Results for “chetty” 74 found
Pollution and Macro Inequality
Combining 36 years of satellite derived PM2.5 concentrations with individual-level administrative data provided by the U.S. Census Bureau and Internal Revenue Service (IRS), we provide new evidence on the important role that disparities in air pollution exposure play in shaping broader patterns of economic opportunity and inequality in the United States. We first document that early-life exposure to particulate matter is one of the top five predictors of upward mobility in the United States. Second, we exploit regulation-induced reductions in pollution exposure from the 1990 Clean Air Act Amendments to produce new age-specific estimates of pollution-earnings relationship. Combined with individual-level measures of pollution exposure during early childhood, we calculate that disparities in air pollution can account for 17-26 percent of the Black-White earnings gap, 5-27 percent of the Hispanic-White earnings gap, and 6-20 percent of the average neighborhood-earnings effect (Chetty and Hendren, 2018; Chetty, Hendren, and Katz, 2016). Collectively, our findings indicate that environmental inequality is an important contributor to observed patterns of racial economic disparities, income inequality and economic opportunity in the United States.
That’s Colmer, Voorheis and Williams summarizing Air Pollution and Economic Opportunity in the United States. The authors also estimate that
…a 1 μg/m3reduction in prenatal PM2.5 exposure is associated with a $1,105 increase in later-life W-2 earnings and…a 1 μg/m3 reduction in prenatal PM2.5 exposure is associated with a 1.29 percentile rank point increase in upward mobility…We estimate pollution-earnings relationships for each age of exposure from birth to age 12 and show that the relationship between pollution exposure and earnings is stable up to age 4 and then diminishes quickly. We do not estimate a meaningful relationship between particulate matter exposure and later-life earnings from age 8 onward.
These estimate are big but given the substantial number of micro-estimates of the effect of pollution on IQ and cognition that Tyler and I have discussed before (see also this video) substantial effects at the macro level are almost inevitable.
Monday assorted links
1. Flipping the burger a few more times will reduce the cook time.
2. Sumner splat.
3. College causally reduces smoking.
5. The socialist version of the anti-alcohol campaign (it’s about time), book here.
New results on social capital and interconnectedness
There are two new NBER papers written by large teams, headlined by Raj Chetty. Here is an excerpt from the first paper:
The fraction of high-SES friends among low-SES individuals—which we term economic connectedness—is among the strongest predictors of upward income mobility identified to date, whereas other social capital measures are not strongly associated with economic mobility. If children with low-SES parents were to grow up in counties with economic connectedness comparable to that of the average child with high-SES parents, their incomes in adulthood would increase by 20% on average.
And this as a general introduction to the project:
….we measure and analyze three types of social capital by ZIP code in the United States: (i) connectedness between different types of people, such as those with low vs. high socioeconomic status (SES); (ii) social cohesion, such as the extent of cliques in friendship networks; and (iii) civic engagement, such as rates of volunteering. These measures vary substantially across areas, but are not highly correlated with each other.
The core data are taken from Facebook and anonymized. And from the second paper:
We show that about half of the social disconnection across socioeconomic lines—measured as the difference in the share of high-socioeconomic status (SES) friends between low- and high-SES people—is explained by differences in exposure to high- SES people in groups such as schools and religious organizations. The other half is explained by friending bias—the tendency for low-SES people to befriend high-SES people at lower rates even conditional on exposure.
There is then this concrete result:
…friending bias is higher in larger and more diverse groups and lower in religious organizations than in schools and workplaces.
Here is a tweet storm with a relevant map. These papers are sure to have considerable influence on how we think about social connections. Yes this is sociology, but has not this team done it better?
Stimulus sentences to ponder
Estimates by Harvard economics professor Raj Chetty and his colleagues suggest that consumer spending by low-income consumers is up more than 13 percent from January 2020 to January 2021, before any new stimulus. Researchers working with data from the JPMorgan Chase Institute find household cash balances have risen across the income distribution during the pandemic. At the proposed level of unemployment benefits, more than half of laid-off workers will see their incomes rise. Proposed expenditure levels for school support exceed $2,000 per student.
That is from Lawrence H. Summers, answering further questions about his stimulus stance. Do read the whole thing. Again people, you are being sold a bill of goods on this one…
New issue of Econ Journal Watch
https://econjwatch.org/issues/volume-17-issue-2-september-2020
In this issue:
Five cities, five stories? Robert Kaestner explores the heterogeneity of results across Baltimore, Boston, Chicago, Los Angeles, and New York in the work of Raj Chetty, Nathaniel Hendren, and Lawrence Katz, arguing that it is misleading to suggest that moving before the age of 13 to lower-poverty neighborhoods promises better outcomes. Chetty, Hendren, and Katz respond.
The AEA: Republicans need not apply: Mitchell Langbert investigates the American Economic Association, using voter-registration data and political-contribution data to show that the AEA officers, editors, authors, and other players are quite thoroughgoingly Democratic.
The AER: How much space is given to articles on gender, race and ethnicity, and inequality?: Jeremy Horpedahl and Arnold Kling track the trends 1991–2020 for the American Economic Review and Papers & Proceedings.
Lockdowns and covid hospitalizations: John Spry criticizes a JAMA research letter by Soumya Sen, Pinar Karaca-Mandic, and Archelle Georgiou about the effectiveness of stay-at-home orders, for eliding available placebo comparisons. Sen, Karaca-Mandic, and Georgiou reply.
Reading, writing, and Adam Smith: Scott Drylie uses Smith’s final words on school financing to review interpretations of Smith on schooling.
Carl Menger: The Errors of Historicism in German Economics: The first English translation of Menger’s 1884 reply to Gustav Schmoller is provided by Karen Horn and Stefan Kolev, whose Foreword analyzes the not-so-amicable Methodenstreit.
Data alteration: Ron Michener rejoins to Farley Grubb, explaining why he thinks that Grubb had no grounds for altering John McCusker’s data series and thereby generating outliers on which his results depend. (Professor Grubb received Professor Michener’s comment too late to allow for concurrent reply but will reply in the next issue of this journal.)
Frictionless note: With the approval and gratitude of Jeffrey Bergstrand, Nico Stoeckmann corrects the constant in the equation for a special, frictionless case of Bergstrand’s gravity equation for international trade.
Liberalism in Brazil: Lucas Berlanza provides a historical and modern guide to the fortunes of liberal ideas and trends in Brazil, extending the Classical Liberalism in Econ, by Country series to 20 articles.
Readworthy 2050: Nine correspondents respond to the question: What 21st-Century Works Will Merit a Close Reading in 2050?
EJW Audio:
Karen Horn and Stefan Kolev on Menger vs. Schmoller: The translators discuss Menger’s 1884 The Errors of Historicism in German Economics and the broader Methodenstreit.
Arnold Kling on Why Edward Leamer Deserves a Nobel Prize
Evan Osborne on Joan Robinson’s Little-Repented Maoism
Saturday assorted links
2. Late nights make the President angry on Twitter.
3. Many experts downplay or even sneer at the preexisting immune response idea when “the kooks” bring it up (e.g., Fauci vs. Rand Paul, for one), but the evidence for it is growing. Its relevance now seems quite likely.
4. Law Firms Pay Supreme Court Clerks $400,000 Bonuses. What Are They Buying? (NYT)
5. Could Einstein get published today? (WSJ)
6. NLRB Files Complaint Against Socialist-Themed Vegan Meat Company That Fired Union Organizers. The company is called No Evil Foods.
7. Raj Chetty during the pandemic (Bloomberg).
Sunday assorted links
1. John Cleese on PC and wokeness. I think the first comment is satire rather than serious, but one can’t be entirely sure these days. The best-known Monty Python episodes these days are entirely acceptable, but some of the now lesser-known works are pretty…out there.
2. “Meanwhile, for-profit companies charge schools thousands of dollars for the training, making the active shooter drill industry worth an estimated $2.7 billion — “all in pursuit of a practice that, to date, is not evidence-based,” according to the researchers.” Link here.
3. Ross Douthat on how many lives a more competent president would have saved (NYT).
4. Why don’t coaches/manangers adjust more? A parable from the NBA, but with much broader applicability. Note that sometimes the star player is the problem too.
Are pre-docs in economics a good idea?
Formal pre-doc programmes have burgeoned, especially in elite universities such as Harvard, Stanford, the University of Chicago and Yale. Participants clean and analyse data, write papers and do administrative tasks. In exchange they may receive free or subsidised classes, a salary in the region of $50,000, potential co-authorship of the papers they work on, and, most prized of all, a letter of recommendation to a top programme.
In part pre-docs show how economic research has changed. “Economics has become more like the sciences in terms of both the methods and the production process,” says Raj Chetty of Harvard, who directs the Opportunity Insights team, a group with a reputation for working its pre-docs hard. When analysing tax records that gave access only to a certain number of people, he switched away from using part-time research assistants to a lab-like team, inspired by his own family of scientists. As bigger data sets, new techniques and generous funding made such collaboration worthwhile, others followed.
Here is much more on pre-docs from Soumaya Keynes at The Economist. I suspect this development is inevitable, but I see at least two things going on here. First, letter writers are internalizing the very high value of those letters in the form of personal services received. Second, this will push out “weirdos” and make the profession more homogenized, more obedient, more elite, more dependent on school of origin, and less interesting. I do understand the value of the training received, and don’t propose any mechanism to “stop this,” but overall it does not make me an entirely happy camper.
Monday assorted links
1. Why might poor white Americans feel especially bad?
2. Raj Chetty talk on Covid-19, coming this Wednesday. And forthcoming seminar on what students think of on-line education.
3. Study of T-cell immunity in Singapore. Small numbers, but of interest.
4. Useful list of top economics blogs.
5. Woman in China, 45, made S$589,800 by buying insurance on flights she predicted would get delayed.
Saturday assorted links
1. Heckman vs. Chetty? (The Economist)
2. The Cannonball Run record has been obliterated.
3. Fracking spread gonorrhea but not through prostitution. (Is that good or bad news?)
4. Derek Lowe on monoclonal antibodies and vaccines.
5. Andrew Sullivan on Samuel Pepys.
6. Africa against the coronavirus is doing better so far than many people had expected.
8. If you read this Apple/Google app track and trace piece carefully, you will learn who is really for privacy and who is not, rather being just anti-corporate. Here is good commentary on said story.
*The Years That Matter Most: How College Makes or Breaks Us*
That is the new book by Paul Tough, I read it through in one sitting. The back cover offers an appropriate introduction to the work:
Does college work? Does it provide real opportunity for young people who want to improve themselves and their prospects? Or is it simply a rigged game designed to protect the elites who have power and exclude everyone else?
That may sound a little overwrought, but this book actually delivers a quality product on those questions. In addition to the well-selected anecdotes, Tough also engages seriously with the research of Raj Chetty, Caroline Hoxby, and others. He is also willing to report politically incorrect truths (for instance the percentage of black attendees at top colleges who are from Africa or the Caribbean) without gloating about it or slanting the evidence, as is so commonly done.
Here is one short zinger to savor:
At the University of Virginia, only 13 percent of undergraduates are eligible for Pell grants — a lower rate than at Princeton University or Trinity College. At the University of Michigan, the figure is 16 percent. At the University of Alabama, the flagship public institution of one of the poorest states in the nation, the median family income for undergraduates is higher than at Bryn Mawr College.
Definitely recommended.
We need a new science of progress
That is the title of my Atlantic piece with Patrick Collison, excerpt:
Progress itself is understudied. By “progress,” we mean the combination of economic, technological, scientific, cultural, and organizational advancement that has transformed our lives and raised standards of living over the past couple of centuries. For a number of reasons, there is no broad-based intellectual movement focused on understanding the dynamics of progress, or targeting the deeper goal of speeding it up. We believe that it deserves a dedicated field of study. We suggest inaugurating the discipline of “Progress Studies.”
And:
Plenty of existing scholarship touches on these topics, but it takes place in a highly fragmented fashion and fails to directly confront some of the most important practical questions.
Imagine you want to know how to most effectively select and train the most talented students. While this is an important challenge facing educators, policy makers, and philanthropists, knowledge about how best to do so is dispersed across a very long list of different fields. Psychometrics literature investigates which tests predict success. Sociologists consider how networks are used to find talent. Anthropologists investigate how talent depends on circumstances, and a historiometric literature studies clusters of artistic creativity. There’s a lively debate about when and whether “10,000 hours of practice” are required for truly excellent performance. The education literature studies talent-search programs such as the Center for Talented Youth. Personality psychologists investigate the extent to which openness or conscientiousness affect earnings. More recently, there’s work in sportometrics, looking at which numerical variables predict athletic success. In economics, Raj Chetty and his co-authors have examined the backgrounds and communities liable to best encourage innovators. Thinkers in these disciplines don’t necessarily attend the same conferences, publish in the same journals, or work together to solve shared problems.
You may have seen there is a small cottage industry on Twitter suggesting that we ignore antecedents to Progress Studies, but of course that is not the case, as evidenced by the paragraph above, not to mention claims like: “Progress Studies has antecedents, both within fields and institutions. The economics of innovation is a critical topic and should assume a much larger place within economics.” In fact we consider antecedents in at least nine different paragraphs of a relatively short piece.
The piece is interesting throughout, and I can assure you that Patrick is a very productive and diligent co-author.
RIP, Martin Feldstein
In addition to being a great economist, Marty was an institution builder. He was the early driving force behind the rise of the NBER, he led the development of empirical public finance as a respected field, and also very early on he pushed health care economics, both through his leadership at the NBER and through his own work and mentorship. He always was reaching out to help others, and Larry Summers, Jim Poterba, David Cutler, Raj Chetty, and Jason Furman were some of those he mentored. The economics of art museums was yet another topic he had a real interest in, and stimulated research in.
Marty also was one of my oral examiners at Harvard, and he asked only excellent questions. I thank him for judging my answers to be good enough.
Friday assorted links
Do tax cuts produce more Einsteins?
Bell, Chetty, Jaravel, Petkova and Van Reenen in a new working paper say not so much. And indeed their intuitions are not surprising. Tax cuts boost the prospects of those individuals who already exposed to the possibility of being innovators, and that is not everyone. Talent searches — to identify and mobilize potential creators — might be more productive. Furthermore, tax cuts could just draw in lots of marginal innovators, whereas the really important contributions come from a fairly small number of top performers. Those top performers reap such high returns/rents that they will not so much be deterred by higher tax rates.
The key decision in their model is whether or not to enter the innovation sector, and in that setting you can see that higher marginal tax rates probably do not stop Brin and Page from creating Google and earning lots of money. A smaller fraction of the value they created is still a huge sum.
And yet I am not convinced. There is another way to think about and model the process. Imagine instead that innovation is a matching process, whereby the most talented creators must be matched to the appropriate infrastructures and ecologies. A given entrepreneur can choose to “think big” or “go small,” the latter involving less work and less risk. Optimal marginal tax rates can be much lower in that model, because there is easier substitution into lower-valued activities, just as optimal tax rates are much lower in matching models for CEO productivity and pay. Pushing the best CEOs to less important firms can bring big losses in output, just as pushing the best innovators to less important projects can work pretty much the same way.
You might also introduce into the model venture capitalists, namely people and firms who (among other things) help match innovators to the right projects. If you tax innovators, might some of the incidence fall upon venture capitalists, who now must accept a lower percent of the return from the project? And what are the secondary consequences of that? I don’t know, but they might be quite different from what is laid out in this model. Tax incidence should not be treated as so simple. Innovation is not a solo endeavor (as progressives will insist on telling us in other settings), rather it is about clusters of excellence and mutual inspirations. And when clusters matter, there is a positive externality from innovation from each innovator, which again militates in favor of a lower tax rate on innovators. If anything, a “clusters model” would seem to favor taxes on land, not on innovation. Furthermore, perhaps we should even subsidize top innovators.
The general point is that when matching and clusters matter, optimal rates of taxation on innovators tend to be lower.