The best results on assortative mating and inequality I have seen

This paper studies the evolution of assortative mating in the permanent wage (the individual-specific component of wage) in the U.S., its role in the increase in family wage inequality, and the factors behind this evolution. I first document a substantial trend in assortative mating, as measured by the permanent wage correlation of couples, from 0.3 for families formed in the late 1960s to 0.52 for families formed in the late 1980s. I show that this trend accounts for more than one-third of the increase in family wage inequality across these cohorts of families. I then argue that the increase in marriage age across these cohorts contributed to the assortative mating and thus to the rising inequality. Individuals face a large degree of uncertainty about their permanent wages early in their careers. If they marry early, as most individuals in the late 1960s did, this uncertainty leads to weak marital sorting along permanent wage. But when marriage is delayed, as in the late 1980s, the sorting becomes stronger due to the quick resolution of this uncertainty with work experience. After providing reduced-form evidence on the impact of marriage age, I build and estimate a marriage model with wage uncertainty and show that the increase in marriage age can explain almost 80% of the increase in assortative mating.

That is from the job market paper of Alparslan Tuncay, from the University of Chicago.

My Conversation with John Nye

John is one of the smartest people I know, and one of my favorite people to talk to, here is the transcript and audio.  Here is the opening summary:

Raised in the Philippines and taught to be a well-rounded Catholic gentleman, John Nye learned the importance of a rigorous education from a young age. Indeed, according to Tyler he may very well be the best educated among his colleagues, having studying physics and literature as an undergraduate before earning a master’s and PhD in economics. And his education continues, as he’s now hard at work mastering his fourth language.

On this episode of Conversations with Tyler, Nye explains why it took longer for the French to urbanize than the British, the origins of the myth of free-trade Britain, why Vertigo is one of the greatest movies of all time, why John Stuart Mill is overrated, raising kids in a bilingual household, and much more.

Here is one bit:

NYE: In fact, one of the things I do know about the 19th century is that there’s no evidence that either unilateral free trade or multilateral did very much.

Almost all the free trade in Europe in the 19th century was a product of, initially, the bilateral trade agreement between Britain and France, sometimes known as the Anglo-French Treaty of Commerce of 1860, in which they each agreed to much more liberalized trade on a most-favored-nation basis. Once they accepted this, then what happened is, anyone who signed on to either Britain or France on the most-favored-nation basis then bought into, in some sense, this system.

Here is another:

COWEN: Particular mistakes aside, what were the systemic mistakes the Western world was making in, say, 1910, 1912?

NYE: I think the systemic mistake really boils down to how do you deal with the problem of power? How do you deal with the problem of different groups, different cultures wanting their place at the table? It’s clear that, if you look, a lot of the fight of imperialism was great-power competition.

If you look in the Far East, for example, some people may know that the United States took the Philippines from Spain at the end of the period of Spanish control of the Philippines in 1898, and partly this was due to Perry’s decision to sail into Manila Bay.

One of the things that’s not discussed — most people are unaware of — is that the German and British fleets were waiting in Hong Kong. They were waiting to see what the Americans did. And it’s quite likely that, had the Americans not steamed into Manila Bay, that the Germans or British would have intervened in the Philippines once the Spanish collapsed.

And:

COWEN: And if there’s an underlying political subtext or import of Hitchcock, what do you think that would be? Not what he necessarily intended as his politics, but what’s in the movies in terms of human nature and political man?

NYE: Well, I think there’s this question of suspicion and the tendency to not appreciate how much is going on under the surface. I think people tend to see these things narrowly in terms of Cold War paranoia. But Hitchcock was a political conservative, and he was much more of the very old British conservative view that one should be wary in times of —

COWEN: Suspicion is metaphysical, right?

Definitely recommended, I am very honored to have had the chance to do this with John.

Artificial Intelligence is Alien Intelligence

Imagine if an alien came to earth and told us some new scientific fact that no human had ever known. Artificial intelligence is starting to do just that. Computers and AI have long given us solutions to problems that humans could not have worked out for themselves but AI is going beyond optimization to tell us facts about the world that no one suspected. Eric Topol on twitter points us to a paper in Nature that used deep learning to analyze retinal images to predict heart disease–it’s long been known that this can be done which is one reason why ophthalmologists take a close look at your retinas when fitting lenses but not surprisingly the AI can see more than can ophthalmologists. What was surprising, however, was that the AI could also tell gender from retinal images, a fact no one had ever previously considered! As a summary notes:

…that information in a retinal image can be used for the prediction of a persons gender is surprising and puzzling. This underscores the potential of artificial intelligence to revolutionize the way medicine is practiced and to help discover hidden associations.

Coleman Hughes reviews *Stubborn Attachments*

Excellent review, in Quillette, here is part of the closing sequence:

Ultimately, absorbing the thesis of Stubborn Attachments would entail a radical loss of purpose for the politically-minded among us. The small, short-term policy fights that energize us most are precisely the ones from which, on Cowen’s account, we should abstain entirely. Even the smartest among us don’t know what net effect small policies will have; plus very little well-being turns on such policies to begin with. Growth maximization, on Cowen’s view, becomes a moral black hole from which no partisan skirmish, no matter how seemingly important, can escape.

In a cultural landscape where partisan skirmishes regularly induce something approaching bloodlust on both sides of the political aisle, it’s safe to say that most Americans are roundly rejecting Cowen’s thesis at the moment. But perhaps that means the message of Stubborn Attachments is needed now more than ever.

Recommended, here is the link.

Those new service sector jobs

The DAWN Café is an upcoming trial project that will test an inclusive working environment. The café will seemingly be staffed with robots that will wait on you by bringing you your coffee and asking if you need anything. But if you think this is another example of robots coming for our jobs, you would be mistaken. Embedded within the robots are real intelligence: they’re operated remotely by people with severe disabilities who often can’t leave their bed.

Here is the story, via Dustin Palmer.

The surprising (?) formula for becoming an art star

From Kelly Crow at the WSJ:

New artists who show their work early in a relatively small network of 400 venues—like Gagosian Gallery or the Guggenheim Museum—are all but guaranteed a successful art career, the study said. By contrast, artists who exhibit mainly in lower-level galleries and midtier institutions are likely to remain stuck in that orbit.

“There’s this invisible network of trust that exists in the art world, but the group that decides who matters in art was considerably smaller and more powerful than we expected,” said Albert-László Barabási, a data scientist who studies networks at Northeastern and led the study along with several colleagues including a data scientist now at the World Bank, Samuel Fraiberger. Their findings also show up in Dr. Barabási’s book published earlier this week, “The Formula: The Universal Laws of Success.”

His findings undermine a popular art-world notion that a prodigy could create in obscurity and get discovered years later. Instead, the research suggests that artists who start out seeking connections with powerful curators, dealers and collectors within the nerve center of the art world are far more likely to hit the big time…

“If one of your first five shows as an artist is held at a gallery in the heart of this network, the chances of your ending your career on the fringes is 0.2%,” Dr. Barabási said. “The network itself will protect you because people talk to each other and trade each other’s shows.”

…“The art world prides itself on being so open and inclusive, but the truth is the opposite,” Mr. Resch said.

The same is true for academia, I might add.  And most other things.

The long-run impacts of same-race teachers

From Seth Gershenson, Cassandra M.D. Hart, Joshua Hyman, Constance Lindsay and Nicholas W. Papageorge:

We examine the impact of having a same-race teacher on students’ long-run educational attainment. Leveraging random student-teacher pairings in the Tennessee STAR class-size experiment, we find that black students randomly assigned to a black teacher in grades K-3 are 5 percentage points (7%) more likely to graduate from high school and 4 percentage points (13%) more likely to enroll in college than their peers in the same school who are not assigned a black teacher. We document similar patterns using quasi-experimental methods and statewide administrative data from North Carolina. To examine possible mechanisms, we provide a theoretical model that formalizes the notion of “role model effects” as distinct from teacher effectiveness. We envision role model effects as information provision: black teachers provide a crucial signal that leads black students to update their beliefs about the returns to effort and what educational outcomes are possible. Using testable implications generated by the theory, we provide suggestive evidence that role model effects help to explain why black teachers increase the educational attainment of black students.

I would describe the strength of this effect as one of the main and most important things economists have taught us over the last five years.

The culture that is Taiwan (Britain)

When the popular BBC TV program The Travel Show introduced Taiwan to its viewers, it failed to mention the island’s food, the Liberty Times noted Thursday.

The show visited the Anping Fort in Tainan, the brand new Weiwuying arts center in Kaohsiung, the sunrise and the tea plantations near Alishan, and the lanterns of Pingxi, but the presenters did not mention a word about Taiwanese food or even the night markets, according to the Liberty Times.

That is from a Taiwanese news site, via Salar al Khafaji.

Hedge fund and tech questions that are rarely asked

COWEN: Given all the data that search companies and some of the other major tech companies have, why aren’t they bundled with hedge funds?

SCHMIDT: What do you mean by bundled?

COWEN: Well, literally in the same company. You’d have a tech company and a hedge fund, and there would be a synergy because the hedge fund would use the data generated by the tech company for investment. So the hedge fund would have that data first. We don’t see that in the market.

And:

COWEN: The major tech companies have done very well, of course, but if we imagine some world in the future where some tech companies are at or near insolvency, and if we think maybe they have a fiduciary responsibility to sell off the information they hold on people, is that a regulatory problem we will need to address?

Obviously, a successful tech company is not going to do that. They would wreck their franchise.

SCHMIDT: Yeah, so the problem that you’re posing is, we have a company that has a great deal of useful information that’s also bankrupt.

COWEN: Right.

Those were my questions to Eric Schmidt.

*Where Economics Went Wrong: Chicago’s Abandonment of Classical Liberalism*

That is the new book by David Colander and Craig Freedman, here is one short bit:

The best way of conveying our conception of what is at least suggestive of a Classical Liberal stance is to present a handful of economists who, in our view, reflect this attitude.  We have chosen six economists: Edward Leamer, Ariel Rubinstein, Alvin Roth, Paul Romer, Amartya Sen, and Dani Rodrik.  Each have, in our view, displayed a Classical Liberal attitude to methodology in important aspects of their work.

I am very much in favor of what the authors propose here, although I might reserve the term classical liberal for the more traditional political distinction.