A Dissenting View on Bifurcating Families

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Nicole Sussner Rodgers writes,

according to a recent analysis of new census data on family structure, education and income from the Council on Contemporary Families (CCF). It found that financial security helps children more than does any particular family structure. Marriage is not a panacea for poverty: There are almost as many poor or near-poor children in two-parent families as there are in single-parent ones.

I believe that the analysis to which she refers is by Shannon Cavanagh. If you can find anything analytical in the piece, let me know. The last paragraph says,

Financial security, even more than household composition, shapes children’s everyday experiences in ways that contribute to growing inequality. Between the mid-1970s and the mid-2000s, the difference between what the richest 20 percent and the poorest 20 percent of parents spent on enrichment activities for their children nearly tripled (Duncan & Murnane, 2014). Today, a 20 percentage point difference in participation in extracurricular sports exists for children in families at or above 200 percent (42.5 percent) compared to those children in poverty (22.5 percent). The difference between children of two married parents and children with a single parent is only 10 percentage points (Hofferth, 2015). Although having a second parent in the household may be important, having financial resources may be even more important, and having a second parent by no means guarantees such resources.

I think that merely saying that “there are poor children in two-parent households, too” is not really the best strategy. I think that the long-term outcomes for children of two-parent households are demonstrably better than those for children of single-parent households. Robert Putnam is as forthcoming on that as anyone.

Instead, if you want to question the conservative advocacy of traditional families as a solution for poverty, I think you have at least two good arguments to make.

1. Correlation is not causation. That is, the greater presence of bad outcomes for children of single-parent households does not necessarily reflect a causal role for family structure. Of course, my suggestion that the correlation may be genetic is not exactly the sort of argument the left would like to use.

2. We know how to alleviate poverty by providing cash and other benefits. We do not know how to fix families.

But

My Talk on the Four Forces and Inspiration to Quality Comments

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First, the inspiration part.

Organizers say it will almost certainly be the first paper at the prestigious Brookings Papers on Economic Activity that was commissioned based on a blog comment. It is also a rare honor for a graduate student to present a sole-authored paper there; a quick scan of Brookings records shows a similar appearance by the now-renowned economist Jeffrey Sachs when he was a doctoral student in 1979.

“It’s made Matt famous,” said Tyler Cowen, the George Mason University economist who runs the Marginal Revolution blog, and who elevated Rognlie’s comment into a standalone post on his site. “It was brilliantly reasoned and right on target. And very elegant.”

More links here. Even more from Timothy Taylor.

Note that it should inspire high-quality comments, not quantity or snark.

The topic is inequality, which leads to a summary of my talk.

In 1965, the St. Louis Cardinals played their home games in Sportsman’s Park (aka Busch Stadium I). The most expensive seat in the ballpark, a box seat, cost $3.50. A blue-collar worker, who earned about $2 an hour at the time, could treat a family of four to a game in these most expensive seats for less than one day’s pay.

These days, the Cards play at the new stadium, Busch Stadium III. A typical blue-collar worker makes something like $20 an hour The cheapest seat in the stadium still costs less than an hour’s pay. But the most expensive seats cost somewhere north of $800. It would take a month for a blue collar worker to earn enough to treat a family of four to the best seats in the ballpark.

In fact, most seats at the new ballpark are out of reach of blue-collar workers. Why is this? Are the new owners more greedy than Augie Busch, who gave tickets away cheap because he was a nice guy? I think not.

The new owners charge high prices for most seats because nowadays they can. In 1965, the top third and the bottom third of the earnings distribution were not that far apart, so that if you charged prices way above what a blue-collar worker could afford, you would have had mostly empty seats. Today, the top third provide a cadre of highly affluent customers.

In 1965, if you were in the top third and went to a baseball game, chances are that there were people sitting nearby from the bottom third Today, the top third and the bottom third are not sitting in the same part of the ballpark.

I think that the explanation for this comes from the four forces.

1. The New Commanding Heights, which means that over the past 100 years more of the increase in total wealth has been spent on education and health care than on manufactured goods. This trend has become most noticeable in the last thirty years. It means that earnings are no longer split between corporate shareholders and a nearly-homogeneous work force. They are split between high-skilled professionals and low-skilled support staff.

2. Bifurcated marriage patterns. Fifty years ago, one often found a marriage between someone who originated in the top third of the distribution and someone who originated in the bottom third. Since the 1960s, that has become rare. That creates the Coming Apart phenomenon documented by Charles Murray and re-documented by Robert Putnam.

3. Factor-price equalization exacerbates the competitive pressure on low-skilled workers.

4. Moore’s Law means that when computers are able to do a task as well as humans, they soon surpass humans.

Policy interventions to try to stop these four forces or reverse their effects are likely to be futile. The future will be some combination of the Diamond Age scenario (everyone’s basic needs satisfied, with an upper class of Vickys enjoying handmade luxury goods) and a Beyond Therapy scenario, with everyone enhanced by genetic engineering, implants, and drugs.

Emergent Anarcho-Capitalism

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“Scott Alexander” reviews David Friedman’s classic, The Machinery of Freedom.

My overall conclusion is that I am delighted by this fascinating and elegant system and would very much like to see it tried somewhere very far away from me.

I might contend that a version anarcho-capitalism is being tried very close to us, in fact right here on the Internet. The Internet’s legal apparatus might be said to be its communication and software protocols. Those emerge in various ways, but not through legislation backed by force.

One might counter that much of what we do on the Internet rests on a layer of commercial practices, and those in turn rest on a layer of government enforcement. This line of reasoning might go: if you took away government, then Google could not enforce its advertising contracts, and then Google would not have revenue, and then we would not have Google.

But I think the argument that we should be afraid of anarcho-capitalism because we lack experience with such a system might not be trumps.

A Shortage Explained Using Textbook Economics

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Alex Tabarrok writes,

California has plenty of water…just not enough to satisfy every possible use of water that people can imagine when the price is close to zero. As David Zetland points out in an excellent interview with Russ Roberts, people in San Diego county use around 150 gallons of water a day. Meanwhile in Sydney Australia, with a roughly comparable climate and standard of living, people use about half that amount. Trust me, no one in Sydney is going thirsty.

I often complain about textbook economics, but certainly this is an example where it offers important insights. When you see a “shortage,” look for the artificially low price.

The price system fosters order. Repression of the price system leads to disorder.

Congratulations, Razib Khan

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He was chosen as one of twenty online opinion writers for the NYT. His gene expression blog is over my head, but I often read versions distilled elsewhere.

It will be interesting to see how the NYT generates traffic for these writers. In particular, will liberals who read the NYT, and whose idea of ideological diversity is David Brooks, be steered toward the new crew of writers, some of whom are outside the range of opinion usually found at the NYT?

Megan McArdle on Bifurcated Family Patterns

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She writes,

Could this be genetic? you ask. People who have impulse-control problems might be more likely to divorce and pass those traits on to their kids. Partially, sure. But two evidence points argue against genetic determinism. First, similar, although less severe, patterns show up in the case of kids who lose one parent, which is mostly not going to be due to homicide. And second, if this is genetic, how come it has changed over time? Have we all gotten genetically less able to stay out of jail or sustain a long-term marriage?

We know that children of single-parent households have worse outcomes than children of two-parent households. To simplify, let us say that there are favorable family patterns and unfavorable family patterns.

First question: how much of this is causal?

It could be that an inability to do well on the marshmallow test causes you to be less likely to raise children in a favorable family pattern and also more likely to pass on to your children genes that cause them to be unable to do well on the marshmallow test. That is how genetics could account for the relationship between family patterns and child outcomes.

Megan asks, what has changed over time? It could be two things. First, nowadays it may be that you have to be much better at the marshmallow test to sustain a favorable family pattern. Second, it may that we have gone through two or three generations of increasingly assortive mating.

Until 1965, a man who was in the top third on the marshmallow test might very well have been married to a woman in the bottom third, and conversely. For one thing, the top third and the bottom third were not that far apart. For another, the signals of being able to do well on the marshmallow test were not as clear (college education was too rare to be a reliable signal, particularly among women). Finally, men and women cared more about separate respective roles (breadwinner and homemaker) than about common abilities in the marshmallow test.

But in the 1960s that began to change. So you get one generation of assortive mating, and for the children of these marriages the difference between the top third and the bottom third on the marshmallow test starts to widen. Then they grow up, engage in assortive mating, have children, and difference widens once more. And so on.

But suppose we assume that there is a strong causal relationship between bad family patterns and bad outcomes. That leads to our

Second question: what can policy makers do to improve family patterns?

If anti-poverty programs are the solution, then why has the problem been getting worse? The Center on Budget and Policy Priorities (pointer from Mark Thoma) will tell you that anti-poverty programs are working to keep people out of poverty. So why are we not seeing more family stability? (Ross Douthat makes related points. Pointer from Tyler Cowen.)

Of course, there is a hypothesis, going back to Moynihan’s analysis, that anti-poverty programs are the problem, rather than the solution, because on the margin they reduce incentives to marry. I am skeptical about that, but as you know I am all for replacing current means-tested programs with a universal benefit that has a low implicit marginal tax rate. The idea is to reduce the adverse incentives that presently exist.

Megan, like Charles Murray, would like to see elites proclaim the benefits of good family patterns. I am skeptical of that, also.

My guess is that family patterns are not amenable to public policy interventions.

Is Voice the Answer?

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In a symposium on libertarian strategy, Jim Powell writes,

Libertarian ideas are unlikely to prevail until we get to stage three. That stage involves a peaceful mass movement to mobilize large numbers of people to pressure politicians to support liberty by enacting some laws and repealing others. A peaceful mass movement is basically what you can do in a democracy when politicians fail to respond to demands.

I am not signing that petition. To me, voice is the problem, not the solution. I prefer libertarian strategies that focus on lowering the cost of exit.

Pointer to the symposium from Alberto Mingardi, who takes a more tolerant view. He writes,

any successful strategy to change the minds of people needs different actors: pluralism, in a sense. it is not just that a “monistic” approach won’t be very libertarian, but you do actually need different kinds of people and lines of effort if you hope to have success.

TANSTAAFM (M stands for market)

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So writes Yuval Noah Harari, in Sapiens.

There is simply no such thing as a market free of all political bias. The important economic resource is trust in the future, and this resource is constantly threatened by thieves and charlatans. Markets by themselves offer no protection against fraud, theft, and violence. It is the job of political systems to ensure trust by legislating sanctions against cheats and to establish and support police forces, courts, and jails which will enforce the law. When kings fail to do their jobs and regulate markets properly, it leads to loss of trust, dwindling credit and economic depression. That was the lesson taught by the Mississippi Bubble of 1719, and anyone who forgot it was reminded by the US housing bubble of 2007, and the ensuing credit crunch and recession.

There is perhaps something to be said for the notion that there is an interior optimum for trust in government. Too little, and you have weak property rights and an inability to safely make long-term investment. Too much, and government takes on too much power and creates a false impression that it can guarantee the safety of dangerous and misguided investment.

Comment on the Intelligence of Foragers and Farmers

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A commenter on this post writes,

Under the Hariri / Diamond theory, you would expect [foragers] and their current descendants to be some of the of the most cognitively gifted people in the world, doing great in school with high test scores, and easily punching well above their weight in all sorts of intellectual pursuits, or at least in the those areas where the hypothetical forager intelligence provides a comparative advantage versus those dull farmers. If, for example, they really need such a phenomenal memory to remember all those plants, then we should see that many of their descendants have exceptions memories and succeed in careers that leverage that special talent.

But not only do we not see this, we see exactly the opposite.

Indeed, one should be wary of just-so stories, particularly when plainly visible evidence runs counter to them.

Trade, Employment and Wages

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Derek M. Scissors writes,

If trade deficits have caused job loss for decades, millions of jobs on some counts, we should see a clear and sustained relationship between trade and unemployment. We don’t.

Right away, I can think of two reasons not to find a relationship.

1. As with many macroeconomic variables, there is causal density. Many factors affect the trade balance, and many factors affect unemployment. In standard international macro, anything that strengthens domestic demand will cause employment to rise along with the trade deficit.

2. Deviations from full employment are temporary (they last for several years, but not forever), at least according to many economic theories. In the long run, the primary effect of globalization should be on the wage rates of various workers, not on the employment rates. And indeed a recent paper by Ebenstein and others claims to find such effects