"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.

If a PhD isn't worth it, you can always get a law degree

Fresh on the heels of this, Felix Salmon continues to be the world's most depressing guidance counsellor:

David Segal is the best writer on the NYT’s business desk, so it’s a good thing that he was chosen to pen today’s 5,000-word disquisition on the economics of law degrees. He’s taken a particularly dry subject and turned it into a compelling and accessible read; that’s no mean feat.

At the heart of the article is law schools’ bait-and-switch operation: universities rake in millions of dollars in tuition fees from students who are given to understand that a well-paid job lies waiting for them upon graduation. But such jobs are hard to find and precious few law graduates will ever waltz straight into a $160,000-a-year Biglaw job, especially if they graduate from a non-top-tier school.

Yes, they really are looking at you

This is why it's creepy to serve the whole fish.



Thanks to Andrew Gelman for this cautionary tail.

Andrew Gelman on the methodological attribution problem

Andrew Gelman has a post in which he brings up the following insight:

This sort of thing comes up a lot, and in my recent discussion of Efron's article, I list it as my second meta-principle of statistics, the "methodological attribution problem," which is that people think that methods that work in one sort of problem will work in others.

I think that this concern is especially key for scientists who are moving between fields. The ideas and techniques in my field have been honed to a fine edge dealing the types of biases and design issues that often occur in our problems. I focus a lot on issues like "confounding by indication" and a lot less on other issues that can be very important in other fields. If I moved to another field, say economics, I might easily focus too much on small points (that really are not an issue in economics research) and yet miss the major points in the field. This type of translation issue is not inevitable but it is worth keeping in mind.

Lithium in the water supply

There is an interesting post over at Worthwhile Canadian Initiative on whether to add Lithium to the water supply:

A city with no-to-little elemental lithium would need to add 70 micrograms/L of elemental lithium to the water supply. Since we're adding lithium carbonate (not pure lithium), we would need roughly 200 micrograms/L. (For reference, there are a million micrograms in a gram).

The average Canadian domestic user uses just over 100,000 L of water a year (Source). At 200 micrograms/L, we would need to add roughly 20 grams per person of lithium carbonate for a total cost of $1.53 per person, or $153,000 per 100,000 people.

The city of Toronto has 3.3 murders/100,000 people (Source). A 30% reduction in this rate would lower it by 1 murder per year per 100,000 people. If our rough back-of-the-envelope calculations are correct and the lithium carbonate method works like the Texas study suggests, $153,000 buys us one less murder. That does not take into account the reductions in rapes, suicides, drug use or thefts.

Will it work? I don't know. It seems like it would be worthy a pilot study or two. Although those levels of elemental lithium are believed to be safe, there may be side-effects we are not considering. There are ethical considerations as well, but it is hard to make a case that adding fluoride to the water supply is ethical but lithium is not - and we've been adding fluoride to drinking water for over half a century.

My first reaction is to note that Lithium is clearly a mind-altering drug and there does seem to be a basic principle that adding mind altering drugs to the water supply is a generally bad idea. Heck, the theme of the Firefly movies (Serenity) was all about a plan like this going very, very wrong. Or, more realistically, one could easily imagine the addition of sedatives to the water as being a response to political unrest (and this would also reduce the murder rate).

Furthermore, the original (ecological) study in Texas was based on naturally occurring Lithium in the water. This brings up two questions to me:

1) Is the distribution of Lithium independent of the characteristics of the inhabitants? This is necessary to make sure that this is not a confounding effect, of some kind (another way to say the same thing is whether water supply is a valid instrument for an instrumental variables analysis).

2) Is the causal agent lithium, or is it another substance that is associated with Lithium?

It is a complex question but it is very effective at making us evaluate our intuitions on public health intervention. Go read . . .

Google -- Over-spammed or over-engineered (or both)?

Brad DeLong points to a couple of posts on the declining quality of Google searches. Jeff Attwood concisely sums up the central point:

People whose opinions I respect have all been echoing the same sentiment -- Google, the once essential tool, is somehow losing its edge. The spammers, scrapers, and SEO'ed-to-the-hilt content farms are winning.

This is certainly right as far as it goes, but the Google searches that annoy me the most are the ones where Google decides I don't want what I just asked for, sometimes even ignoring quotation marks. For example, if you query "jeff bridges true grit", about a third of the results on the first page don't contain the string "jeff bridges true grit". This is an unlikely example but I've frequently found myself looking for an obscure search term that was similar to something popular. The results were unspeakably aggravating.

The great irony here is that by taking control away from the searchers, Google is making search engine optimization easier. If you really want to screw with the people trying to reverse engineer your algorithms, make the searches more interactive. If Google let us tune our searches with dials that changed the weights of parameters such as word order or proximity of words in our search, the results would be less annoying for us and more annoying for the SEO people.

'Standard' does not mean 'sound'

Eric Schoenberg is raising some important points:

[Greg] Mankiw concisely summarizes the theory underlying the ethical argument for market capitalism: "under a standard set of assumptions... the factors of production [i.e., workers] are paid the value of their marginal product... One might easily conclude that, under these idealized conditions, each person receives his just deserts." Mankiw's long-standing opposition to higher taxes on the wealthy suggests that he thinks these conditions usually pertain in the real world, too.

Consider me skeptical. The list of "standard assumptions" open to question is long... I believe, progressives must directly challenge the claim that unfettered markets create just deserts. This won't be easy. Free market fundamentalists have the advantage of a simple message -- ending bailouts will deliver just deserts -- and of nearly limitless funds from rich folks who benefited from the bailout but are happy to claim that it should never happen again.

Mankiw's assumptions may all be correct, but they are not all self-evident. Some are at odds with experience. Some are in conflict with findings from related fields like psychology and behaviorial economics. Some are just hard to buy. These are the kind of assumptions that need to be stated and supported.

As mentioned before, the way language is used in the debate compounds the problem. The 'free-market fundamentalists' (to use Schoenberg's phrase) often affect a folksy, plain-spoken tone. They make common-sense statements like "people are rational" or "people respond to incentives." They generally don't add that they are using these terms in a technical, highly specialized sense.

Damned Canadian Show-offs

From the aforementioned paper by Lane Kenworthy:

At the risk of repeating myself, if we want to use the experiences of other countries to help us improve our education system, the first place we should look is probably Canada, even if those experiences don't support the conventional wisdom.

"Two and a Half Cheers for Education"

I've only had a chance to briefly skim this paper by Lane Kenworthy, so I can only give it a so-far-so-good recommendation, but what I've seen definitely looks interesting.

Here's a taste:

Some home environments are less helpful to children's development than we would like them to be. Schools tend to do better. Evidence on this in the U.S. context comes from the natural experiment that is summer vacation. During those three months out of school, the cognitive skills of children in lower socioeconomic status (SES) households tend to stall or actually regress. Kids in high-SES households fare much better during the summer, as they are more likely to spend it engaged in stimulating activities. Cognitive psychologist Robert Nisbett concludes that "much, if not most, of the gap in academic achievement between lower- and higher-SES children, in fact, is due to the greater summer slump for lower-SES children."

This is relevant also for inequality of opportunity. Some argue that
schools actually worsen inequality, because children from high-income households benefit more than their less advantaged counterparts, thereby widening the disparity. As the evidence from summer breaks attests, that is wrong. Without schools the gap in cognitive and noncognitive abilities almost certainly would be greater. Though they can't possibly produce full equalization, schools do help to equalize.

To get a fuller picture of this phenomena, listen to this segment on the Harlem Children Zone's Baby College from This American Life.


Thanks to Mark Thoma for the link.

Political rhetoric and political violence -- the McKinley Assassination

William Randolph Hearst was relentless in his attacks on President McKinley. When the president was assassinated, those attacks had consequences:

Hearst Burned in Effigy

The publisher learned of the shooting in Chicago and said quietly to editor Charles Edward Russell of the American, "Things are going to be very bad." All of his papers took a sorrowful, solicitous, hopeful stance while waiting for news of McKinley's fate. When the president died, Hearst's enemies reprinted the cartoons, the poem, and the editorial that seemed to incite assassination. It was widely believed that Czolgosz was carrying a copy of the Journal in his pocket when he shot the president, but that story is apocryphal. Nonetheless, the Hearst papers were widely boycotted, and their publisher was burned in effigy along with anarchist Emma Goldman, whose lecture Czolgosz cited as his true inspiration for the assassination. Hearst punished none of the writers or cartoonists but soon changed the name of the Journal to the American. A cloud hovered over his empire for about a year, but by 1902 he was popular enough to win election to the House of Representatives from New York.

We'll have to wait to see if there will be any real consequences for this.

Dark days

In Arizona this morning:

Rep. Gabrielle Giffords (D-AZ) has reportedly been shot in the head at point blank range at an event in her district.

The incident took place in the parking lot of Safeway in Tuscon where Giffords was hosting a "Congress on Your Corner" event. The first 911 call came in at 10:11 local time, according to the Pima County sheriff's office. Local news confirmed that there were 5 dead at 3:34 ET. In a 4:00 ET press conference, UMC trauma surgeon Peter Rhee confirmed that they had received a total of 10 victims, one of whom had died, five of whom were in surgery and 5 of whom were in critical condition. Giffords, he said, was shot once in the head "through and through" but was responding to commands and had made it through surgery. Rhee said he was optimistic that she could recover.

The deceased victim at UMN, Rhee said, was a child.

Also from Talking Points Memo:

A federal judge was killed in the same incident in which Rep. Gabby Giffords was shot on Saturday morning.

A federal law enforcement official first confirmed to TPM that a federal judge was shot. The U.S. Marshals Service is on the scene of the shooting, the federal official told TPM. The Marshals Service employees responded to the scene after the shooting, the official said.

WNBC reporter Jonathan Dienst confirmed Roll was killed. A statement from Homeland Security Secretary Janet Napolitano said in a statement that Roll had been attacked.

Roll faced death threats in 2009 after presiding over a $32 million civil-rights lawsuit, the Arizona Republic reported:

When Roll ruled the case could go forward, Gonzales said talk-radio shows cranked up the controversy and spurred audiences into making threats.

While we're doing "then and now"

Back in June, 2009, this is how Edward L. Glaeser felt about the bailouts:

Since the collapse of Lehman Brothers, the public sector has spent billions saving the banks. While these decisions are certainly debatable, they are understandable. The US financial industry misbehaved badly,... but it is still a sector with a future. ... After all, every other sector in the economy depends on banks for their financing.

But what about cars? ... Does anyone, other than GM's management, believe that this company can come back? The current treatment, cash infusion and a reduction in corporate liabilities, provides a solution for a company that is broke, not for one that is broken.

The future of the financial sector is looking pretty scary these days. How about the auto industry and GM in particular?

Although the transformation has been a long time coming, Ford and the rest of the domestic auto industry appear to be finally giving up their addiction to gas-guzzling trucks and sport utility vehicles. Prodded first by rising federal fuel economy standards, then shocked in 2008 by $145-a-barrel oil and a global credit crisis that forced General Motors and Chrysler to seek federal bailouts, Detroit is making a fundamental shift toward lighter, more fuel-conscious cars — and turning a profit doing so.

Lone star, bad portents

Then:



Now (from Paul Krugman):

These are tough times for state governments. Huge deficits loom almost everywhere, from California to New York, from New Jersey to Texas.

Wait — Texas? Wasn’t Texas supposed to be thriving even as the rest of America suffered? Didn’t its governor declare, during his re-election campaign, that “we have billions in surplus”? Yes, it was, and yes, he did. But reality has now intruded, in the form of a deficit expected to run as high as $25 billion over the next two years.

And that reality has implications for the nation as a whole. For Texas is where the modern conservative theory of budgeting — the belief that you should never raise taxes under any circumstances, that you can always balance the budget by cutting wasteful spending — has been implemented most completely. If the theory can’t make it there, it can’t make it anywhere.

How bad is the Texas deficit? Comparing budget crises among states is tricky, for technical reasons. Still, data from the Center on Budget and Policy Priorities suggest that the Texas budget gap is worse than New York’s, about as bad as California’s, but not quite up to New Jersey levels.

The point, however, is that just the other day Texas was being touted as a role model (and still is by commentators who haven’t been keeping up with the news). It was the state the recession supposedly passed by, thanks to its low taxes and business-friendly policies. Its governor boasted that its budget was in good shape thanks to his “tough conservative decisions.”

Oh, and at a time when there’s a full-court press on to demonize public-sector unions as the source of all our woes, Texas is nearly demon-free: less than 20 percent of public-sector workers there are covered by union contracts, compared with almost 75 percent in New York.

So what happened to the “Texas miracle” many people were talking about even a few months ago?

Part of the answer is that reports of a recession-proof state were greatly exaggerated. It’s true that Texas job losses haven’t been as severe as those in the nation as a whole since the recession began in 2007. But Texas has a rapidly growing population — largely, suggests Harvard’s Edward Glaeser, because its liberal land-use and zoning policies have kept housing cheap. There’s nothing wrong with that; but given that rising population, Texas needs to create jobs more rapidly than the rest of the country just to keep up with a growing work force.

And when you look at unemployment, Texas doesn’t seem particularly special: its unemployment rate is below the national average, thanks in part to high oil prices, but it’s about the same as the unemployment rate in New York or Massachusetts.

What about the budget? The truth is that the Texas state government has relied for years on smoke and mirrors to create the illusion of sound finances in the face of a serious “structural” budget deficit — that is, a deficit that persists even when the economy is doing well. When the recession struck, hitting revenue in Texas just as it did everywhere else, that illusion was bound to collapse.

The only thing that let Gov. Rick Perry get away, temporarily, with claims of a surplus was the fact that Texas enacts budgets only once every two years, and the last budget was put in place before the depth of the economic downturn was clear. Now the next budget must be passed — and Texas may have a $25 billion hole to fill.

As a native of the Lone Star state (now happily on the West Coast), I've got to go with General Sheridan on this one.

Defining Denominators

Via Mark Thoma, I discovered this very interesting article looking at group of gross domestic product by working age population (WAP):

When one looks at GDP/WAP (defined as population aged 20-60), one gets a surprising result: Japan has actually done better than the US or most European countries over the last decade. The reason is simple: Japan’s overall growth rates have been quite low, but growth was achieved despite a rapidly shrinking working-age population.

The difference between Japan and the US is instructive here: in terms of overall GDP growth, it was about one percentage point, but larger in terms of the annual WAP growth rates – more than 1.5 percentage points, given that the US working-age population grew by 0.8%, whereas Japan’s has been shrinking at about the same rate.

Another indication that Japan has fully used its potential is that the unemployment rate has been constant over the last decade. By contrast, the US unemployment rate has almost doubled, now approaching 10%. One might thus conclude that the US should take Japan as an example not of stagnation, but of how to squeeze maximum growth from limited potential.

This is a very good illustration of how important it can be to understand the structure of a population under study. I don't know if the proposed metric is the most relevant metric for the phenomenon under study but it's sure interesting how it completely changes the interpretation of the result. That could have very profound policy results when we consider questions like "would it be a bad thing to emulate Japan's industrial policy?".

Rajiv Sethi was there first

While going through the comment section of this post by Tim Duy, I was reminded that Rajiv Sethi was talking about broadcast HDTV long before the rest of us and was doing a remarkably thorough job of it.