The marriages of power couples reinforce economic inequality

by on December 27, 2015 at 1:37 am in Current Affairs, Economics, Education, Uncategorized | Permalink

That is my latest Upshot column for the NYT, here is an excerpt:

Of all the causes behind growing income inequality, in the longer run this development may prove one of the most significant and also one of the hardest to counter.

For instance, the achievement gap between children from rich and poor families is higher today than it was 25 years ago, according to a recent study from the Pew Research Center. Furthermore, higher income and educational inequality increase the incentive to seek out a good marriage match, so the process may become self-reinforcing.

…The numbers show that assortative mating really matters. One study indicated that if the marriage patterns of 1960 were imported into 2005, the Gini coefficient for the American economy — the standard measure of income inequality — would fall to 0.34 from 0.43, a considerable drop, given that the scale runs from zero to one…

A study of Denmark by Gustaf Bruze…showed that about half of the expected financial gain of attending college derived not from better job prospects but from the chance to meet and marry a higher-earning spouse.

…a recent paper by Robert D. Mare, a professor of sociology at the University of California, Los Angeles, showed that assortative mating was relatively more common in America’s Gilded Age, fell and reached a much lower level in the 1950s, and afterward started and continued to rise.

The G.I. Bill may have helped lower assortative mating, because it gave opportunities for upward mobility to economic classes that had not enjoyed it. In general, the greater the number of men entering the middle class, the more socioeconomic mixing will occur.

In 1950 it was also the case that marriage ages were especially young, meaning that couples often paired off from high school and may have had less of a sense how to match to each other by expected income or education. And most women had fewer chances to earn very much, so few if any men were searching hard to find future law partners or doctors.

I would put it this way.  I frequently read the Sunday marriage pages of The New York Times, and I never feel that I am tearing myself away from social science research.

Do read the whole thing.

37 comments

From the comments, on sexist pricing

by on December 26, 2015 at 3:02 pm in Economics | Permalink

See Pashigian, B. P.. (1988). Demand Uncertainty and Sales: A Study of Fashion and Markdown Pricing. The American Economic Review, 78(5), 936–953. Retrieved from http://www.jstor.org/stable/1807158

Basic idea: there are more and better priced clearance sales for items that quickly go out of fashion, fewer clearance sales for non-fashionable items (e.g., white shirts, blue blazers, grey pants.)

That is from Hal Varian, on the topic of “sexist pricing.”

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Why did economists ignore the rise of the top one percent for so long?

by on December 26, 2015 at 12:07 pm in Data Source, Economics, History, Political Science | Permalink

Daniel Hirschman at the University of Michigan wrote a dissertation chapter on that topic, in the field of sociology, here is the abstract:

In the 2000s, academics and policymakers began to discuss the growth of top incomes in the United States, especially the “top 1%.” Newly analyzed data revealed that top income earners in the 1990s received a larger share of income than at any point since the Great Depression, and that their incomes had begun a dramatic upward climb in the early 1980s. This paper investigates why it took two decades for this increase in top incomes to become politically and academically salient. I argue that experts assembled two “regimes of perceptibility” (Murphy 2006) for producing knowledge about income inequality, and that neither of these regimes was capable of tracking movements in top incomes. Macroeconomists focused on labor’s share of national income, but did not examine the distribution of income between individuals. Labor economists, on the other hand, drew on newly available survey data to explain wage disparities in terms of education, age, work experience, race, and gender. By relying on surveys, these scholars unintentionally eliminated top incomes from view: surveys top-coded high incomes, and thus were incapable of seeing changes in the top 1%. Studies of top incomes that relied on income tax data thus fell by the wayside, creating the conditions under which experts, policymakers, and the public alike could be surprised by the rise of the 1%. This historical narrative offers insights into the political power of economic expertise by clarifying the complex linkages between observations, stylized facts, causal theories, and policy attention.

The chapter is here (pdf).  There is too much general background in this piece, and it is silly for the author to say that macroeconomics did not exist before 1930.  Most of all, that the import of the growth of incomes in the top one percent remains underexplained I think is outside his framework.  Nonetheless there are some points of interest throughout the chapter.

Here is Dan Hirschman’s home page.

Pointers run through Marshall Steinbaum and Henry Farrell.

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*The Conflict Shoreline*, best non-fiction book of the year

by on December 26, 2015 at 1:15 am in Books, Current Affairs, Economics, History, Law, Political Science, Religion, Science, Travel | Permalink

For best non-fiction book of the year, a late entry swoops in to take first place!  That’s right, I am going to select The Conflict Shoreline: Colonization as Climate Change in the Negev Desert, by Eyal Weizman and Fazal Sheikh.

This is an unusual book.  It is only 85 pp. of text and about half of it is aerial photos and maps.  It covers the history of the Negev desert, the Bedouin, Israeli policy toward the Bedouin, ecology, seed botany, and the roles of water policy and climate change, all in remarkably interesting and information-rich fashion, with a dose of Braudel and also Sebald in terms of method.

For one thing, it caused me to rethink what books as a whole should be.  This is one cool book.

To make it stranger yet, this book is Weizman’s response to Sheikh’s The Erasure Trilogy, which is structured as a tour of the ruins of the 1948 conflict.  That book is I believe from a Palestinian point of view, and described as a “visual poem.”  I just ordered it; note that Sheikh is the photographer for The Conflict Shoreline and thus listed as a co-author.

Some will read The Conflict Shoreline as “anti-Israeli” in parts, but that is not the main point of the book or my endorsement of it.  The book however does point out that Israeli policies toward the Bedouin often were prompted by a desire to remove large numbers of them from their previous Negev land and move them into the West Bank and Egypt.  I had not known “The village of al-‘Araqib has been destroyed and rebuilt more than 70 times in the ongoing “Battle over the Negev””.  The book ends with a two-page evidentiary aerial photo of that village, taken during 1945; other photos of it date as far back as 1918.  This is all part of Weizman’s project of “reverse surveillance.”

It is a hard book to summarize, in part because it is so visual and so integrative, but here is one excerpt:

The Negev Desert is the largest and busiest training area for the Israeli Air Force and has one of the most cluttered airspaces in the world.  The airspace is partitioned into a complex stratigraphy of layers, airboxes, and corridors dedicated to different military platforms: from bomber jets through helicopters to drones.  This complex volume is an integral part of the architecture of the Negev.

And then it will move to a discussion of seed technology, or how Bedouin economic strategies have changed over the course of the twentieth century, and how these various topics fit together.  Think of it also as a contribution to location theory and economic geography, but adding vertical space, manipulated topography, rainfall, and temperature to the relevant dimensions of the problem.

Too bad it costs $40.00.  Recommended, nonetheless.  Here is one review, here is another, the latter having especially good photos of the book’s photos.

Here is a good interview with Weizman, who among other things outlines his concept of Forensic Architecture.

Here is my earlier post on the best non-fiction books of 2015.  And here is an earlier post the best books under one hundred pages.

Weizmanbook

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Christmas assorted links

by on December 25, 2015 at 2:53 pm in Uncategorized | Permalink

1. “…military robots transformed into sleigh-pulling reindeer…”

2. Paul Krugman on whether the technological slowdown in ending.

3.”The Wall Street Journal’s survey of economists shows they largely don’t practice what the naysayers preach: 51 of 54 respondents said they bought loved ones gifts; the other three initially said they didn’t, but later admitted they did.”  Story here.

4. “Can drones compete with this truck?”  And were one million drones gifted today?  How many were sent by drone?  Next year?

5. Putin perfume.

6. What do Beijing residents think of Christmas?

50 comments

The Christmas Market

by on December 25, 2015 at 7:20 am in Current Affairs, Economics, The Arts | Permalink

Erfurt Christmas Market

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Merry Christmas!

by on December 25, 2015 at 12:34 am in Current Affairs, History, Religion | Permalink

muslimxmas

The attached article is here, and here is more information.

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Avant-garde candy markets in everything

by on December 24, 2015 at 1:08 pm in Economics, Food and Drink, The Arts | Permalink

candy

“Everybody is always like Wonka this, Wonka that, but I just never relate,” said Maayan Zilberman, a lingerie savant turned conceptual confectioner and the creator of Sweet Saba, an avant-garde candy company.

…Behind her was a container of candy rings that resemble men’s sex toys, made with edible gold and pectin. Ms. Zilberman had prepared them initially for a baby shower. “It was for the parents’ friends, not the baby,” she said. Much to her amusement, the $10 rings are often misidentified as doll bracelets by young customers. “They’re some of my best sellers.”

There are also candies that look like gold Rolexes but taste like Champagne ($10), eucalyptus-flavored Q-tips ($8 for six) and pencils that taste like grass ($12 for four). Ms. Zilberman worked with a food technologist to develop about 30 flavors, which include bubble gum, bacon, whiskey and mother’s milk.

“It’s mostly just cream,” Ms. Zilberman said of the last one.

Here is the Joshua David Stein NYT piece.  Here is Zilberman’s Instagram page, try this photo of the candy.

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Thursday assorted links

by on December 24, 2015 at 10:31 am in Uncategorized | Permalink

1. Are bigger brains causing part of the Flynn Effect?

2. Which states are gaining and losing population?, new estimates.

3. Can animals engage in mental time travel?  Paper here.

4. Don’t trust the stars (statistics).  And moral blindness in Star Wars, sorry for the ads.

5. Interfluidity on why it is hard to deregulate housing.  And the political views of Matthew Belmonte, main personal page here.

6. Does China need more property taxes?

7. Poland’s constitutional crisis goes international.  This is perhaps the most important story of the last month or so.

42 comments

What is the expected rate of American price inflation?

by on December 24, 2015 at 3:28 am in Current Affairs, Economics | Permalink

Here is Stephen Williamson:

We can use inflation swaps data, as Summers does; we can look at the breakeven rates implied by the yields on nominal Treasury securities and TIPS; and we can look at survey measures. What do people who do forecasting for a living, and who have access to all of that data, say? The Philly Fed’s most recent Survey of Professional Forecasters has predictions of PCE headline inflation for 2016 and 2017, respectively, of 1.8% and 1.9%, which is pretty close to the 2% PCE inflation target. A Wall Street Journal survey shows a CPI inflation forecast that seems roughly consistent with the December FOMC projections for PCE inflation. So, it seems that “most available data,” filtered through the minds and models of professional forecasters, suggests no less optimism than the FOMC is expressing in its projections, about achieving 2% inflation in the future.

Most of the post is about Summers, but I am more interested in noting that the Fed can indeed achieve — at least roughly — the rate of price inflation it desisres.  Under liquidity trap theories, you would think that price inertia would have worn off a bit by now, but if anything the American economy seems to be converging to somewhat higher rates of price inflation, which is not what the theory predicts.

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Artisanal funeral markets in everything

by on December 24, 2015 at 2:07 am in Economics | Permalink

With an increasing demand among baby boomers for customized funerals that reflect the individuality of the deceased, funeral directors are expanding into the business of event production. Today’s funeral director might stage a memorial service featuring the release of butterflies at the grave site, or with the deceased’s Harley parked ceremonially at the entrance to the chapel. In such instances, the skills of a funeral director can seem to fall somewhere between those of a nurse and a wedding planner. Mortuary Management, a trade magazine, offers articles about such innovations as the tribute blanket—an instant heirloom that incorporates photographs of the deceased into a custom-made tapestry—and urges funeral directors to be open-minded when faced with families who want pop songs played at a service. It’s a profitable strategy to, as a feeble witticism of the industry has it, “put the fun back into funerals.”

There is more from here from Rebecca Mead.  I liked this exchange too:

“Who is going to follow a funeral home’s Twitter account, really?” one participant asked.

“Weirdos,” someone replied.

“Competitors,” added another.

Interesting throughout, as they say.

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More from Robin Hanson on sexist pricing, which might just be sampling bias

by on December 23, 2015 at 5:04 pm in Economics, Food and Drink | Permalink

I’d guess women actually do tend to have a higher taste for quality and variety within this category of [regular] products. But I still doubt that women have higher taste for quality and variety overall. Instead it seems to me that the sorts of products that can have similar male and female versions tend to be lower-quality less-varied more-commodity-like sorts of products.

Women could have a higher taste for quality among lower quality products, and still have the same overall taste for quality, if women have less tolerance for variation in quality across product categories. That is, men may be more willing to save via lower quality in some areas, in order to pay for higher quality in other areas. In contrast, women may seek a more consistent level of quality across many product categories. Women may be more afraid someone will judge them badly from one particular unusually low quality category, while men may hope someone will judge them well from one particular unusually high quality category. This theory fits with many other results suggesting that men are and seek higher variance, and have less conformity.

His post is here.

I would offer the following (speculative) generalization.  Guys are more likely to “just buy any usable sock,” whereas women are more likely to want “the right socks.”  Therefore socks for guys end up being cheaper, because male price elasticity is higher.

Yet guys are more likely to spend a lot to buy the most expensive stereo system, or the most expensive car, or make the biggest charitable donation.  There may not be coexisting “male” and “female” versions of these goods, as with pink vs. blue razors, but still the men pay big compared to the women.

The now-famous WaPo Danielle Paquette piece oversamples “regular goods” and undersamples the goods where males end up paying more.  Therefore it looks like women are getting ripped off, but in reality we don’t know the net effect.

Bryan Caplan had a hand in this lunch discussion too, I ordered halal fish and chips, Bryan let me take his extra spinach.

57 comments

Were the Civil War and abolition a surprise?

by on December 23, 2015 at 12:35 pm in Data Source, Economics, History, Law, Political Science | Permalink

More than I had thought.  And Lincoln really was the difference maker:

…prior to 1860, few political events seemed to affect slave prices, and even the Dred Scott decision had only a small and temporary effect. After Lincoln’s nomination for the presidency, slave prices fell, and they continued to fall once the war commenced. The overall decline in slave prices was large (more than one-third from their 1860 peak) and occurred prior to any battle losses by the South.

That is from the new AER piece by Calomiris and Pritchett.  There is an ungated version here (pdf).

39 comments

New results on the minimum wage and inequality

by on December 23, 2015 at 10:27 am in Data Source, Economics, Law | Permalink

There is a new paper in American Economic Journal: Applied Economics by David H. Autor, Alan Manning, and Christopher L. Smith, here is the abstract:

We reassess the effect of minimum wages on US earnings inequality using additional decades of data and an IV strategy that addresses potential biases in prior work. We find that the minimum wage reduces inequality in the lower tail of the wage distribution, though by substantially less than previous estimates, suggesting that rising lower tail inequality after 1980 primarily reflects underlying wage structure changes rather than an unmasking of latent inequality. These wage effects extend to percentiles where the minimum is nominally nonbinding, implying spillovers. We are unable to reject that these spillovers are due to reporting artifacts, however.

Here are earlier, ungated versions of the paper.  Overall my read of this is that many people are leaping in too quickly and making unsupported claims about how the minimum wage is connected to income inequality.

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Wednesday assorted links

by on December 23, 2015 at 2:46 am in Uncategorized | Permalink

1. The infrastructure that is China, Stephon Marbury edition.

2. Price differences across gendered but otherwise highly similar toys.  On Twitter Robin Hanson wrote: “My guess: women more infer quality/status from price…An obvious other theory of higher prices for women: their products more varied, & so fixed costs are spread over fewer items.”

3. Has the time come for a Pigouvian state? (pdf)

4. The Drone Wars have shifted to the ski front.  And comet strikes too.

5. Neil Irwin on The Big Short.

6. Why is the author of The Revenant obsessed with trade disputes?

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