False flags

Frances Woolley has a nice post about retirement and women's rights:

Yes, there are older female academics who will enjoy greater financial security as a result being able to work past 65. But let's think not about anecdotes - the stories of particular men and particular women. Overall, how many of the beneficiaries from the end of mandatory retirement are men, and how many are women? Who bears the costs of the transition?

Two thirds of university teachers between 65 and 69 are men (p. 22 here), as are three quarters of those over the age of 70. This is not simply a reflection of an academy that, 20 or 30 or 40 years ago, when these folks were hired, favoured men over women. Let's rewind five years, to when the people who are now 65 to 69 were 60 to 64. This is more or less the same group of people, just at two different points in time.

In 2005-6, just before the standard retirement age ended, 65 percent of academics aged 60 to 64 were male (p. 22 here).

In 2010-11, when that same cohort of people were 65-69, 68 percent of those working as university teachers were male. There is hardly any hiring of individuals into university teaching in that age group. The only plausible explanation of the three percentage point increase in the proportion of men in the academia is that the more women than men retired in that cohort.

In other words, while there might be other reasons to end mandatory retirement, it is pretty clear that it did very little to increase the participation of women in the academy.  Furthermore, since it is very costly (professors at the end of their careers make a lot in Canada), it may well outcompete alternatives like a massive pay equity program. 

You see this sort of principal a lot when people don't want to admit the actual reasons that they are doing something.  Or, even worse, when they are pretending to be on the side of the people who will lose the most from the policy.

My current favorite example is the opposition to gas and congestion taxes under the rubric that they hurt the poor the most.  That can only be true in a very narrow sense.  First of all, the poorest of people don't actually own cars (which are expensive).  Second, subsidizing car commuting makes it more difficult to put in alternative systems like public transit -- as this approach both makes driving easier and starves government of revenue.  Who benefits the most from public transit?  I'll give you a hint -- it's not the people with brand new SUVs. 

Furthermore, the real test of a false flag is when people resist alternative ways to help the populations who are under discussion.  For example, do the people who are against mandatory retirement also want to ensure strict gender equality in pay?  What about paying for long maternity leaves to make it easier for women to retire at 65 with full pensions? 

Similarly, why can't we increase the gas tax and then give money to poor people (who could spend it on gas or something else)?  Heck, to be logically consistent, the tax that would hurt the poor the least would be a wealth tax.  Why not do that instead of a gas tax? 

Now this is not to say that these policies may not be okay on the merits without the false flags.  The policy alternatives that I pointed out may have other good reasons to be rejected.  But the failure to even engage these adjacent arguments is a pretty good evidence that the main priority is not the concern for the group in question but rather worry that the policy argument is weak on the merits.

And we should be less forgiving of that. 

Inequality

Frances Woolley has a post about inequality up in which she notes:

It's impossible for all firms to pay their CEOs above the median salary - by definition, half of executives must be paid below the median. If the majority of firms adopt a compensation policy like the Bell Canada Enterprises one quoted above, CEO salaries will increase inexorably. At the same time, allowing firms to bring in temporary workers at less than the prevailing market wage prevents the price of labour from being bid up in response to labour shortages, dampening salary growth for workers at the lower wage end of the labour market.
 

What I found interesting was not just the argument, but rather what happened in the comments.  People focused on the second piece of the argument (temporary workers at below mean wages) and whether the sense of justice should be local or global.  Consider Mike Moffat:

The inequality discussion changes a great deal if you consider the effects it has on Canadian inequality vs. global inequality. Why should the former necessarily be the lens we use to look at this problem? \
 

The question here is why is the focus on workers and not on CEOs?  I am a big fan of flexible immigration policies and I celebrate them.  But I wonder if a temporary workers program (at below market wages) isn't just a half-way measure.  Why not have permanent workers who have full rights to switch jobs? 

I am not sure that removing the best and brightest from the third world is always a good plan, but if we are going to do it then why not make it easy for them to stand as equals in the society they are helping to build? 

"The generosity collapse"

Frances Woolley has an interesting post on the nonlinear relationship between demand and charitable giving:

People give when they're asked.

Jim Andreoni and Justin Rao have proved it. They ran the following experiment: one person, the allocator, was given 100 'money units', worth $10 in real money. She was free to choose how much to keep for herself and how much to give to another person, the recipient. The recipient, however, had an opportunity to ask for a particular division of money - 50/50, say, or 30/70 or 60/40.

It turns out that people who ask for more get more - up to a point. When the recipient asks for, say, 70 percent of the money in the envelope, the allocator is quite likely to say "sorry" and give nothing. But a recipient who asks for a 50/50 split on average receives more than the recipient who asks for nothing.

I'm not entirely comfortable with the way Woolley generalizes these results (I suspect her conclusions are correct; it just feels like a bit of a jump getting there), but it's a thought-provoking piece with important implications.

And the fishing analogy is pretty cool.

More on Jump$tart

From an email from Frances Woolley:

Mark: "There are no questions that refer to charts or tables though the ability to read both is an essential part of financial literacy." This is a really good point. I also very much like your point about question 24, with its highly dubious generalization from the general to the particular.

In many ways, teaching people what they don't know, and the types of systematic mistakes they are likely to know, is probably as valuable for financial literacy as anything. For example, when dieting, knowing about standard psychological biases, e.g. that people eat less when they eat from a small plate, more from a large one, helps a person trick herself into eating less - and that's more help than being told that celery is less fattening than cookies.

It's unfortunate in many ways that the Jump$tart has so many flaws of this kind, because it could be really valuable.

If we actually care about financial literacy, we ought to commission a decent test.