of a spectacular attack that terrorists abroad "believe will rival or exceed the scope and impact of those we experienced on Sept. 11,'' said Scott McClellan, the White House press secretary.
Apparently the December scare was based on a hoax and not even an elaborate hoax. The con man, a heavy gambler with no serious background in computer science, never gave anyone in the CIA, the Air Force, or Special Operations Command his software or explained his algorithms and no one else ever found any secret messages in Al-Jazeera broadcasts. Moreover, despite the fact that this information went right to the top, few people stopped to ask the obvious questions such as why the hell would al-Qaeda do something ridiculous like embed messages in Al-Jazeera broadcasts? Wouldn't, you know, say an email or obscure web page work better?
On a lighter note this sentence in the NYTimes piece caught my eye:
Hints of fraud by Mr. Montgomery, previously raised by Bloomberg Markets and Playboy, provide a cautionary tale about the pitfalls of government contracting.
Playboy?!!! Determined to investigate further, I discovered that the NYTimes is being somewhat duplicitous since Playboy broke the story and provided a lot more than hints. The Playboy story is in fact quite a bit more detailed than the NYTimes gloss (need I warn you, however, that the adverts make it NSFW?).
Are you surprised that Playboy would break such an important story? I was, that is, until I remembered that Playboy has been uncovering fakes for a long time.
What do twin adoption studies show?
"A case in point is provided by the recent study of regular tobacco use among SATSA's twins (24). Heritability was estimated as 60% for men, only 20% for women. Separate analyses were then performed for three distinct age cohorts. For men, the heritability estimates were nearly identical for each cohort. But for women, heritability increased from zero for those born between 1910 and 1924, to 21% for those in the 1925-39 birth cohort, to 64% for the 1940-58 cohort. The authors suggested that the most plausible explanation for this finding was that "a reduction in the social restrictions on smoking in women in Sweden as the 20th century progressed permitted genetic factors increasing the risk for regular tobacco use to express themselves." If purportedly genetic factors can be so readily suppressed by social restrictions, one must ask the question, "For what conceivable purpose is the phenotypic variance being allocated?" This question is not addressed seriously by MISTRA or SATSA. The numbers, and the associated modeling, appear to be ends in themselves."
How best to learn some econometrics
A few times I've received this question, usually from people whose work intersects with economics, yet without those people needing to produce econometric studies themselves. "How can I better understand the empirical papers I am reading?" I have a few suggestions:
1. Attend some (empirical) economics seminars first, to get a sense of what you need to learn and how discourse proceeds and what sort of points end up being contested. Subsequent class learning will be more focused and productive.
2. Often a good hands-on undergraduate class is more useful for these purposes than a graduate class. The latter might have too much econometric theory and theorem-proving.
3. The quality of an econometrics class (for these purposes, putting aside frontier work) is not well correlated with the quality of the college or university it is being taught at. The quality of the class is instructor-specific.
4. The quality of econometrics in the profession has continued to rise. That is good news, but for the purposes of this discussion there is a downside, namely that mistakes are much less transparent. For an increasing number of papers, it is hard to judge the final quality of the work without spending a lot of time on it. Whether or not a paper can be replicated is a more important question, given that more researchers are operating with frontier-level techniques.
Do you have other suggestions?
Addendum: Here is Mark Thoma's course, entirely on-line and free.