Why is monogamy associated with economic development?

by  Tyler Cowen in

Eric Gould, Omer Moav and Avi Simhon offer a new answer in the March 2008 American Economic Review: female inequality.  Economic growth means that some women have higher human capital than others and thus they are better suited at producing and rearing high quality children.  Wealthy men with lots of human capital will start to bid for these women and they will have to offer them exclusive status; these men also wish to invest in a smaller number of higher quality children.

In other words, male inequality encourages polygamy while female inequality discourages it.  Apparently female inequality has been winning that race.

The hypothesis also helps explain why polygamy unravels so decisively at some point.  Since monogamy itself encourages children (including daughters) with higher human capital, initial tendencies toward monogamy are self-reinforcing.

Here is an earlier ungated version of the paper.  Or buy the new version here for $7.50.  Here are previous MR posts on polygamy.

More on Bartels

by  Alex Tabarrok in

I’m a little surprised that the Bartels result is receiving so much attention because the result, in slightly different form, has long been known to political economists under the rubric of partisan business cycle theory.  In a nutshell, the theory of partisan business cycles says that Democrats care more about reducing unemployment, Republicans care more about reducing inflation.  Wage growth is set according to expected inflation in advance of an election.  Since which party will win the election is unknown wages growth is set according to a mean of the Democrat (high) and Republican (low) expected inflation rates.  If Democrats are elected they inflate and real wages fall creating a boom.  If Republicans are elected they reduce inflation and real wages rise creating a bust.  Notice that in PBC theory neither party creates a boom or bust it’s uncertainty which drives the result – if the winning party were known there would be neither boom nor bust.

Ok, there’s plenty to question about the theory but let’s look at the data.

Pbcdata
Notice that in the second year of just about every Democratic Presidency there is a boom.  Interestingly, the boom is biggest for Truman whose reelection was highly uncertain (remember Dewey wins!) thus expected inflation would have been low and the boom big.  Similarly the boom is smallest (relative to the surrounding years) for Clinton II a relatively certain reelection.

Now look at Republicans in just about every second year of a Republican Presidency there is a bust.  The one major exception being Reagan II where uncertainty about the outcome was low.

It’s pretty clear that this result can explain Bartels’s result which is exactly Tyler’s point in his post.   It’s equally clear that when we consider Presidents there aren’t many data points.  (PBC does appear to hold somewhat in other countries).

Notice that the reason for the result, according to PBC, is sticky wages and the business cycle and not some nefarious story about taxes, oligarchies and political conspiracies.

Haitian prison

by  Tyler Cowen in

If international minimum standards of about four square metres for
every prisoner were met, the National Penitentiary would hold a little
more than 400 inmates. On the day Maclean’s visits the prison, there
are 3,331 men jailed inside. Most, at least 90 per cent, have not had a
trial. They are held under the euphemistic term "preventative
detention," and because of a lack of judges, proper evidence, and even
vehicles to transport them to court, it is unlikely many will be tried
any time soon.
"People sleep on top of people in here," one prisoner says through
the bars of a bathroom-sized cell that holds 43 people. Most are
standing. Others have fashioned hammocks out of scraps of cloth and
have suspended themselves from the bars of the cell’s high window,
where they can get more light and air…

Here is more.  And that is not all:

There is a punishment cell, perhaps four feet tall, where no one can
stand. The punishment cell is crowded, but less so than other cells,
and some inmates prefer it. "You have people who do things wrong just
so they have a place to lie down or to be safe from gangs," Cadet says.

Here is a video about recent food riots in Haiti, and no those are not in the prisons.

Larry Bartels, and how Republican Presidents drive income inequality

by  Tyler Cowen in

He writes:

In any case, the largest partisan differences in income growth, by far, occur in the second year of each administration.

The link, by the way, answers many objections to his basic thesis.  View this graph if you don’t already know the argument.  The core claim is that Republican Presidents are better for the rich and Democratic Presidents are better for the poor, and to a striking degree. 

I view the statistical significance of the Bartels result as stemming from monetary policy.  Republicans are more willing to break the back of inflation and risk an immediate recession.  Alternatively, it could be said that central bankers expect enough support for tough, anti-inflation decisions only from Republican Presidents.  (Note that Jimmy Carter, who did support Volcker, is in fact the single Democratic outlier.)  Note that without the monetary policy effect, only a few data points, mostly from very recent times, support the basic claim.  Without the monetary policy effect, I do not think that statistical significance would remain.  Furthermore other plausible channels for income inequality effects, such as tax and regulatory decisions, would not be concentrated in the second year of each administration.  Monetary policy decisions would be.  A recession, by generating more unemployment, hurts the poor the most in proportional terms.

So what does this all mean?

Inflation is good for the poor in the short run, since many poor are debtors.  But inflation is bad for the poor in the long run.  Just ask anyone who lived through the New Zealand inflation of the 1970s.

So Bartels could have entitled his key graph: "Democratic Presidents live for the short run and we need a Republican President every now and then."

Addendum: Even Paul Krugman wonders about the basic mechanism driving the result.

World Wide Losses are the Best Losses

by  Alex Tabarrok in

From the frozen lands of Norway’s Arctic Circle to the hot sands of the Middle East and the booming metropolis of Shanghai the losses from America’s subprime crisis are popping up around the world like angry whac-a-moles.  The losses are large and appear larger by being found in the most unexpected of places.  Today the focus is on these world-wide losses but I think future historians will focus on how the crisis demonstrated to everyone the power of integrated capital markets to diversify risk. 

The losses, of course, are regrettable and the desire to find and apportion blame for the crisis among investors, home buyers, mortgage brokers, credit analysts and regulators is understandable.  We should and will learn lessons.  And yet, despite problems with transparency one of those lessons ought to be that the crisis would have been worse if the losses had been more concentrated.

From this perspective, world-wide losses are perhaps the best losses of all.

How free trade affects thievery, part II

by  Tyler Cowen in

Yes commodity prices are high:

A thief sneaked under the sport utility vehicle with a battery-powered
saw, slicing from the Toyota’s underbelly what may be one of the most
expensive small parts of the auto world: the catalytic converter, an
essential emissions-control device made with small amounts of metals
more precious than gold. Who knew?

…Theft of scrap metals like copper and aluminum has been common here and
across the country for years, fueled by rising construction costs and
the building boom in China. But now thieves have found an easy payday
from the upper echelon of the periodic table. It seems there may not be
an easier place to score some platinum than under the hood of a car…

The catalytic converter is made with trace amounts of platinum,
palladium and rhodium, which speed chemical reactions and help clean
emissions at very high temperatures. Selling stolen converters to scrap
yards or recyclers, a thief can net a couple of hundred dollars apiece.

Here is the story.  Here is part I in the series.  Here is a man who died trying to extract gold from his computer.

The erotics of investing

by  Tyler Cowen in

When young men were shown erotic pictures, they were more likely to
make a larger financial gamble than if they were shown a picture of
something scary, such as a snake, or something neutral, such as a
stapler, university researchers reported.

The arousing pictures lit up the same part of the brain that lights up when financial risks are taken.

…The study conforms with recent research that indicates men shown a
pornographic movie were more likely to make riskier sexual decisions.
Another suggests straight men think less about their financial future
after being shown pictures of pretty women.

Here is more.  One question — and perhaps a more direct test of the hypothesis — is whether traders in more sexually integrated firms do in fact behave differently.  Or how about companies located next to modeling agencies?  I suspect in real social settings the effect washes out, for reasons identified by Freud (among others) some time ago.  The more literally minded among us might also question whether a stapler is in fact a neutral image.  It isn’t for me.

Jeff Sachs on biodiversity

by  Tyler Cowen in

His new book Common Wealth devotes an entire chapter to this important topic.  Sachs writes:

The main lesson of ecology is the interconnectedness of the various parts of an ecosystem and the dangers of abrupt, nonlinear, and even catastrophic changes caused by modest forcings…It is a basic finding that biological diversity increases the productivity and resilience of ecosystems.  With more species filling more niches in a given location, a biodiverse ecosystem is better buffered against external shocks in is more adept at cycling nutrients, capturing solar radiation, utilizing water resources, and preventing the takeover of the system by single predators, weeds, or pathogens.  In other words, preserving biodiversity helps to preserve all aspects of ecosystem functions.  Removing one or more species from an ecosystem, for example, by selective harvesting of trees or fish or hunted animals, can lead to a cascade of ecological changes with large, adverse, and nonlinear effects on the functioning of the ecosystem.

Now, loyal MR readers may remember that I am genuinely uncertain how much we should worry about the loss of biodiversity.  I do know the following:

1. Many smart people who know much more science than I do are very worried about the loss of biodiversity.

2. Given that the human population has ballooned for the foreseeable future, massive losses in biodiversity are inevitable.  The question is how bad the marginal losses will be, if we do not adapt policy accordingly.

3. If I had to conduct a debate and argue that the marginal loss of biodiversity was going to be a tragedy for human beings (obviously, I can see the loss to animals, and yes I do count that for something), I would not do very well.  Yes Yana’s children won’t eat tuna and then I would sputter something about carbon and nitrogen cycles.

So OK readers, help me out.  I’ve read Sachs’s passage and I don’t think I disagree with any of the claims in it.  But I still cannot articulate to a skeptic exactly what marginal disaster will come if we do not take drastic action to preserve biodiversity.

Please use the comments to set me straight.  What exactly will go wrong?  And do not compare seven billion humans to pristine nature.  Compare seven billion humans with bad biodiversity policy to, say, five billion humans with a pretty good biodiversity policy.  What exactly is the difference?  What are these costs as a percentage of gdp? 

Please be as specific as possible; I genuinely would like to learn more.

Car patrol vs. foot patrol

by  Tyler Cowen in

Car patrol eliminated the neighborhood police officer.  Police were pulled off neighborhood beats to fill cars.  But motorized patrol — the cornerstone of urban policing — has no effect on crime rates, victimization, or public satisfaction.  Lawrence Sherman was an early critic of telephone dispatch and motorized patrol, noted, "The rise of telephone dispatch transformed both the method and purpose of patrol.  Instead of watching to prevent crime, motorized police patrol became a process of merely waiting to respond to crime."

That is from Peter Moskos’s Cop in the Hood: My Year Policing Baltimore’s Eastern District; here is my previous post on the book.

Why economics was late in starting

by  Tyler Cowen in

I’ve already posed the question, I’d like to add two points.  First, sustained economic growth in the Western world starts in 17th century England, as shown by Greg Clark.  Interest in economic reasoning then comes rapidly, first from the mercantilists, then in Adam Smith and some earlier free trade thinkers, such as Dudley North and Nicholas Barbon.

Second, the idea of "private vices, publick virtues" was central for eighteenth century economic thought and for social science more generally.  This came from Bernard Mandeville (drawing upon the French Jansenists) in 1720.  It’s no accident that Mandeville lived in the Dutch Republic, which had very little censorship.  No, I am not a Straussian but the merits of that viewpoint are often overlooked.

The School of Salamanca had an excellent marginal utility theory in 17th century Spain, the framework simply did not go anywhere.  For that matter we can look later and see that Samuel Bailey, Mountifort Longfield (1834), and others had critical components of Marshall.  But no one really cared because they could not yet see how important those contributions would turn out to be.  This is a central theme in why the growth of economic thought took so long.

It also suggests that today we might have some very important ideas amongst us, we simply cannot yet see how fruitful they will be.  Their own proponents may not even know it.

Predictions about 2008

by  Tyler Cowen in

From 1968:

A typical vacation in 2008 is to spend a week at an undersea resort,
where your hotel room window looks out on a tropical underwater reef, a
sunken ship or an ancient, excavated city. Available to guests are two-
and three-person submarines in which you can cruise well-marked
underwater trails.

But many of the predictions are good, at least in part.  Get this:

The single most important item in 2008 households is the computer.
These electronic brains govern everything from meal preparation and
waking up the household to assembling shopping lists and keeping track
of the bank balance. Sensors in kitchen appliances, climatizing units,
communicators, power supply and other household utilities warn the
computer when the item is likely to fail. A repairman will show up even
before any obvious breakdown occurs.

Computers also handle travel reservations, relay telephone messages,
keep track of birthdays and anniversaries, compute taxes and even
figure the monthly bills for electricity, water, telephone and other
utilities. Not every family has its private computer. Many families
reserve time on a city or regional computer to serve their needs. The
machine tallies up its own services and submits a bill, just as it does
with other utilities.

Via www.geekpress.com.  As usual, it is presumed that traffic and transportation problems will have seen a lot of progress when in fact they have not.  Nor was it understood how unevenly the benefits of progress would be distributed and how possible it would be to continue a life basically devoid of these advances.