People vs. Percentiles

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Russ Roberts writes,

This first study, from the Pew Charitable Trusts, conducted by Leonard Lopoo and Thomas DeLeire uses the Panel Study of Income Dynamics (PSID) and compares the family incomes of children to the income of their parents.⁴ Parents income is taken from a series of years in the 1960s. Children’s income is taken from a series of years in the early 2000s. As shown in Figure 1, 84% earned more than their parents, corrected for inflation. But 93% of the children in the poorest households, the bottom 20% surpassed their parents. Only 70% of those raised in the top quintile exceeded their parent’s income.

A lot of studies of income distribution track percentiles. That is, they will compare the bottom 20th percentile in, say, 1970, with the bottom 20th percentile today. Those are not the same people. Yet the press almost always reports such studies as if they were the same people. Even worse, many social scientists do this, also.

There is much more at the link.

The non-polarized segment of America

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It’s large, according to a study by Stephen Hawkins, Daniel Yudkin, Miriam Juan-Torres, and Tim Dixon, helpfully summarized by Yascha Mounk, who writes,

According to the report, 25 percent of Americans are traditional or devoted conservatives, and their views are far outside the American mainstream. Some 8 percent of Americans are progressive activists, and their views are even less typical. By contrast, the two-thirds of Americans who don’t belong to either extreme constitute an “exhausted majority.” Their members “share a sense of fatigue with our polarized national conversation, a willingness to be flexible in their political viewpoints, and a lack of voice in the national conversation.”

If Lilliana Mason and Ezra Klein are correct in forecasting a future alignment between a Social Justice party and those who are opposed, the Social Justice party has little chance. Which means they are not correct.

The paper offers this ideological picture:

– Progressive Activists: younger, highly engaged, secular, cosmopolitan, angry.
– Traditional Liberals: older, retired, open to compromise, rational, cautious.
– Passive Liberals: unhappy, insecure, distrustful, disillusioned.
– Politically Disengaged: young, low income, distrustful, detached, patriotic,
conspiratorial.
– Moderates: engaged, civic-minded, middle-of-the-road, pessimistic, Protestant.
– Traditional Conservatives: religious, middle class, patriotic, moralistic.
– Devoted Conservatives: white, retired, highly engaged, uncompromising,
patriotic.

I am skeptical of this breakdown. Where do African-Americans or Hispanics fit? Libertarians and others who with some beliefs that align left and other beliefs that align right?

Still, this report is catnip for me, with all sorts of interesting nuggets. Another excerpt:

The old left/right spectrum, based on the role of government and markets, is being supplanted by a new polarization between ‘open’ cosmopolitan values and ‘closed’ nationalist values. Insurgent populists, usually advancing a strident ‘closed’ agenda, are disrupting many political establishments. Yet we also find in each country that somewhere between 40-60 percent of people do not identify unambiguously with either the open or closed ends of the spectrum, and many are disturbed by the increasing sense of division in their country.

Will population growth rebound?

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Jason Collins and Lionel Page write,

The United Nations produces forecasts of fertility and world population every two years. As part of these forecasts, they model fertility levels in post-demographic transition countries as tending toward a long-term mean, leading to forecasts of flat or declining population in these countries. We substitute this assumption of constant long-term fertility with a dynamic model, theoretically founded in evolutionary biology, with heritable fertility. Rather than stabilizing around a long-term level for post-demographic transition countries, fertility tends to increase as children from larger families represent a larger share of the population and partly share their parents’ trait of having more offspring. Our results suggest that world population will grow larger in the future than currently anticipated.

Collins is humble about the ability of any model to project fertility, given the importance of cultural evolution. I have not seen the paper, but I would like to know whether they tested their model against actual data in any way. For example, you could “backcast” the model and see how well it “predicts” population in, say, 1980 or 1950.

An Estonian comments

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Speaks thus:

I am Estonian and what Diamandis writes is not reality, but marketing talk.

In fact, Estonian e-residency is dead. Killed by ALM and KYC rules. Estonian banks are closing accounts of existing e-residents and not opening new ones. Government still tries to promote it a bit, but enthusiasm is dying.

Attitudes and regulations about cross-border finance have changed in recent years and killed e -residency.

If the challenge with implementing your idea is that the incumbents don’t like it and try to regulate it out of existence, then it’s probably a good idea.

The drop in potential GDP

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Robert Murphy points me to Paul Krugman doing economic analysis.

The analysis concerns potential GDP, which is a concept that plays a big role in a paradigm that I have come to reject, that of aggregate supply and demand. But let’s roll with it, at least for a while. Potential GDP is what GDP would be at full employment, meaning that there is no shortfall in aggregate demand. Another term for potential GDP is long-run aggregate supply.

More below the fold. Continue reading →

P(Bayesian) = ?

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Scott Alexander writes,

I asked readers to estimate their probability that Judge Kavanaugh was guilty of sexually assaulting Dr. Ford. I got 2,350 responses (thank you, you are great). Here was the overall distribution of probabilities.

1. A classical statistician would have refused to answer this question. In classical statistics, he is either guilty or he is not. A probability statement is nonsense. For a Bayesian, it represents a “degree of belief” or something like that. Everyone who answered the poll (I did not even see it, so I did not answer) either is a Bayesian or consented to act like one.

2. A classical statistician could say something like, “If he is innocent, then the probability that all of the data would have come in as we observed it is low, therefore I believe he is guilty.”

3. For me, the most telling data is that he came out early and emphatically with his denial. This risked having someone corroborate the accusation, which would have irreparably ruined his career. If he did it, it was much safer to own it than to attempt to get away with lying about it. If he lied, chances are he would be caught–at some point, someone would corroborate her story. The fact that he took that risk, along with the fact that there was no corroboration, even from her friend, suggests to me that he is innocent.

4. But that could very well be motivate reasoning on my part, because I was in favor of his confirmation in the first place. By far, the biggest determinant of whether you believe he is guilty or not is whether or not you wanted to see him confirmed before the accusation became public. See Alexander’s third chart, which shows that Republicans overwhelmingly place a high probability on his innocence and Democrats overwhelmingly place a high probability on his guilt. That is consistent with other polls, and we should find it quite significant, and also depressing.

Who wrote this in support of charter schools?

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these families think that by being anti-charter they’re defending America’s institution of public education. In reality, they’re defending a specific model of public education, one developed more than a century ago: an industrial-era model built around top-down management and bureaucracy, in which control and decision making belong to the central office rather than the practitioners. This model is a poor fit for today’s world because it treats all kids the same, often assigns them to schools based on their neighborhoods, and produces cookie-cutter schools that educate most children in the same way. It isn’t working well for the majority of urban students. And here’s the irony: it doesn’t always work well for suburban students, either.

It comes from a report by Emily Langhorne for the Progressive Policy Institute. I would add that today’s suburban public schools are not what they used to be. Many of the challenges that we used to associate with urban public schools, including large numbers of students from low-income backgrounds, are now prevalent in the suburbs.

Personally, I am not so optimistic that charter schools will produce significantly better outcomes. But I do think that it is more humane to allow families to opt out of the large-scale school districts that empower bureaucrats at the expense of parents.

Oren Cass’ Working Hypothesis

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Oren Cass writes,

a labor market in which workers can support strong families and communities is the central determinant of long-term prosperity and should be the central focus of public policy.

In other words, instead of counting GDP, we should be counting workers with enough income to support families. He goes on to say

if the Working Hypothesis is correct, a basic income would be entirely unresponsive to the nation’s challenges; indeed, the idea represents an explosive charge planted directly at the weakest points in society’s foundation. It would make work optional and render self-reliance moot; consumption would become an entitlement officially disconnected from production. A community in which people capable of making positive contributions are not expected to do so is unlikely to be one that thrives on any dimension in which productive contributions are needed.

Yuval Levin cites this paragraph and praises the book.

But Cass is wrong on the economics. If you object to policies that make earning a living unrewarding, then you should object to the policies we have now and appreciate that a universal basic income would be a huge improvement.

Cass uses rhetoric to make the universal basic income sound anti-work. But it is not. It would be much more pro-work than our patchwork of means-tested programs whose phase-outs create implicit tax rates that average 80 percent on earned income for the bottom fifth of earners.

Apparently, more people need to get up to speed on the basic economics of the UBI.

Exit and governance

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Scott Alexander writes,

I think a libertarian treatment . . . would argue that towns have the most right to pass restrictive laws when things like exit rights are most salient, and less right when they aren’t.

Peter Diamandis writes,

States and their governments have forever been tied to physical territories, and public services are often delivered through brick-and-mortar institutions.

Yet public sector infrastructure and services will soon be hosted on servers, detached from land and physical form.

1. The relationship between governance and the right of exit has long been of interest to economists. The Tiebout hypothesis is that when residents can exit freely, they will sort themselves into towns where the services, taxes, and regulations suit their preferences.

2. I don’t think that we get much Tiebout sorting in practice. Most jurisdictions are bundles of private and public amenities. You can’t exit from the amenities you don’t like without also losing the amenities that you do like.

3. Scott’s post suggests that a way to improve things would be to allow more start-up cities. In my most widely unread book, Unchecked and Unbalanced, I suggested instead making exit more powerful by enabling unbundling. Make it easy for me to choose an alternative trash-collection service, and alternative school for my children, etc.

4. Read the Diamandis post. In theory, Estonia could franchise its government model to other jurisdictions. In my book, I suggest something approximately like that. See also Neal Stephenson’s novel Snow Crash. But if governments will not let you unbundle, choice will be thwarted.

Yoram Hazony from a three-axes perspective

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How would one evaluate a government, and what does this imply about nationalism vs. trans-nationalism?

For a conservative, the question is how well the government preserves the civilization of the people within its jurisdiction. According to Hazony, this is most likely to occur within a nation-state, that is a state that consists of people with a shared culture. Trans-nationalism threatens to imperil national civilizations.

A progressive might ask whether a government sides with the oppressor or the oppressed. A government must have enough power to overcome oppressors. This might require trans-nationalism, in order to overcome oppressors in particular nations. But nationalism may suffice.

A libertarian might ask whether a government limits its use of coercion. Trans-nationalism sounds like coercion carried to a higher degree. Even nationalism may be too coercive. It should be easy for people to exercise exit. In the United States, federalism was supposed to ensure relatively easy exit, but that is no longer the case.

Thanks to Yuval Levin for suggesting applying the three-axes model to the issues raised by Hazony.