And so it begins
Scarlet Letters (and Numbers)
In Ohio, drivers convicted of drunk driving will be issued special red on yellow license plates. From an economic point of view, fines are the best punishment because they benefit the punisher as they punish the violator and imprisonment is the worst punishment since it punishes the punisher as well as the violator.
Many people don’t like fines, however, because they seem to allow the rich to get away with anything so long as they pay the price (see Tyler on progressive fines). But in theory, if the fine is set equal to the expected cost of the crime, everyone should face the same fine irrespective of wealth and if the benefit of violating the law exceeds the fine then paying the fine and violating the law is the efficient solution. Economists think this argument is obviously correct but it leaves most people cold.
Fines do have another disadvantage if you don’t trust the government (i.e. take this disadvantage seriously). Precisely because the fine is a revenue to the government it encourages them to fine more. And precisely because imprisonment is costly we expect government to be more restrained in its use.
Social sanctions punish the violator, and are perhaps a better signal to others about the costs of crime than are fines, but have neither benefits nor costs to the punisher – thus they lie in-between fines and imprisonment. If fines are thought unfair or too dangerous and imprisonment is too expensive then social sanctions seem ideal. It’s surprising that we don’t see this form of punishment more often.
Addendum: Thanks to early reader William Sjostrom in Ireland (read his Atlantic Blog) and Stephen Laniel at Unspecified Bunker for reminding me about the disadvantages of fines and the signaling quality of social sanctions.
The origins of human intelligence?
Researchers have proposed an answer to the vexing question of how the human brain grew so big. We may owe our superior intelligence to weak jaw muscles, they suggest.
A mutation 2.4 million years ago could have left us unable to produce one of the main proteins in primate jaw muscles, the team reports in this week’s Nature. Lacking the constraints of a bulky chewing apparatus, the human skull may have been free to grow, the researchers say.
The timing of the mutation is consistent with rampant brain growth seen in human fossils from around 2 million years ago, says Nancy Minugh-Purvis of the University of Pennsylvania in Philadelphia, who helped with the study. “Right at the point you lose power in these muscles, brain size evolution accelerates,” she says.
Here is the full story. Here is the original research. Here is another account, which also reports on the critics of the idea. My gut level lay person’s response is not to believe the hypothesis, but hey, try convincing a physicist of the notion of comparative advantage.
Soviet observations
1. Here is the second sentence of Robert Conquest’s The Harvest of Sorrow: Soviet Collectivization and the Terror-Famine: “We may perhaps put this in perspective in the present case by saying that in the actions here recorded about twenty human lives were lost for, not every word, but every letter, in this book.” That sentence represents 3,040 lives. The book is 411 pages long.
2. Joke: Why are the USSR and America the same? A: Because in the USSR you can joke about America and in America you can joke about America.
3. Stalin famously said: “Death solves all problems. No man, no problem.”
4. In the first weeks of the war the Soviet Union lost 30 percent of its ammunition and 50 percent of its reserves of food and fuel. In the first three months the air force lost 96.4 percent of its planes…By the end of 1942, 3.9 million Russian soldiers had been taken prisoner – 65 percent of the Red Army…It would be pat, but also accurate, to say that from 1933 to 1941 the only human being on earth that Stalin trusted was Adolf Hitler.
5. But progress has already been made. The argument, now, is about whether Bolshevik Russia was “better” than Nazi Germany. In the days when the New Left dawned, the argument was about whether Bolshevik Russia was better than America.
From Martin Amis’s excellent Koba the Dread: Laughter and the Twenty Million. The material is quoted directly from Amis, I have added the numbering.
The benefits of no-fault divorce
In the past three decades, liberalized divorce laws have reduced suicides among women, sparked a dramatic reduction in domestic violence and led to a decline in women murdered by their partners, according to economists Betsey Stevenson and Justin Wolfers.
Specifically, they claim, these benefits have resulted from the adoption of so-called “no-fault” divorce laws, in which one partner can end the marriage without the consent of the other.
After states adopted no-fault divorce laws, suicides among women dropped by 20 percent, the rate of domestic abuse fell by a third, and the number of women murdered by their partners dropped by about 10 percent, Stevenson and Wolfers found.
Adoption of unilateral divorce laws didn’t affect the suicide rate of men or the likelihood that they would be murdered by their partners. But domestic violence directed at both men and women declined, the researchers reported in a recent National Bureau of Economic Research working paper.
Here is the link. Here is the original research. Here is the home page of Betsey Stevenson; he is the home page of Justin Wolfers. Here is Wolfers’s summary of the research.
My take: I’m all for family values, but let’s not forget that some families should split up.
Beliefs about welfare
Why does Western Europe spend so much more on welfare payments than does the United States?
Why is the latter system (45% of GDP) bigger than the former system (30% of GDP)?
While 29% of Americans believe that poor people are trapped in poverty, 60% of Europeans share this belief.
While 30% of Americans believe that luck determines income, 54% of Europeans share this belief.
While 60% of Americans believe that poor people are lazy, 24% of Europeans share this belief.
Robert Tagorda continues with the following:
These statistics come from the Economist, which has a fascinating review of Fighting Poverty in the US and Europe: A World of Difference. Authored by Harvard scholars Alberto Alesina and Edward Glaeser, this forthcoming book argues that institutional and political differences lead to contrasting American and European approaches.
More provocatively [we now move to Tagorda citing The Economist]:
The other half of the explanation lies in America’s racial diversity. In spite of 20 years of unprecedented immigration, European countries, particularly smaller ones like Portugal and those of Scandinavia, are still highly racially homogenous. America, by contrast, has great diversity, which is especially wide in some states. In addition, the poor in America are disproportionately non-white. Non-Hispanic whites are 71% of America’s population but only 46% of the poor.
Racial diversity in individual states is correlated with the generosity of welfare. For instance, the authors find that in 1990 Aid to Families with Dependent Children ranged from over $800 per family per month in mainly white Alaska to less than $150 in Alabama and Mississippi, where almost one-third of the population is black. Even after adjustment for inter-state differences in average incomes, the correlation with race remained strong. Across countries, too, racial diversity goes with low government spending on poverty relief.
The reason, argue the authors, is that “race matters”, and they marshal statistical evidence, much of it from opinion surveys, to back this up. People are likely to support welfare if they live close to recipients of their own race; but are antipathetic if they live near recipients from another race. The divergent attitudes of Europeans and Americans to the poor are underwritten by the fact that the poor in Europe tend to be ethnically the same as most other folk. In America, their skin is often a different colour. [Emphasis added by Tagorda.]
My take: I buy the basic results. The sorry truth is that a fully cosmopolitan society is an impossible ideal. Furthermore the proffered questions don’t fully get at the real beliefs of many Americans, which is that most poor people deserve their status. (I think some of the poor are lazy, but being a determinist I don’t assign fault.) That being said, it is such false beliefs that keep American welfare spending at reasonable, non-European levels. By the way, here is a related paper by the authors.
Ebay vigilantes
Imagine spending your spare time perusing ebay for fraudulent listings and stopping them. A fair number of people do exactly that. Read Cronaca.com for the full story.
How does sadness affect market behavior?
Sadness makes you more eager to both buy and sell. It lowers the reservation price of sellers. Not surprisingly, feelings of disgust make you more eager to sell, but less eager to buy. Here is the home page of the one of the researchers. Here is some press coverage.
Randall Parker suggests: “Avoid shopping or selling things when you are sad.”
An alternative interpretation is that retail therapy is exactly what you need. That being said, I suspect that consummating a transaction is what makes you happy, not buying something expensive per se. Your vulnerability may suck you into spending more money than you ought to, but just sitting at home is a mistake as well. And contrary to what anti-market critics might suggest, loft insulation is unlikely to cheer you up. So what is the real lesson? When you are sad, go visit your local public library. They are almost sure to have something you want, and at the right price.
Thanks to Paul Barriere for the pointer.
Senators tell their favorite jokes
Imagine writing all the senators and asking them to relate their favorite jokes.
Here is one of the least funny responses, though the competition is stiff for this honor.
Here is the worst pun, don’t miss the accompanying photo.
Here is John Kerry’s joke.
Olympia Snowe won the vote for funniest joke.
I found Rick Santorum to have the funniest response, this is a PG-13 blog but for extra perspective read Dan Savage on the Senator, and no I won’t give you the link.
Thanks to Geekpress.com for the pointer.
Good economics makes for strange company
As you may recall, I showed that the CEA’s employment forecast, wrong as it has been, was simply a prediction of a return to trend and that Paul Krugman’s charges that the CEA has become corrupt are irresponsible and unjustified. (Sadly, Brad Delong has also signed on to these charges.)
I find myself in surprising company. In Salon, the left-leaning James K. Galbraith presents almost the same graph and the same conclusion.
Was Economic Team Bush getting its job targets, as many suspect, from Karl Rove? Did the professionals turn prostitute, as Krugman charges in no uncertain words?….Our new chart shows that the Bush forecast did not imply unusually rapid job growth for an economic expansion. …the failure of the jobs forecast did not occur because economic recovery forecasts were abnormal. They were not. So far as we can tell, it did not occur because someone cooked the books, under instruction or otherwise.
Shouldn’t DeLong and Krugman be worried when they fall to the left of Galbraith?
See also Econopundit who writes, “every economist who, like me, runs models with new quarterly data giving alternate (and possibly less-optimistic) employment forecasts is owed an apology. I have falsified nothing, but my results have been similar to those shown in the chart. I have reported the numbers that resulted from running a known model openly available to any and all (including Paul Krugman) who are competent to use it.”
Thanks to The Big Picture for the Galbraith link.
Marc Andreesen on comparative advantage
What a delight, Marc Andreesen, the internet pioneer, correctly explains comparative advantage to John Robb and then goes on to list America’s advantages. Tyler earlier pointed out this USA Today piece on Andreesen’s support for outsourcing.
Punkers for capitalism
With his mohawk, ratty fatigues, assorted chains and his menagerie of tattoos – swallows on each shoulder, a nautical star on his back and the logo of the Bouncing Souls, a New York City punk band, on his right leg – 22-year-old Nick Rizzuto is the very picture of counterculture alienation. But it’s when he talks politics that Mr. Rizzuto sounds like a real radical, for a punk anyway. Mr. Rizzuto is adamantly in favor of lowering taxes and for school vouchers, and against campaign finance laws; his favorite Supreme Court justice is Clarence Thomas; he plans to vote for President Bush in November; and he’s hard-core into capitalism.
“Punks will tell me, `Punk and capitalism don’t go together,’ ” Mr. Rizzuto said. “I don’t understand where they’re coming from. The biggest punk scenes are in capitalist countries like the U.S., Canada and Japan. I haven’t heard of any new North Korean punk bands coming out. There’s no scene in Iran.”
Here is a New York Times article, don’t forget to check out the pictures (password required). Here is a website for GOP punkers, they seem to approve of Reagan’s famous threat to bomb the Soviet Union. Or perhaps it is just irony. They stress that they are not libertarians because America is “at war” with the left, and the libertarian philosophy is not well-suited to fighting a war. Here is their cited critique of the Canadian health care model. Good economics, but these punkers, oppositional by nature, feel a kneejerk need to defend every action of the Bush administration. Here is the ConservativePunk.com website, which offers an interview with right-wing punker Johnny Ramone. Here is yet another site, which cites right-thinking punk bloggers. And will National Review be pleased that MyEvilMinion.com links to them approvingly?
My take: Punk music needs an idea of evil and an oppositional stance. So punkers will adopt every position of defiance they can find, including in-your-face right-wing politics. But in the long run? Remember what The Clash sung: “You grow up, you calm down, working for the clampdown…”
Is Microsoft the new language arbiter?
Microsoft has decided to write Windows for Welsh.
Microsoft programmes already run in 40 languages including English, Spanish, Arabic and Chinese variants.
A Welsh start menu and some commands will be available in about six months.
Microsoft said it has received complaints from places such as Catalonia, Malaysia and the Arctic regions of Canada.
They claim the switch from native languages online is also affecting everyday speech, said BBC North America Business Correspondent Stephen Evans.
Some argue the fewer languages the better for global trade and understanding, but Microsoft is siding with “linguistic diversity”, he said.
The other big linguistic groups to benefit from the expansion will be speakers of Gujarati and Tamil in India, of Catalan in Spain, and of Bahasa in Malaysia.
Native languages from Northern Canada and Ethiopia will also be added.
My take: Whether or not a language is focal will be determined with increasing rapidity.
Thanks to Cronaca.com for the link.
Small families can decrease social mobility
…it is among larger families that the household or kin effects on the success of children are the weakest. Not only do children from larger families do worse on average than those from smaller families, but they also experience more randomness. In other words, parents’ class status affects their offspring more weakly in large families than in small ones. Likewise, siblings resemble one another less in larger families. For example, sibling similarity in income levels is approximately 24 percent stronger in families with three siblings or fewer than in families with four or more children. For net worth levels…the degree of sibling similarity is 59 percent greater in smaller families.
Those are significant effects, what will they mean?
What all this means for the class structure of American society is that as families get smaller, there may be less socioeconomic mobility, not more. Parents will be able to more carefully control the environments of their offspring and thereby reproduce their own class status.
There is a caveat:
Of course, this depends not just on the overall average number of kids that families are having, but also on the distribution. If the most dramatic declines in family size occur among the economically disadvantages segments of American society then we could have more equality of opportunity.
In other words, having larger families, across the board, will mean that subsequent income is less correlated with family history. But on average it will not raise the prospects of people from poor families.
From Dalton Conley’s excellent The Pecking Order: Which Siblings Succeed and Why. Follow this link and here for my earlier writings on Conley.
Income inequality over time
How great a share has the top ten percent of the American income distribution earned over time?
Ben Muse tells us (based on, Income Inequality in the United States, 1913-1998, by Thomas Piketty and Emmanuel Saez):
In 1917, the top 10% of “tax units” had about 40% of national income. The percent of the income earned by this group rose until about 1929, ranged from about 44% to about 46% until 1940, then plummeted to the area of 32% during the war, and sat there until about 1972. From 1972 to 1998, the share of income received by this group rose almost continuously, ending the period in the area of 42%.
Here is the graph (click to expand):
Breaking the top 10% into even finer gradations we see that:
Percentiles 90-99 appear to rise gradually from 1917 to 1940, do the 1940 WWII drop, then, following the war, begin a long sustained increase through 1998.
But the top percentile is all over the place. The authors had enough data to start this series up in 1913, before the start of WWI. It plummets on U.S. entry into the war and during a post-war depression, rises through the boom of the 1920s, peaking in 1929, plummets with the onset of the Great Depression, and again with the onset of WWII, then continues to fall following the war, bottoming out about 1972, and then rising over the period 1972-1998. A large part of this last rise takes place in 1987 and 1988, following the Tax Reform Act of 1986….
What else do we learn? War and other disruptions appear to damage capital income more than labor income. If that is the case, a healthy and peaceful society might have increasing income inequality. In other words, if we are lucky, income inequality will increase even more.