Tyler Cowen's Blog, page 535

Markets in Everything: US Public Schools

Reuters: Across the United States, public high schools in struggling small towns are putting their empty classroom seats up for sale.

In Sharpsville, Pennsylvania, and Lake Placid, New York, in Lavaca, Arkansas, and Millinocket, Maine, administrators are aggressively recruiting international students.

They're wooing well-off families in China, Saudi Arabia, Pakistan, Russia and dozens of other countries, seeking teenagers who speak decent English, have a sense of adventure – and are willing to pay as much as $30,000 for a year in an American public school.

The end goal for foreign students: Admission to a U.S. college.

So far the numbers are small. US high schools do outperform those in many other countries but the quality is modest relative to other developed countries and it's hard for me to see this as a boom market. Nevertheless, I think I will warn my teenager that an exchange program with South Korea is an option.

Hat tip: Daniel Lippman.

Charles Murray on the role of economic forces

This has been debated by Brooks, Krugman, and around the blogosphere, so let us hear from the man himself:

"OK, let's try this," he said. "If you get a rising economy, for example, if Barack Obama could say we are going to bring on seven years of incredibly low unemployment, then he would argue that this would do a lot of good to the working class, wouldn't he?" I agree. "But we already had that in the 1990s, and yet the dropout from the labour force continued to go up, people on social disability went up. Divorce went up. We have no evidence that a robust economy has much to do with these problems at all."

I point out that many employers complain of a shortage of skills – a large chunk of America's workforce is not as well equipped as it used to be relative to the rest of the world. If you don't have the skills to make a living, how can you feel pride in your situation? "Well, that's a different problem," says Murray, looking suddenly uninterested. "If you are arguing that 22-year-old men are saying to their girlfriends, 'I just need a job and then I'll behave responsibly …' Well, that's just bullshit. If you ask women in working class communities, they will say, 'Why should I marry these losers? It's like taking another child into the household.' "

That is from his FT interview, I am not sure if it is gated for you.  The closing paragraph is this:

I feel mildly guilty at having spoiled Murray's jovial mood but he quickly bounces back. The bill arrives. I disguise my shock at its size. As we get up to leave, Murray says: "Here is an interesting commentary: I was willing to talk to the Financial Times under the influence of alcohol but I'm not willing to play poker under the influence. What does that say?" Don't worry, I reply, you won't lose your shirt. Murray laughs. As we are shaking hands, he adds, "I really enjoyed that. We must do it again some time." Then he strides off in what looks to me like a straight line.

Christian card counters

Until last year, he and his high school friend from Bible camp, Ben Crawford, ran a group of more than 30 religious card counters. Based in Seattle, the rotating cast of players says it won $3.2 million over five years — all while regularly attending church, leading youth groups and studying theology.

But first Jones and his group had to wrestle with the apparent moral paradox: Should Christians be counting cards?

"My father-in-law flipped out about it," Jones said. "I remember Ben and I discussing everything. Are we being dishonest to the casinos? Is money an evil thing?"

Group members believed what they were doing was consistent with their faith because they felt they were taking money away from an evil enterprise. Further, they did not believe that counting cards was inherently a bad thing; rather, it was merely using math skills in a game of chance. They treated their winnings as income from a job and used it for all manner of expenses.

The article is here, hat tip goes to Mo Costandi.

For the next round

With the completion of this deal, the International Monetary Fund and Greece's European partners will possess 77 percent of the country's outstanding debt. From now on, foreign taxpayers will be asked to suffer the bulk of the loss the next time Greece confronts a financial crisis — and they are likely to be much less forgiving.

There is more here.  Obviously, this will make it correspondingly difficult for Greece to borrow money from the private sector too.  Lending to Greece will put you at the near-back of a very long line…

Sentences to ponder

There are all kinds of detailed facts to extract: like that the average fraction of keys I type that are backspaces has consistently been about 7% (I had no idea it was so high!).

That is from Stephan Wolfram, and it is only the beginning.  Here is his on-phone probability:

The entire post is interesting.  There are these words too:

And as I think about it all, I suppose my greatest regret is that I did not start collecting more data earlier.

For the pointer I thank Brandon Robison.

Assorted links

1. The economics of The Hunger Games, and the marketing of The Hunger Games..

2. The culture that is Thailand.

3. Progress on poverty.

4. How Gerhard Richter became the best-selling living artist.

5.  Scott on Russ Roberts and Fama.

Is Medicare cost growth slowing down?

A lot is at stake here.  Kevin Drum has a good summary of some recent work:

Via Sarah Kliff, a pair of researchers have taken a look at per-capita Medicare spending and concluded that it's on a long-term downward path which is likely to continue into the future. Their claim is pretty simple: Although Medicare's sustainable growth rate formula has been overridden year after year (this is the infamous annual "doc fix"), they say that other attempts to rein in spending have actually been pretty effective. This suggests that the cost controls in Obamacare have a pretty good chance of being effective too. Their basic chart is below, and since we're all about the value-added around here I've added a colorful red arrow to indicate the trajectory.

(Note that their calculations are based on potential GDP, not actual GDP. I'm not sure why, but I assume it's to control for the effects of recessions and boom years.)

Now, this calculation is per beneficiary, which means that overall Medicare costs will still go up if the number of beneficiaries goes up — which it will for the next few decades as the baby boomer generation ages. There's really nothing to be done about that, though. Demographic bills just have to be paid. Nonetheless, if we can manage to keep benefits per beneficiary stable compared to GDP we'll be in pretty good shape.

While I would say "too soon to tell" (for me only the post-2005 data points mean very much vis-a-vis the original question), I would not dismiss such reports out of hand.

Correlations on porn

From Garth Zietsman:

Firstly (using the General Social Survey) I found no relationship between being pro the legality of porn, or propensity to watch porn, and pro social behaviors e.g. volunteer work, blood donation, etc.

We can dismiss the feminist (and sociological) charges of porn increasing sexual violence and leading to sexism. The USA, Sweden, Germany, Netherlands (2) and Japan were just some of the countries that suddenly went from no legal pornography to quite widespread availability and consumption of it. These studies all found that greater availability of, and exposure to, pornography does not increase the rate of sexual assaults on women, and probably decreases it (3). Japanese porn is quite frequently violent and yet even there rape decreased from an already very low base. It's interesting that an increase in porn exposure decreases sexual violence only, and has no effect on other crime. Economists would put this down to a substitution effect.

Several countries have sex offender registers – mainly of pedophiles. A wide variety of professions are represented on these registers. Members of professions that supposedly promote morality e.g. clerics or teachers, are quite common on it yet conspicuously absent from such registers are men who have worked in the porn industry.

This study (1) found no relationship between the frequency of x-rated film viewing and attitudes toward women or feminism. From the GSS (controlling for IQ, education, income, age, race and ideology) I found that those who are pro the legality of porn are less likely to support traditional female roles, more likely to be against preferential treatment of either gender, and to find woman's rights issues more frequently salient. Although I found that women's rights issues are less salient to male watchers, and female watchers are less likely to think women should work, I also found that watching porn is unrelated to negative attitudes toward women and feminism.

In short exposure to and tolerance of pornography does not cause anti-social behavior (and may even reduce it in relation to sex) and does not get in the way of pro social behavior either.

The sociological and religious charge that pornography undermines monogamy and family values does however receive support. From GSS (and controlling for IQ, education, income, age, race and ideology) I found that men who are pro legalizing porn are less likely to marry and are more pro cohabitation. There was no such association for women. A higher propensity to watch porn movies is also associated with a lesser likelihood of marrying but is unrelated to cohabitation attitudes – in both men and women. So a pro porn attitude is consistent with a reduced respect for marriage.

Both genders also tend to have fewer kids in marriage, if they are pro the legalizing of porn. However, for men, a higher propensity to watch porn movies is associated with having MORE children within marriage. Note that pro legal porn attitudes and porn movie viewership is not associated with having children out of wedlock – for men its associated with a lower chance of that happening – so porn doesn't lead to that kind of irresponsible behavior.

Possibly part of this general pattern, I found that both being pro the legality of porn and watching porn are related to lower voting rates in general elections.

I found no relationship to a variety of 'family values' type questions e.g. importance of family, or to the value of relationships and friendship.

Being pro the legality of porn, and porn viewing, are associated with unhappiness with the family or marriage – especially for men. Those who are pro porn also tend to have a greater number of sexual partners and are more likely to have a sexual affair. This supports the 1984 and 1988 discoveries of Dolf Zillman and Jennings Bryant (4) that the effects of repeated exposure to standard, non-violent, commonly available pornography includes: increased callousness toward women; distorted perceptions about sexuality; devaluation of the importance of monogamy; decreased satisfaction with partner's sexual performance, affection, and appearance; doubts about the value of marriage; and decreased desire to have children. Later research studies further confirm their findings.

Garth's excellent and underrated blog is here.  I have put it in my RSS feed.

What would Nietzsche say?

Financial markets are already betting Greece will default again in the future. Grey market pricing for the new Greek bonds to be issued as part of the exchange ranged from 17 to 28 cents on the euro, a highly distressed level, according to indicative quotes seen by the FT.

The pricing equates to a yield on the new bonds of 17 to 21 per cent about where Greek yields stood in the autumn and far worse than the yield on debt issued by Portugal, which has also received a bailout.

Here is more.

American public opinion toward the space program

From Alexis Madrigal, this was news to me:

In thinking about the recent battles over NASA's budget, it seems like the problem is simply citizen support. People don't care that much about space, so space doesn't get funded. Back in the Apollo days, people loved the space program! Except, as this Space Policy paper pointed out, they didn't. A majority of Americans opposed the government funding human trips to the moon both before (July 1967) and after (April 1970) Neil Armstrong took a giant leap for mankind. It was only in the months surrounding Apollo 11 that support for funding the program ever reached above 50 percent.