Anniversary reflections

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This post is scheduled to go up on the 39th anniversary of my marriage. If you want to aim to replicate some aspect of my life, I recommend the family aspect.

When it comes to small-scale society, my personal views are extremely conservative. I really believe that the old-fashioned stable marriage, with children and grandchildren and a close-knit family, is the way to go. I see the cultural-elite disrespect for that sort of family as sad and disturbing.

Almost all of my writing concerns large-scale society. When you ask about the role of government, I believe that the libertarian response is usually the best. I don’t lose any sleep trying to come up with ways for government to promote social conservatism.

I try to maintain separation between micro-morality and macro-morality. I recognize that in some ways the two realms collide. But I believe that keeping them conceptually separate helps to avoid a lot of the worst intellectual errors.

I believe that micro-morality matters more than macro-morality. I have total respect for friends who have political beliefs that differ from mine and who have maintained solid marriages. I feel a sense of distance and distrust toward men whose political beliefs I generally share but who have left behind their families for the younger woman.

My wife is one of the few people I have known who appear to me to live their lives constantly asking “What would a righteous person do in my situation?” These are the people that I think of when I hear the term tzadik, which is Hebrew for “righteous one.” My wife’s sister’s husband is another tzadik. I did not know him well, but a businessman and philanthropist who was killed in a traffic accident earlier this month came across to me (and to others) as another tzadik.

I don’t see myself as a tzadik to that degree. In the realm of micro-morality, I avoid doing bad, but I don’t go out of my way to do good. I would grade myself as B+.

According to Helen Fisher’s personality theory, my wife and I are not a good match, and indeed our friction points are the ones that Fisher would predict. But the combination of a tzadik and a B+ has held up quite well.

Marrying a person and a job, as an economist

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By now you may have read–see Tyler’s post or the WSJ coverage–about the survey of the American Economic Association that found that nearly 100 women economists have been sexually assaulted by another economist. I condemn the perpetrators, but I don’t see this statistic as a reason to condemn the entire economics profession or all of its male practitioners.

1. Can you easily find elsewhere a sub-population of similar size with fewer sexual assaults?

2. I haven’t looked at the study. Did they tabulate the number of male-female pairs of economists who are happily married? I bet that off the top of his head Tyler can think of at least 15 economist-economist marriages. In the entire economics profession, how many such pairs are there? 1,000? More?

3. Did they ask how many consensual relationships there were between economists? I’ll bet that it would be almost impossible to find a different sub-population of women with a higher ratio of consensual relationships to sexual assaults.

I don’t get invited to conferences. Should I feel sorry for women who are afraid to speak up at conferences for fear of “disrespectful treatment”?

The tiny, back-scratching cabal that largely controls academic economics is mostly male. But the fact that it is male is not the real scandal. The real scandal is that it is a tiny, back-scratching cabal.

Marrying a person vs. marrying a job

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A commenter asked me to spell out more of the differences.

I start with an old-fashioned opinion about marriage, which is that the main point is to raise children. I find myself quite baffled by the “new” view that just treats children as a troublesome time-sink.

There are certainly childless couples with good marriages. I have nothing against it. But for the childless, I see marriage as just an option.

If we limit the discussion to couples who have children, then I think that you owe it to your children to try to behave positively toward your spouse. If you remain married, then events like family get-togethers, your children’s graduations, their marriages, and the births of their own children become highlights of your life. If you don’t remain married, then those moments are awkward at best and painful at worst.

Those elements are not present in a job. If you leave an employer, you might leave behind a pet project or two. But that is not the same thing as messing up your relationship with your children.

And I think that it’s easy to err on the side of becoming too committed to a job. You can be very giving and self-sacrificing, but the relationship is transactional. Your employer does not and cannot love you unconditionally.

If you are in a marriage with children, it’s stupid to go around asking yourself if there is a better potential spouse out there somewhere. With your career, it’s stupid not to ask yourself if there is a better potential job out there somewhere.

Null Hypothesis watch

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Eric A. Hanushek, Paul E. Peterson, Laura M. Talpey and Ludger Woessmann write,

We find that the socioeconomic achievement gap among the 1950s birth cohorts is very large—about 1.0 standard deviations between those in the top and bottom deciles of the socioeconomic distribution (the “90–10 gap”) and around 0.8 standard deviations between those in the top and bottom quartiles (the “75–25 gap”). These are very extensive disparities, as 1 standard deviation is approximately the difference in the average performance of students in 4th and 8th grades, or four years’ worth of learning. But though these inequalities are large, they have neither increased nor decreased significantly over the past 50 years.

It could be, however, that the picture is not as dismal as suggested. If overall changes in society, coupled with policy initiatives, have proportionately lifted all boats at the same rate, everybody might be better-off, even if gaps have not significantly changed. Using the same data as for the gap analysis, we find gains in average student performance of about 0.5 standard deviations for students at age 14, or roughly 0.1 standard deviations per decade. But, surprisingly, over the last quarter century, those gains disappear for students by age 17. In other words, there is no rising tide for students as they leave school for college and careers.

The lack of progress is not due to lack of spending. In an op-ed piece, two of the authors point out that

Since 1980 the federal government has spent almost $500 billion (in 2017 dollars) on compensatory education and another $250 billion on Head Start programs for low-income preschoolers. Forty-five states, acting under court orders, threats or settlements, have directed money specifically to their neediest districts.

And overall, of course, inflation-adjusted spending per pupil in the U.S. more than doubled between 1970 and 2006.

I should note that the authors themselves are not devotees of the null hypothesis. Instead, they call for more efforts to improve teacher quality and to address the issue of “fade-out” of achievement gains between age 14 and age 17.

Russ Roberts on economics and loneliness

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Russ Roberts writes,

But not everything that is important can be quantified. I worry that as economists, we too often are like the drunk at 1 am looking for his keys under the glare of a streetlight. You go over to help and when you fail to find the keys you ask the drunk if he’s sure if he lost them here. Oh no, he responds. I’m not sure where I lost them. But the light’s better here.

Roberts points out that some of the most painful social problems are associated with people feeling lonely and unloved, and economics does not have much to say about this.

Economists focus on the material well-being of a large-scale society. The ability of strangers to cooperate in the context of the market is probably our key insight.

But does cooperating with strangers provide emotional satisfaction and a feeling of being loved? Probably not. Personal interdependence satisfies human needs for closeness better than impersonal interdependence. But personal interdependence is a characteristic of small-scale society–the family, the tribal band, the village.

Our increased material wealth arises from more specialization, which means more impersonal interdependence. But people still need the comfort and status that come from personal interdependence. It seems to me that in our modern world there is a tendency for people reach out for substitutes for personal interdependence. Russ mentions opiods. I sometimes think that the increased intensity of political engagement is another substitute. It is an opiod of a different sort.

The hard-left splinter party

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Ted Van Dyk writes,

Begin with the objective conditions. The first is continuing public disenchantment with political, media, financial and cultural establishments.

File that one under “Martin Gurri watch.”

Voters thus will be looking for a 2020 Democratic presidential candidate who is reflective, experienced, a unifier rather than divider, and demonstrably capable of serious governance. In other words, not just another pugnacious self-seeker.

How many of the announced Democratic aspirants fit that description? Most thus far appear to be appealing mainly to diehard anti-Trumpers important in early primary and caucus contests. But it’s a mistake to believe that general national opinion conforms to that of party activists. You could ask Presidents Goldwater and McGovern about that mistake.

My thoughts:

1. Prior to what Gurri calls the revolt of the public, our two-party system operated on the median voter model. Party insiders, whose main interest was in winning elections, controlled the nominating process and chose candidates close to the center. But just as Olivier Blanchard declared that “the state of macro is good” just prior to the financial crisis that preceded double-digit unemployment, John Zaller and others published The Party Decides at exactly the moment when their thesis became false. The median voter model does not apply in a Martin Gurri moment.

2. For Democrats currently, it appears that “the hard left decides.” The hard left is committed to policy positions that antagonize members of the Democratic coalition that are not part of the hard left.

3. The Green New deal is in some sense a declaration of war against those workers whose skills are complementary with capital based on the internal combustion engine. The war is being declared by the class whose skills are complementary with capital based on silicon. The AFL-CIO understands which side of the war its members are on. So might many African-Americans and Hispanic American citizens.

4. African-Americans and Hispanic American citizens are also not likely to see themselves as beneficiaries of another hard-left commitment, which is to non-enforcement of immigration laws.

5. Among Jewish Americans, many assign Israel a low priority or are unhappy that it has a right-of-center government. But few American Jews are comfortable with the hard-left position that Israel is inherently a pariah state. My line on Congresswoman Omar is that she will not cost the Democratic nominee even 100 votes in 2020, but she has begun a process that will gradually break the bonds between Jews and Democrats. It took the Democrats a long time to earn the enmity of working-class voters, but in 2016 their efforts to do so paid off, so to speak. The same could happen vis-a-vis Jewish voters after another decade.

6. Progressive gender dogma does not expand the Democratic coalition. I have seen the bathrooms where “men” and “women” have been replaced by signs saying “stalls and urinals” and “stalls only.” That may satisfy the demands of the hard left, but let’s ask the average progressive woman how she feels as she heads toward a “stalls only” bathroom and sees a man preceding her.

The hard left is a splinter party. In a proportional representation system, it would have a solid 15 percent of the vote. In our political system as it exists, the hard left creates opportunities for Republicans and pitfalls for Democrats.

The null hypothesis for policy

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Scott Alexander writes,

the same argument that disproves the importance of photolithography disproves the importance of anything else.

His post gives a number of examples where progress follows a straight line. This is sometimes used as an argument that no individual policy (or invention, as in the case of photolithography) matters. Alexander wonders whether we are deceiving ourselves into believing the null hypothesis for policy.

I think that in the case of inventions it can be difficult to discern an effect at the point in time when the invention occurs. The process of developing complementary inventions, adapting to the new technology, and achieving widespread adoption takes time. See the work of economic historian Paul David. As a result, even in a world of discrete innovations, the overall path of progress is smooth.

In the case of policy, I think that one must also allow for time lags. For example, changes in labor market incentives may not have large effects in the short run, but over time the culture can be affected.

But in general, I think that if one fails to see any historical break point in an outcome following the adoption of a policy, that justifies a presumption that the policy did not better. I would suggest more careful analysis if that is possible. A clever researcher may be able to find a “natural experiment” that has more power against the null hypothesis. For example, Tyler Cowen posted about a study that found that a carbon tax had little effect on carbon dioxide emissions by comparing across regions. In principle, that study provides more persuasive evidence that the null hypothesis holds for the carbon tax.

Financial innovation is a warning sign

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Raghuram Rajan says,

I think you have to be a little careful. Every time you stop something, it’ll show up somewhere else if there’s a need for it. And is it better that it be in an entity that you regulate and you monitor reasonably closely? Or in an entity that you don’t regulate?

To the extent the entity you don’t regulate can absorb those losses, that’s not a bad thing. But to the extent that it cannot, and it all comes back into the system via these interconnected markets, you’re no better off. In fact, you’re worse off because you’re blindsided by the risks migrating to places you don’t look at.

That is from a conversation with Tyler Cowen.

In what I call the chess game of financial regulation, every regulatory move leads to a counter-move by the financial sector. Many regulatory ideas, including the idea that Rajan wisely scorns of not allowing banks to hold risky assets (requiring (narrow banking), are unwise if you look ahead one move.

I think that one way that you can tell you have made a bad move in the regulatory chess game is when you observe extensive financial innovation. It seems to me that a lot of innovation reflects attempts to take advantage of opportunities created by regulatory mistakes. Risks that you thought you were controlling are in fact changing shape or migrating.

The correct response is not to outlaw innovation. That just leads to another counter-move. The correct response when you see extensive financial innovation is to go back and understand how your regulations encourage that innovation and come up with ways to attenuate those incentives.

A perspective on Adam Smith

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James Otteson writes,

Smith’s argument is that human morality is a social system that arises—like languages, like ecosystems, and like markets—on the basis of countless individual decisions, actions, and interactions but without any overall plan and with no overall designer. Each of us begins life with no moral sentiments whatsoever, but with an instinctive desire for mutual sympathy of sentiments. Interactions with others—and, in particular, experiences in which others judge us—trigger our desire for mutual sympathy of sentiments and begin the lifelong process of finding ways to behave that stand a chance of achieving this sympathy, which Smith believes is, along with the desire to procreate, among the strongest social desires humans have. This trial-and-error process, which we conduct with others who similarly wish to achieve mutual sympathy, leads us to develop habits of behavior that reflect successful attempts. These habits eventually become, through suitable refinement, principles of behavior, and then come to inform our conscience. Because we develop these principles with others in our community, they can become a shared system of moral judgment

Otteson’s book and related media can be freely explored here.

Hard left economics

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Jared Bernstein writes,

as economist Brad DeLong recently showed in a Vox interview. DeLong, who calls himself a “Rubin Democrat” (a reference to Clinton’s centrist treasury secretary, Bob Rubin), argues that the moment is such that “The baton rightly passes to our colleagues on our left. We are still here, but it is not our time to lead.” “DeLong believes,” according to the piece, that “the time of people like him running the Democratic Party has passed.”

In fact, there seems to be a widespread sentiment on the (formerly) center-left of saying about the hard left “If you can’t beat ’em, join ’em.”

To me, it seems that it is not just that the political discussion is moving toward the hard left. I see something similar going on among economists. Some prominent recent examples:

1. Emmanuel Saez and Gabriel Zucman.

2. Olivier Blanchard.

3. Jason Furman and Lawrence H. Summers.

What I call hard-left economics argues that high marginal tax rates on the rich have little or no adverse consequences. It argues that large government deficits have little or no adverse consequences. As a result, the bumper-sticker version of these papers would be:

Government should tax the rich more, because it can.

Government should spend more, because it can.

I can remember how economists on the left excoriated George W. Bush for squandering the budget surplus that President Clinton had started to build. That surplus was supposed to help avoid a collision of Baby Boomer retirement with fiscal capacity. DeLong once snarked that President Bush thought it was fine to run big deficits “because there are still checks in the checkbook.”

“There are still checks in the checkbook” has become the new fiscal wisdom.