Rhetorical Questions About Education, Grades 7-12

Responding to stories about police and student discipline, how hard it is to sit in class all day, and how many high-school graduates are unprepared for college.

1. How much would somebody have to pay you to be a teacher in the middle school that you attended?

2. How well do you think that evolution trained the human adolescent to sit in a desk and pay attention?

3. When you were aged 13-18, how easy was it for a teacher to gain your respect?

4. When you were aged 13-18, did you only take rational risks?

5. When you were aged 13-18, did you want your friends to shut up so that you could listen to the teacher?

6. When you were aged 13-18, did you do what you would advise an adolescent to do today?

Jonathan Haidt on Political Bias in Sociology

He is quoted by Chris Mooney as saying,

When the facts conflict with…sacred values, almost everyone finds a way to stick with their values and reject the evidence. On the left, including the academic left, the most sacred issues involve race and gender. So that’s where you find the most direct and I’d say flagrant denial of evidence. I think the results of this study do clearly show that political concerns influence the willingness of sociologists to consider a major class of causal factors in human behavior.

Read Mooney’s whole piece. The study he refers to is by sociologist Mark Horowitz and two colleagues.

Plus, there is this article on Haidt on social psychology. Pointer from Jason Collins.

The One-Axis Model of “Scott Alexander”

It is thrive-survive. The left thinks in terms of what it will take to thrive, and the right thinks in terms of what it will take to survive.

What he is trying to do is explain why the two tribes believe what they do. My goal with the three-axis model is to explain why they communicate as they do. My objective differs a bit from Scott’s although they are close. I think that the tribes have nuanced reasons for believing what they believe, but when they are beating tribal drums, the signals fall along my three axes.

Anyway, here is a sentence from his post:

I despair of any theory that will tell me why school choice is a rightist rather than a leftist issue

Pointer from a commenter on Bryan Caplan’s post.

Suppose that both sides now believe that the left controls the public schools. Then I think it becomes easy to explain the partisan pattern. To put this another way, if most teachers and school boards were proponents of right-wing views, I think that a reversal on school choice would be highly probable.

In terms of Scott’s single-axis model, the fact that the left controls public schools may cause the left to deduce that public schools are the best hope for providing students with the tools that they need to thrive, and that taking students out of public schools only subjects them to inferior models. Conversely, the right may believe that public schools are ruining the character of young people, and the only way for society to survive is to make alternatives available to as many students as possible.

David Brooks’ Economic Priorities

Dean Baker writes (The post is unsigned, so it might not be Baker),

we get Brooks telling us:

“The government should reduce its generosity to people who are not working but increase its support for people who are. That means reducing health benefits for the affluent elderly.”

There are two questions that come up here. First what is the definition of “affluent” and second what counts as “generosity.”

In case you didn’t know, Baker does not heart Brooks. My own views align with neither Baker nor Brooks.

1. Brooks supports more government spending on infrastructure, as does Baker. I do not.

2. On the redistribution issue, my perspective differs somewhat from Brooks. My concern is that we have too many uncoordinated means-tested programs, making marginal tax rates too high for the able-to-work poor. As you know, I prefer something more along the lines of a small universal basic income provided at the Federal level, with additional specific needs addressed through programs from states, local governments, and charities.

As for health benefits, I am not for taking away Medicare from the elderly today, but I am for scaling back promises to people tomorrow. Note that Baker claims that today’s beneficiaries have paid for their benefits. I call baloney sandwich. What they paid for were their parents’ benefits, and what they paid into the system was not sufficient to pay for the benefits they are now receiving. If it were true that they had paid for their benefits, the system would be solvent.

3. Brooks endorses the reform conservative Room-to-Grow idea of showering middle-class families with tax credits. I see that as political posturing. If I could be in charge of tax reform, we would get rid of credits and deductions, and we also would move away from taxing income and instead toward taxing consumption. Note, however, that tax reform is not one of my top three priorities.

4. Brooks wants us to open the immigration door wide for high-skilled immigrants, while presumably trying to keep it relatively closed for low-skilled immigrants. If it were up to me, the door would be wide open for people who are grateful for the chance to live in America and are eager to assimilate, and otherwise my feelings about opening the door would be more ambivalent. But I also would not make immigration reform a top priority.

5. Brooks wants more spending on education. I take the null hypothesis seriously.

Remembering the Suits vs. Geeks Divide

I’ll provide a post-mortem on my appearance at this panel on whether or not to break up the banks after I’ve had more time to reflect.

Prior to the panel, I Googled one of the other panelists, and I found that he had hopes for the Volcker Rule, which would try to keep banks from doing proprietary trading. I am not a fan of the Volcker Rule. In fact, in recent years, I have not been a fan of Paul Volcker, because I think he has what I call a low geek quotient.

What I call Geek Finance has emerged over the past thirty years. It is used extensively in derivatives markets and in mortgage finance. It involves very complex probabilistic simulation models that are used to assign values to long-term, deep out-of-the-money options. Some thoughts.

1. Is Geek Finance a good thing? On the one hand, I would say that we need some rational way of valuing these sorts of options. On the other hand, it is important to be aware of the assumptions that go into such models and not to have too much faith in their precision. In the case of mortgage default risk, for example, it matters whether you assume that house prices across different locations are highly correlated or nearly independent. It matters whether you assume that a large nationwide house price decline is practically impossible or just somewhat unlikely.

2. Shortly after the financial crisis, Robert Merton, who shared the Nobel Prize for developing option price theory, gave a lecture in which he suggested that many top corporate executives did not really understand what was being done by the practitioners who worked for them. I termed this the Suits vs. Geeks divide. Many CEOs, and also many top officials in Washington, had low geek quotients.

3. Whether you love or hate geek finance, whether you want to tolerate it or would seek to get rid of it, you have to understand it. I think that Suits with low geek quotients are dangerous.

4. In 2003, Freddie Mac’s Board ousted a CEO with a high geek quotient and replaced him with a CEO with a low geek quotient. The main change that resulted from that was that Freddie Mac greatly increased its exposure to risky loans.

5. In 2006, Goldman Sachs lost a CEO with a low geek quotient. Subsequently, and this may have been purely coincidental, Goldman was relatively good at reducing its exposure in the mortgage market.

6. The original idea of TARP, which was to use government funds to buy toxic assets, had a low geek quotient. As a geek, I did not think it was workable. Of course, this idea was never implemented. Instead, the TARP money pile was used to inject capital into banks, to restructure GM and Chrysler, and ….well, whatever the President and Treasury Secretary felt like spending it on, it seems.

7. Back to the Volcker Rule. I don’t think it can fly. My prediction is that they will get it off the ground to save face, then it will wobble at low altitude for a bit, and within a few years you will find it resting on the ground. I imagine a sequence of conversations going something like this:

Volcker rulers: Banks, you cannot touch securities.

Banks: But you do want us to hedge our risks, don’t you?

Volcker rulers: Hmmm. OK, but you have to hold your hedging instruments until they mature.

Banks: But when interest rates change, you do want us to rebalance, don’t you?

Volcker rulers: Hmmm. OK, but…

etc., etc., until there is no rule left

Robert Solow and Russ Roberts

On this podcast. As many commenters point out, Solow has a lot of acuity (and stamina!) for someone aged 90.

I think that in their discussion of what people believe in macro and why, I prefer Solow’s rendition. I think he is correct that it was not as simple as saying that Chicago taught monetarism and MIT taught fiscalism. (Small world note: Roberts’ undergraduate friend who went to MIT was my roommate during our first year of graduate school.) I think Solow is correct that the AS/AD paradigm was very different from what came before. However, I would note that until the 1970s, it was the AD paradigm alone, with the Phillips Curve (popularized by Samuelson and Solow) tacked on. In the 1970s, as economists started to think more about inflation and about what sort of theory might explain the Phillips Curve, there emerged the AS-AD paradigm. Most of the macro that came out of that 1970s theorizing ended up going in a direction that neither Solow nor I liked. As I point out in my macro memoir, that is how I was drawn to Solow as a thesis adviser.

Joshua Gans on Apple Pay and Market Power

He writes,

So last week, in some of these stores you could use Apple Pay. This week in CVS and Rite Aid you can’t. The reason appears to be that a bunch of large retailers got together a couple of years ago to develop their own mobile payments solution — mostly to compete with existing banks and credit card associations. They are still doing that and will only launch their app, CurrentC, next year. In the meantime, they have acted to stop Apple Pay and Google Wallet from getting traction.

When a consortium of big legacy companies tries to take on a tech company in an innovative area, I expect an epic fail.

Matthew Yglesias on Amazon and Market Power

He writes,

What is indisputably true is that Amazon is on track to destroy the businesses of incumbent book publishers. But the many authors and intellectuals who’ve been convinced that their interests — or the interests of literary culture writ large — are identical with those of the publishers are simply mistaken.

Pointer from Jason Collins.

I agree that we should not be rushing to the barricades to defend the traditional publishing business model. Rooting for the book publishers to have strong negotiating leverage with Amazon is equivalent to rooting for the legacy music industry to have strong negotiating leverage with iTunes.

Research Findings Support Change-the-Gender

Therese Huston writes in the NYT,

Neuroscientists have uncovered evidence suggesting that, when the pressure is on, women bring unique strengths to decision making.

…the closer the women got to the stressful event, the better their decision making became. Stressed women tended to make more advantageous decisions, looking for smaller, surer successes. Not so for the stressed men. The closer the timer got to zero, the more questionable the men’s decision making became, risking a lot for the slim chance of a big achievement.

Pointer from Jason Collins.

An evolutionary psychologist would have a great just-so story to explain this. Women are gatherers, looking for smaller, surer successes in finding food. Men are hunters, risking a lot for a slim chance of bringing back meat.

As you know, I have frequently suggested that if I had the job of regulating risk in the financial industry, I would change the gender of the CEO’s at big banks. (Some people wonder if that means I would order sex-change operations. No, I would also give the CEO the option of stepping down to allow a woman to be appointed.) I came to this point of view on the basis of casual observation of the different propensities of men and women as executives.

But now we have experimental evidence. Trust the science!

Just to be clear, these findings come from a methodology of which I am deeply skeptical. It just happens that in this case that the results line up with my own preconceptions.