Bryan Caplan's Blog, page 88

I Dream of Repentance, by Bryan Caplan

Since the election, several people have privately asked me, "Well, whatever you think about Trump, don't you at least enjoy the attendant outrage of the left?  At least that must make you happy, right?" 

In my misanthropic youth, the answer would have been a resounding yes.  But in all honesty, I put away such childishness years ago.  I have a rich, full life that affords me ample opportunities for pure joy.  I have no need to seek out joy sullied by anger.  And again in all honesty, I wish everyone else felt as I do.  Living through this disgraceful election, and then seeing partisan pundits double down on their disgraceful behavior afterwards, just discourages me.  This is especially true when I'm sympathetic to the conclusions of practitioners of the disgraceful behavior.  Reasonable, fair-minded disagreement gives me hope; unreasonable, unfair agreement just creeps me out.

What about the unreasonable and unfair?  Don't I want to see them choke on their own rage?  Not at all.  To give me pleasure, they would have to display a far rarer reaction: heart-felt repentance.  All of the following would be music to my ears:

1. "Forgive me, for I have allowed my emotions to cloud my judgment.  From now on, I'll strive to be calm when I analyze politics."

2. "Forgive me, for I have apologized for dishonesty, demagoguery, and half-truths.  From now on, I'll prize truth over political victory."

3. "Forgive me, for I have trolled, stating arguments I know to be flawed in order to aggravate others.  From now on, nobility comes first."

4. "Forgive me, for I have advocated collective punishment of groups I dislike, even though I know most members of these groups are innocent.  From now on, I will make a special effort to treat members of groups I dislike justly."

5. "Forgive me, for I have advocated government coercion, even though it's far from clear that leaving people alone would lead to worse results.  From now on, I embrace the presumption of liberty."

If any of these mea culpas come my way, I'll be delighted and grateful - and never say, "I told you so."  But if repentance remains rare - as I firmly expect - I won't let it get me down.  Any observant person who turns to politics for happiness is doomed to dismay.  I have my Bubble, and it is enough.

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Easy Answer All My Students Should Know, by Bryan Caplan

Last week, I presented a question almost all my Public Choice students have trouble answering:

Suppose voters were rational [in the Rational Expectations sense] and the SIVH [Self-Interested Voter Hypothesis] were true.

T, F, and Explain: Democracies would spend a
higher share of their budgets on genuine public goods.

Students usually claim that self-interested voting will lead to more redistribution and less public good production: Selfish people want free stuff, but don't care about society.  But that's pretty silly.  Key point: Redistribution is zero-sum, but genuine public goods are positive-sum.  As a result, there are generally far more selves who selfishly benefit from public goods than redistribution! 

And since we've assumed rationality, the electorate will, on average, recognize this difference.  Whatever you think about rational, selfish voters' desired level of government spending, their relative support for public goods over redistribution raises the budgetary share devoted to genuine public goods.  This result is even clearer if you realize that many alleged "public goods" aren't public goods at all - and that rational, selfish voters would, on average, realize this fact and support them less, further boosting the budget share of genuine public goods.

P.S. I'm on vacation for the next four weeks.  Expect light posting during that time.  Happy holidays to all!

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Orange Rocks and the Minimum Wage, by Bryan Caplan

I've long been deeply suspicious of contrarian research that purports to show that the minimum wage doesn't decrease low-skilled employment.  But Don Boudreaux explains my suspicion far better than I could:

Has any science ever devoted so much time, effort, and cleverness to
elaborate attempts to determine whether or not a central and
indisputably correct tenet of that science - a tenet used without
question to predict outcomes in general - fails to work as an accurate
predictor for one very specific, small slice of reality as has been
devoted by economics over the past two decades to determine whether or
not the law of demand works to accurately predict the effects of minimum
wages on the quantity demanded of low-skilled labor?

I'm pretty sure that the answer to my question is 'no.'

I judge from the furious debate over the effects of minimum wages on
the quantity demanded of low-skilled labor that were there to exist
powerful political and ideological forces that stand to benefit if the
general public believes that small orange rocks dropped into swimming
pools cause no increases in the water levels of swimming pools, there
would be no shortage of physicists who conduct and publish studies
allegedly offering evidence that, indeed, the dropping of small orange
rocks into swimming pools does not tend to raise the water levels of
swimming pools (and, indeed, might even lower pools water levels!).

[...]

And so it is with minimum-wage legislation.  The strong political and
ideological interests on the pro-minimum-wage side keep alive the
debate over whether or not raising employers' costs of employing
low-skilled workers causes employers to further economize on the amounts
of low-skilled labor that they hire.  There is no furious empirical
debate among scholars over whether or not, say, raising an excise tax on
oranges would, ceteris paribus, cause fewer oranges to be
bought and sold.  There is no furious empirical debate among scholars
over whether or not, say, an increase in the tuition charged to attend
college would, ceteris paribus, discourage some people from
enrolling in college.  There is no furious empirical debate among
scholars over whether or not, say, imposing a poll tax would, ceteris paribus, discourage some people from voting.

Yet because powerful political and ideological interests have a stake
in the market for low-skilled workers being immune from the normal
operation of the law of demand, a furious debate rages over whether or
not employers forced to pay more for labor do or don't further economize
on labor.

One picayune criticism of Don's analogy: Comparing the minimum wage to "small orange rocks" leads casual readers to the specious inference that we have trouble detecting the minimum wage's disemployment effect because it, too, is small.  Don's should have simply spoken of "orange rocks" - then explained that we might trouble detecting even sizable disemployment effects because of confounding factors.  Don is naturally well-aware of this point.  He even extends his orange rock analogy by identifying confounding "factors such as rainfall and evaporation, swimmers jumping into
and out of pools, and the condition of each of the many pools' drainage
and filtering systems."  But I wish he'd driven it home a little more aggressively.

Last point: If I were an immigration skeptic, I'd be sorely tempted to use Don's words to debunk the mainstream view that immigration has minimal effect on native wages:

Has any science ever devoted so much time, effort, and cleverness to
elaborate attempts to determine whether or not a central and
indisputably correct tenet of that science - a tenet used without
question to predict outcomes in general - fails to work as an accurate
predictor for one very specific, small slice of reality as has been
devoted by economics over the past two decades to determine whether or
not the law of supply works to accurately predict the effects of immigration on the wages of native laborers?

The key difference: The Law of Comparative Advantage specifically predicts an ambiguous net effect of immigration on native wages, because specialization and trade raises labor productivity and therefore labor demand.  You can't credibly say the same about the minimum wage. 

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Many a Slip, by Bryan Caplan

Another reason why I think I win my bets so consistently: I take seriously the old proverb, "There's many a slip 'twixt cup and lip."  When I bet that "X won't officially happen by date Y," I'm not merely thinking, "X is far-fetched."  I'm also thinking:

1. "Even if X looks like it's going to happen, it's going to hit a bunch stumbling blocks - any one of which could derail X."

and

2. "Even if X does happen, it will probably be delayed, and delayed again."

I could still lose my EU bet with Mark Steyn and David Henderson, but it ain't over 'til it's over.

Case in point: See how the Swiss immigration referendum is working out.  If this is the inexorable backlash against immigration, I'm not sweating it:

Back in February 2014 the Swiss people narrowly voted in favour of
bringing in some form of limits on immigration from EU countries, a move
that would have countered the EU's free movement principle and
jeopardised Switzerland's many other bilaterals with the bloc.

The new rules agreed on Monday diverge hugely from the
constitutionally-binding referendum, after the Swiss parliament decided -
to outcry from some - that it was not willing to sacrifice its
relationship with the EU.

Rather than imposing strict limits on EU immigration, parliament has
agreed new rules on unemployment which should limit the impact of
foreign workers on the domestic job market.

Employers will be obliged to advertise vacant positions to job centres
and invite selected Swiss job seekers for interview. If they don't, they
will risk a 40,000 franc fine.

This obligation will only apply in professions, job sectors or regions where unemployment is above average.

However employers will not - as was suggested by the Council of States
during the development of this new law - be obliged to justify why they
refuse a Swiss candidate.

You've heard the saying, "That's a loophole you could drive a truck through."  One reason I win my bets is that there's enough debris on the road to stop a truck.

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National Origin as Nurture Effect, by Bryan Caplan

Abundant adoption and twin studies find minimal long-run nurture effects.  In plain language: The family that raises you has little effect on your adult outcomes.  A key caveat, though, is that almost all of these studies come from the First World.  Does growing up elsewhere durably stunt personal development?  Existing evidence is largely silent.

While reading the National Academy of Sciences all-new report on The Economic and Fiscal Consequences of Immigration , though, I finally encountered some relevant data - though unfortunately, it only allows us to measure the effect of growing up in the U.S. versus anywhere else. 

Background: To estimate an immigrant's long-run fiscal effect, you must also estimate how successful his descendants will be.  The NAS explains its method:

In order to forecast taxes and benefits for an average immigrant and descendants, it is necessary to first forecast the ultimate educational attainment for young immigrants and the future educational attainment of the offspring of immigrants. The panel predicted the education of offspring as a function of parental education using regression analysis based on CPS samples 15 years apart... Adult child education is regressed on parental education by birth region, with separate equations for native-born children versus foreign-born children. This generates equations that are used to predict a child's ultimate educational attainment...

Big finding: Children of immigrants have markedly greater educational success than you would expect given their foreign-born parent's education.  While children always tend to resemble their parents, the resemblance is stronger when both child and parent are native-born.  Estimates for children of natives:

Estimates for children of immigrants:

The most striking achievement gaps: Less than 20% of children of native-born high school dropouts go beyond high school, but almost 40% of children of foreign-born high school dropouts pass this milestone.  Similarly, about half of children of native-born high school grads surpass their parents' attainment - versus over two-thirds of children of immigrant high school grads.

What does this teach us about the power of nurture?  For the sake of argument, assume that everyone born in the United States enjoys the same educational environment, so genes (and luck) explain all remaining disparities.*  Then we can use immigrants' children's success to measure the stunting effect of growing up outside the United States!  Intuitively: If a native and an immigrant's children perform equally well, we should infer that their parents had equal genetic potential.

For convenience, let's code the five educational categories as continuous variables: less than high school =1, high school graduate =2, some college =3, bachelor's degree =4, more than bachelor's =5.  Then here is children's average educational attainment E, conditional on their parents':

 

Expected Child's Education (E)

Parental Education

Native

Parent

Immigrant Parent

1

1.9

2.3

2

2.5

2.9

3

3.2

3.4

4

3.9

4.0

5

4.4

4.4

We can use this information to construct another table mapping immigrants' observed education into their potential education - i.e., the education they would have acquired if they'd been born in the United States.  Example: The American-born children of immigrants who didn't finish high school (E=1) have average attainment E=2.3.  That's two-thirds of the way between kids of natives who didn't finish high school (E=1.9) and kids of natives who finished high school (E=2.5).  In other words, immigrants with E=1 have the kids you'd expect from parents with E=1.67!  Filling in the rest of the table:

Immigrant Education

Environment

Deprivation

Actual

Potential

1

1.67

-.67

2

2.57

-.57

3

3.29

-.29

4

4.20

-.20

5

5.00

-.00

Now we're ready to calculate the nurture effects of national origin.  There's no harm at the tip top: Non-Americans with advanced degrees look intrinsically no abler than Americans with advanced degrees.  As you move down the educational ladder, however, environmental deprivation goes from moderate (-.20 steps for college grads) to serious (-.57 steps for high school grads, -.67 for less than high school).  And if you think that American-born children of immigrant parents are also somewhat deprived, their parents' estimated environmental deprivation is even worse.

Main doubt: The NAS correlates success for individual parents and their kids.  In principle, then, kids of immigrants could have one native-born parent - and kids of native-born parents could have one immigrant parent.  Ideally, we'd compare kids of two immigrant parents to kids of two native parents.  Given the strong correlation in spousal education, though, this probably understates immigrants' deprivation.  Genetically speaking, an immigrant who marries an equally-educated native is "marrying down."

The implications for immigration are debatable.  So are the implications for education.  But the implications for nurture effects are clear.  If you grew up in a relatively deprived American home, adoption and twin research imply that your educational success would have barely changed.  If you grew up in an absolutely deprived non-American home, however, your educational success would have been markedly worse - masking your underlying genetic potential.  The broader but still provisional lesson: Nurture matters after all.  Behavioral geneticists have struggled to detect nurture effects because of range restriction - not because there's nothing to detect.

* Whether or not you buy this assumption, it still sets a lower bound on nurture effects.  Keep reading.

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Easy Question Almost All My Public Choice Students Miss, by Bryan Caplan

A recurring final exam question for my undergraduate Public Choice class:

Suppose voters were rational [in the Rational Expectations sense] and the SIVH [Self-Interested Voter Hypothesis] were true.

T, F, and Explain: Democracies would spend a
higher share of their budgets on genuine public goods.

Almost no one gets it right - and we cover the most relevant material just one week before the final exam!

Feel free to try your hand in the comments...

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Kahan and the Politically Motivated Reasoning Paradigm, by Bryan Caplan

Gary Lucas, rising star of Behavioral Public Choice, turned me on to the work of psychologist Dan Kahan.  Highlights from Kahan's review article on the "Politically Motivated Reasoning Paradigm", or PMRP:

Citizens divided over the relative weight of "liberty" and "equality" are less sharply divided today over the justice of progressive taxation (Moore 2015) than over the evidence that human CO2 emissions are driving up global temperatures (Frankovic 2015). Democrats and Republicans argue less strenuously about whether states should permit "voluntary school prayer" (General Social Survey 2014) than about whether allowing citizens to carry concealed handguns in public increases homicide rates or instead decreases them...

These are admittedly complex questions. But they are empirical ones. Values can't supply the answers; only evidence can. The evidence that is relevant to either one of these factual issues, moreover, is completely distinct from the evidence relevant to the other. There is no logical reason, in sum, for positions on these two policy relevant facts--not to mention myriad others, including the safety of deep geologic isolation of nuclear wastes, the health effects of the HPV vaccine for teenage girls; the deterrent impact of the death penalty, the efficacy of invasive forms of surveillance to combat terrorism--to cluster at all, much less to form packages of beliefs that so strongly unite citizens of shared cultural outlooks and divide those of opposing ones. (emphasis mine)

What on Earth is going on?

That explanation is politically motivated reasoning (Jost, Hennes & Lavine 2013; Taber & Lodge 2013). Where positions on some risk or other policy relevant fact has come to assume a widely recognized social meaning as a marker of membership within identity-defining affinity groups, members of those groups can be expected to conform their assessments of all manner of information--from persuasive advocacy to reports of expert opinion; from empirical data to their own brute sense impressions--to the position associated with their respective groups.

If, unlike me, you resist appeals to "common sense," experiments testing the PMRP are adding up.  One example:

[C]onsider a study of how politically motivated reasoning can affect perceptions of scientific consensus. (Kahan, Jenkins-Smith & Braman 2011) In the study, the subjects (a large, nationally representative sample of U.S. adults) were shown pictures and CVs of scientists, all of whom had been trained at and now held positions at prestigious universities and had been elected to the National Academy of Sciences. The subjects were then asked to indicate how strongly they disagreed or agreed that each one of them was indeed a scientific expert on a disputed societal risk--either global warming, the safety of nuclear power, or the impact of permitting citizens to carry concealed handguns. The positions of the scientists on these issues were manipulated, so that half the subjects believed that scientist held the "high risk" position and half the "low risk" one on the indicated issue. The direction and strength of the subjects' assessment of the expertise of each scientist turned on out to be highly correlated with whether the position attributed to the scientist matched the one that was predominant among individuals sharing the subjects' cultural out-looks (Figure 2).

Results, in a single figure:
Some other findings of the PMRP:

High numeracy--a quantitative reasoning proficiency that strongly predicts the disposition to use System 2 information processing--also magnifies politically motivated reasoning. In one study, subjects highest in Numeracy more accurately construed complex empirical data on the effectiveness of gun control laws but only when the data, properly interpreted, supported the position congruent with their political outlooks. When the data properly interpreted was inconsistent with their predispositions, they were more disposed than low numeracy subjects to dismiss it as flawed.

Though I'm admittedly unhappy with Kahan's interpretation:

These data, then, support a very different conclusion from the standard one: politically motivated reasoning, far from reflecting too little rationality, reflects too much.

Why wouldn't "being rational if and only if it helps your cause" still count as "too little rationality"?  The most you could fairly say here is that "a little rationality is a dangerous thing."

I'm also thrilled by Kahan's treatment of monetary incentives and external validity of experimental political psychology:

No-stake PMRP designs seek to faithfully model this real-world behavior by furnishing subjects with cues that excite this affective orientation and related style of information processing. If one is trying to model the real-world behavior of ordinary people in their capacity as citizens, so-called "incentive compatible designs"--ones that offer monetary "incentives" for "correct" answers"--are externally invalid because they create a reason to form "correct" beliefs that is alien to subjects' experience in the real-world domains of interest.

On this account, expressive beliefs are what are "real" in the psychology of democratic citizens (Kahan in press_a). The answers they give in response to monetary incentives are what should be regarded as "artifactual," "illusory" (Bullock et al., pp. 520, 523) if we are trying to draw reliable inferences about their behavior in the political world.

Professionally, I must confess, I wish Kahan at least cited my Myth of the Rational Voter , which makes many of the same points.  But I strive to put such pettiness aside.  The more scholars dogpile on the shameless religiosity of the political mind, the better.

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Conversion: The Quantity/Quality Trade-off, by Bryan Caplan

Confession: Whenever I write, I'm looking for converts.  I don't just want to share some information.  I want to change how my readers think - and how they see themselves.

When I read other proselytizing thinkers, however, I cringe.  I cringe not merely because I disagree with their conclusions.  And I certainly don't object to the conversion motive itself.  I cringe, rather, because my competitors seem far too focused on the quantity of their converts rather than their quality. 

How can I tell?  If your main goal is to convince as many people as possible, you naturally focus on emotional appeals - especially to anger, fear, and disgust.  Everyone feels these emotions, so everyone's a potential convert.  If you bother making arguments at all, build your case around vivid stories, not step-by-step arguments.  Don't bother trying to pass an Ideological Turing Test for opposing views; you'll just confuse your audience.  In fact, don't bother anticipating and answering the best objections to your views.  Just troll and move on.  Why respond to arguments most of your potential converts have never even heard?

In contrast, if your main goal is to improve the intellectual quality of people on "your side," you do the opposite.  Start by urging your allies to calm down, because anger, fear, and disgust impede careful reasoning.  Then, review popular arguments for your allies' views - and point out flaws in said arguments.  Finally, offer better arguments - and more reasonable conclusions.  Along the way, you'll eagerly address the best objections you've encountered - and try to present them as skillfully as their best advocates.  By the end, most of your potential audience will have wandered away in anger, fear, and disgust.  But the few who remain will be better thinkers and better people.

I can't honestly claim to focus solely on quality.  Frankly, it gets a little dull.  But from where I'm standing, most public intellectuals focus almost exclusively on quantity.  This is hardly surprising for slower-witted pundits; maybe they can't do any better.  But when I see brilliant minds demagoguing, I'm aghast.  Even if they made converts by the boatload, I'd be ashamed to emulate them.

Admittedly, you could accuse me of sour grapes.  My quantity-conversion skills are, at best, weak.  In quality-conversion skills, in contrast, are pretty good.  Give me an hour with someone who sympathizes with my general views, and I can reliably inculcate more reasonable versions of those views.

And if you give me ten minutes every day on EconLog, I can do much more.  You will not be numerous, my readers.  But you will be marvelous! :-)

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Three Themes of the Niskanen Center, by Bryan Caplan

The Niskanen Center has been an engine of idea creation since its foundation in 2014.  I know many of its scholars well.  But I'm still trying to figure out Niskanen's fundamental goal.  Perhaps I'm obtuse, but I detect three distinct - and pretty incompatible - themes.

Theme #1: Open-mindedness.  Instead of rigidly appealing to the libertarian "party line," Niskanen scholars strive to be flexible and pluralist.  Scholars and policy analysts across the political spectrum have useful ideas; let's give everyone a hearing and pick the best.

Theme #2: Pragmatism. Instead of making the best the enemy of the good, Niskanen scholars remember that politics is "the art of the possible."  Achieving minor reforms by assembling diverse political coalitions is a lot better than writing irrefutable essays for the elect.

Theme #3: Liberaltarianism. Instead of sticking to the time-honored "fusionist" alliance between libertarians and conservatives, Niskanen scholars go full "liberaltarian."  They're not merely looking for common ground with liberals.  Instead, they're ready, willing, and eager to admit that on many issues - global warming, poverty, race - the left is largely correct. 

How do these themes conflict?  In every possible logical combination!

1. Open-mindedness vs. pragmatism.  Being flexible and pluralist can help achieve real-world results.  But so can polarization, demagoguery, and loyalty to your long-term political allies.

2. Open-mindedness vs. liberaltarianism.  If you really give everyone a fair hearing, you're not just going to acquire some liberal views.  You're also going to acquire some conservative views.  For example, you might discover that for all its evils, the U.S. criminal justice system isn't racist.  And if you acquire too many conservative views, the budding liberal-libertarian alliance falls apart.

3. Pragmatism vs. liberaltarianism.  Liberals and libertarians see eye-to-eye on many issues, starting with immigration and terrorism.  Sadly, these are also issues where both liberals and libertarians are out of step with mainstream America.   So what should they do?  Quixotically push their shared views - or focus on issues where the audience is more receptive?

Defenders of Niskanen could always appeal to consilience: While its three themes occasionally conflict, such conflict is rare.  If so, I say: Convince me.  Or better yet, bet me.

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The Dumbest Thing Batman Ever Said, by Bryan Caplan

Batman v. Superman: The Dawn of Justice isn't a great movie, but it does have one great teaching moment.  Batman is trying to get his hands on some Kryptonite.  Faithful butler Alfred wants to know why.  Batman's rationale:

Batman: He [Superman] has the
power to wipe out the entire human race, and if we believe there's even
a one percent chance that he is our enemy we have to take it as an
absolute certainty... and we have to destroy him.

No one should be a utilitarian.  But from a utilitarian point of view, Batman's logic is superficially appealing: He can sacrifice one life to save 7 billion humans with 1% probability, for a net expectational gain of 69,999,999 lives.  Until, of course, you pause and reflect.  Consider the following utilitarian counter-arguments, in ascending order of quality.

1. Out-of-pocket cost.  Destroying Superman will burn immense resources, and utilitarians have to take these into account.  But if you do the math, this is a pretty weak objection: Even if it costs $7B - a hefty sum even for billionaire Bruce Wayne - standard value of life calculations say that's worth 1000 lives, leaving a net benefit of 69,998,999 lives.

2. Opportunity cost. Superman doesn't just have the power to destroy the world; he also has the power to save it.  If there's a 1.1% chance that Superman will one day save the world if Batman lets him live, that amply justifies living with a 1% risk that he'll one day destroy the the world.  And given the hazards of the DC Universe, the world is clearly safer with Superman than without him.

3. The self-fulfilling prophesy. Batman's colossal error, though, is to fail to ask the question, "What would ever lead a superhuman as nice as Superman to destroy mankind?"  And the most credible answer is: "If mankind tries to destroy Superman first."  Batman makes the classic hawk's error: Failing to consider the possibility that he's making enemies with his aggressive actions.  And when your putative enemy is Superman, that's an error of cosmic proportions.  The common-sense strategy, rather, is to bend over backward to keep Superman on humanity's side.

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