Category Archives: Tyler Cowen is my Favorite Blogger

Vickies and Thetes

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Cory Doctorow writes,

We’ve been talking about an increase in productivity producing an increase in leisure for a long time, but instead, the “winner take all” world of Brynjolfsson and McAfee often seems to produce a “winner” class that works itself into an early grave by running 100-hour work weeks at astounding payscales, and a much larger “loser” class that works itself into an early grave by working 100-hour weeks in shitty, marginal, grey-economy jobs, trying to stitch together something like an income.

I think this is wrong. The “loser” class has less income to spend on expensive schools and health plans that pay for you to get an MRI if you complain of a bad headache. But the people in this class do not necessarily work 100-hour weeks. I think that Neal Stephenson’s depiction in The Diamond Age is more apt. Some people work a lot and save a lot, because that is what their values call for. Those are the Vickies. Some people work less and save less. They are the Thetes. Their lifestyle looks distasteful to the Vickies, but they do not starve or lack for toys.

Pointer from Tyler Cowen. Both Doctorow and Cowen link to pieces by Kevin Kelly, and each Kelly piece is worth reading.

The Un-Malling of America

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Jeff Jordan writes,

Hundreds of malls will soon need to be repurposed or demolished. Strong malls will stay strong for a while, as retailers are willing to pay for traffic and customers from failed malls seek offline alternatives, but even they stand in the path of the shift of retail spending from offline to online.

Pointer from Tyler Cowen.

It used to be that a mall was lots of stores with a few places to eat tacked on as an afterthought. Now it’s the other way around.

It’s not just that people are buying more stuff online. They are buying less stuff (as a share of income), period. This is partly a long-term trend, as documented by economic historian Robert Fogel and picked up on by Nick Schulz and myself. It may be accentuated by information technology–think of all the stuff you don’t have to buy now because of digital technology: books, bookshelves, radios, music discs or tapes, stereo systems, calculators…

Searchers vs. Planners

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Dana Goldstein reports,

In 2008, four Harvard and MIT graduate students studying developing-world economics decided to form their own giving circle. The research literature on anti-poverty aid was discouraging. In India, an estimated 50 to 60 cents of every government dollar spent on food or employment aid for the poor is lost due to corruption, and private philanthropy, too, is heavily skimmed as it makes its way into the hands of the poor…

So where did that leave four private donors, anxious to fight global poverty, but too savvy to trust many of the leading models for international aid? Paul Niehaus, Michael Faye, Rohit Wanchoo, and Jeremy Shapiro came up with a radically simple plan shaped by their own academic research. They would give poor families in rural Kenya $1,000 over the course of 10 months, and let them do whatever they wanted with the money.

Read the whole story. Pointer from Tyler Cowen. My title for this post refers to William Easterly’s view that bottom-up aid solutions are better than top-down.

Fake Chart?

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Many people have been commenting on a chart that shows annual per capital health care expenditures in the U.S. by age group. The chart seems to say that this figure is about $3500 until people reach their mid-50’s and then rises exponentially to about $30,000 in their 70’s and $45,000 in their 80’s.

Tyler Cowen is among those pointing to the striking chart, which is creating a frenzy in the health-care-wonkosphere.

At least two folks, Austin Frakt and Kevin Drum, are skeptical about these numbers. I am beyond skeptical. I call baloney sandwich.

Finding the most reliable data for 2010 takes two seconds. Just go to the trusty Medical Expenditure Panel Survey. The mean expenditure per person for people with expenses is $3866 for people under 65 and $10,274 for people 65 and over.

It takes another five minutes to generate your own table using MEPS. I wanted to break down the over 65 group into finer categories. So here are the means for each age group:

45-54: $4816
55-64: $6823
65-74: $9265
75-84: $10,175
85+: $11,233

Those are the facts, as best I can determine.

[Update: a number of bloggers have now backed away from the chart (see Tyler’s comment, posted below), on the grounds that it does not include private health care spending. But that makes it sound as though the problem is that the chart understates spending on the young, when in fact the problem is that it overstates spending on the old. The most charitable interpretation of how the chart emerged is that somewhere along the way somebody started with TOTAL spending on health care by people in a middle-age bracket (say, 45-54), multiplied this by the ratio of GOVERNMENT spending on people in a higher age bracket (say, 65-74) to GOVERNMENT spending on the middle-age bracket, and arrived at an alleged TOTAL spending figure for people in the higher age bracket. But really, trying to figure out how bogus numbers made it into a chart is a mug’s game. Regardless of how they got there, they are bogus.]

Exaggeration in Political Stereotypes

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Jonathan Haidt’s latest.

The ideological “culture war” in the U.S. is, in part, an honest disagreement about ends (moral values that each side wants to advance), as well as an honest disagreement about means (laws and policies) to advance those ends. But our findings suggest that there is an additional process at work: partisans on each side exaggerate the degree to which the other side pursues moral ends that are different from their own. Much of this exaggeration comes from each side underestimating the degree to which the other side shares its own values. But some of it comes, unexpectedly, from overestimating the degree to which “typical” members of one’s own side endorse its values.

Pointer from Kevin Drum, via Tyler Cowen.

This is consistent with what I think happens in my “three axes” model. That is, I would expect progressives to view themselves as particularly sympathetic to the oppressed and to view others as on the side of oppressors. I would expect conservatives to view themselves as particularly sympathetic to the civilized and to view others as on the side of barbarism. I would expect libertarians to view themselves as particular sympathetic to freedom and to view others as on the side of coercion.

Let me emphasize that I am not using “three axes” to try to explain what different people believe. It is not a theory of why people believe what they believe. Rather, it is a way of organizing their beliefs. It is a way of predicting how different partisans will communicate their beliefs, how they will interpret issues, and how they will interpret the views of those who disagree.

Haidt is a major influence on my thinking. However, there are limits as to far I want to go in the direction of relating ideological beliefs to personal psychology. As Jeffrey Friedman has taught me, trying to explain why person X believes something is often an effort to avoid treating X’s beliefs with respect. It is really hard, perhaps even impossible, to psychologize about someone else’s political beliefs in a way that is not demeaning.

The goal of the three-axes model is to enable people to see how others might arrive at a different viewpoint on a particular issue. My own leanings are libertarian. However, I would hope that anyone, whether progressive, conservative, or libertarian, could use the three-axes model to better appreciate that others’ views have some justification.

College Admissions, Merit, and Ethnicity

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The (long) article is by Ron Unz. One somewhat tangential excerpt:

Ultimately, he stamped her with a “Reject,” but later admitted to Steinberg that she might have been admitted if he had been aware of the enormous time and effort she had spent campaigning against the death penalty, a political cause near and dear to his own heart. Somehow I suspect that a student who boasted of leadership in pro-death penalty activism among his extracurriculars might have fared rather worse in this process.

Pointer from Tyler Cowen, who seems to have misgivings about recommending the article. I would actually nominate for the citations that David Brooks hands out every year for most important magazine essays.

Unz proposes a two-part admissions process for prestige institutions. One part would select the very best students, based on demonstrated academic ability. The other part would select a random sample of other qualified students.

I think he is on the right track. In fact, forgetting the first part and just taking a random sample of students who meet some qualification criteria would be an outstanding reform. However, you would also have to make scholarship offers unbiased. My proposal would be to have them be totally need-based. These policies would take politics, ethnicity, and other factors out of the equation. It would make sports teams genuinely amateur.

When I was an undergraduate, I assisted a Swarthmore economics professor with a study of the admissions process. We found that the student’s interview received a high weight and that scores on the interview went down as SAT scores rose above the high 600s. I speculated that admissions officers were not themselves super-smart and did not like super-smart applicants. (I was admitted because I talked about wrestling with the alumnus who interviewed me, having seen his son lose a match for the high school state championship. The day I arrived on campus, the Dean of Admissions said that the wrestling coach was looking forward to having me on the team. I never was any good in high school, and I never met that wrestling coach, but the interview did the trick.)

Back to the Unz article, it raises questions about the process by which America selects its elite. I share Unz’s concern that this process has been deteriorating. Moreover, think about what happens when people achieve elite status without merit. They become really attached to the existing system, because they are threatened by true meritocracy. I think that one of the signs of that is when questioning orthodoxy itself becomes a disqualifying factor. As I see it, the American academy has crossed that threshold.

The Left’s Post-Election Self-Examination?

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Brad DeLong writes,

Massachusetts has been walking down this exchange-and-public-program-expansion road for six years now, since Mitt Romney signed RomneyCare. Massachusetts has been vacuuming up doctors and nurses from Costa Rica and elsewhere and still has been finding that the cost of treating your state population is higher when 97% are insured than it was when 88% were insured. And there aren’t enough loose doctors and nurses in the rest of the world for the ACA to vacuum up enough of them to meet the needs of not 1 state but 50 states.

…What is your guess as to what will happen if the ACA works for access, works for quality, works for coverage–but the extra health-care workforce needed isn’t there, and the lines start to get longer?

Pointer from Tyler Cowen.

Until the election, this sort of question had only been asked by conservative economists.

Perhaps this is an early example of the pattern of self-examination that I thought might take place after the election. When it comes to their policy portfolios, the Republicans will be second-guessing themselves in terms of political positioning. Meanwhile, the Democrats may be second-guessing themselves in terms of feasibility.

The Right’s Post-Election Self-examination

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Tyler Cowen points to a David Brooks column that praises a number of right-of-center commentators who are more prominent in the blogsphere than elsewhere. Some thoughts of mine:

I doubt that Mitt Romney ever considered drafting any of the people mentioned by Brooks to serve on his policy team. Instead, he just rounded up the usual suspects. I thought that President Obama could have put up a list of Romney’s economic advisers along with their positions in the Bush Administration and asked, rhetorically, “What do you think will turn out differently this time?”

I expect that most of the advice to Republicans will be of the form, “Move closer to my position.” So, for example, I would advise the Republicans to focus on the fact that the government has made financial promises that it cannot keep. In other words, we are broke. I would like to see Republicans insist on an adult conversation about the budget, while soft-pedaling other issues.

Left-wing Democrats will tell Republicans that they need to move closer to the “center,” by which they mean the positions held by left-wing Democrats. Social conservatives will say that Republicans need to jettison their unpopular economic conservatism and instead emphasize traditional marriage in order to appeal to ethnic minorities. Immigration restrictionists will say that Republicans need to hang tough rather than surrender. Libertarians will dream of a Republican Party that moves to the far left on every issue other than economic policy.

Which brings me back to David Brooks. He wants Republicans to elevate the importance of young pundits who combine the background, tastes, and style of the liberal elite with some conservative political views. Bobos in Paradise meets Hayek, or something like that. I assign a low probability to the Republican Party adopting that identity.

Non-fiction Books of the Year

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Tyler Cowen gives his list. I agree on Charles Murray and George Dyson. I also read Gertner and Fallows (primarily on Tyler’s previous blog recommendations), and I was happy I did so but not ready to grant best-of-the-year status.

My additions to the list would include James Manzi’s Uncontrolled, Enrico Moretti’s The New Geography of Jobs (in my opinion, one cannot put Murray on the list and leave out Moretti), Bruce Schneier’s Liars and Outliers (that one does not seem to have impressed anyone else I know), Paul Reid’s completion of William Manchester’s three-volume biography of Winston Churchill, and Jonathan Haidt’s The Righteous Mind (this is on an even higher plane, in my opinion–a candidate for book of the decade? See my review essay.)