tag:blogger.com,1999:blog-71206984111324857952024-03-05T02:11:22.262-05:00SpivonomyEven white boys got to shout.Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.comBlogger23125tag:blogger.com,1999:blog-7120698411132485795.post-91119313689722183822014-07-22T12:08:00.001-04:002014-07-22T12:08:33.453-04:00Decompose that Denominator, BroNoah Smith wants to <a href="http://noahpinionblog.blogspot.com/2014/07/bayesian-superman.html">challenge your silly preconceptions</a> about your invincibility. Good on him. His job would have been a lot easier though if he'd have taken the simple step of decomposing his denominator.<br />
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His formula:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvzHZQ5eqQQRcNnfxDZn6Juo4T_cQn5QitC7YfRXwiaRDveulrIdLijk_kGb274qx1_eJBTEepagStNz7wm-zeux_I5FulCn_4NxoYwKL-amPNXe3jTvofasLsKhFXSlC_aqRdclgHiLE/s1600/BayesShort.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvzHZQ5eqQQRcNnfxDZn6Juo4T_cQn5QitC7YfRXwiaRDveulrIdLijk_kGb274qx1_eJBTEepagStNz7wm-zeux_I5FulCn_4NxoYwKL-amPNXe3jTvofasLsKhFXSlC_aqRdclgHiLE/s1600/BayesShort.gif" /></a></div>
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So far so good. But note that the denominator isn't very illuminating.<br />
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A better way of stating the case:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMT7plz3UXBoNoRHLhyQN6Y3uGYWo2ONasRNOcc5DYRQiw8OPu-qSLMo9Wg_Rvoc9pmrQHHypM9ysPm_LuCp39Hs5PK5PY1u634V5Gc9JsOyxkgW1HAHwrOZAJXseTegRtahyphenhyphen3CTlT3Xc/s1600/BayesLong.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMT7plz3UXBoNoRHLhyQN6Y3uGYWo2ONasRNOcc5DYRQiw8OPu-qSLMo9Wg_Rvoc9pmrQHHypM9ysPm_LuCp39Hs5PK5PY1u634V5Gc9JsOyxkgW1HAHwrOZAJXseTegRtahyphenhyphen3CTlT3Xc/s1600/BayesLong.gif" height="32" width="320" /></a></div>
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Look at what this formulation does. It obliges you to calculate the relative probability of Type I and Type II errors. This expanded version explicitly forces you to consider the quality of evidence, both for and against.<br />
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Of course, Noah's critique of unknown (unknowable?) alternative hypotheses remains salient. Mankind's persistent epistemological blind spot is non-ergodicity. There will always be missing terms in that denominator.<br />
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But we do the best we can with what we've got.<br />
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#phronesisAnonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-49038398923120514412013-12-11T14:29:00.002-05:002013-12-11T14:29:36.021-05:00The IQ HorseshoePart of the paper I'm writing with Alex Nowrasteh over at Cato has bits in it on opinions on specific policy issues. If you're reading this (and I have every reason to assume you are reading this), there's a pretty good chance that you're familiar with my fondness for Stata's MARGINSPLOT command. You may also be familiar with my fondness for ordered probit regressions using GSS data. It's a wonderland, people. Combine the two, and I'm like Jack Skellington in Sandy Claws gear, filled with dreadful Christmas cheer.<br />
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Take a look at these, would you?<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2Hzuo7PdhVS1p4C2hAdb-EkkQTHbJTMRVphzimsajsZCo2rzRlJHnrP7gSIDalMIOxMmag8HRczexmjQ56Rj9bTlow8Bxd8cCKKTQ0tvhDUFC3hA02G39xOdaneQy1IdhFSKdae_TuG4/s1600/MarginsNATCRIME1wordsumBYfemale.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2Hzuo7PdhVS1p4C2hAdb-EkkQTHbJTMRVphzimsajsZCo2rzRlJHnrP7gSIDalMIOxMmag8HRczexmjQ56Rj9bTlow8Bxd8cCKKTQ0tvhDUFC3hA02G39xOdaneQy1IdhFSKdae_TuG4/s1600/MarginsNATCRIME1wordsumBYfemale.png" /></a></div>
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What doth these? Margins, of course. Specifically, margins of this regression:</div>
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oprobit natcrime i.partyid i.immcat i.polviews i.female i.race i.age i.degree i.wordsum loginc, cluster(year)
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Of the form<br />
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margins wordsum#female, predict(outcome(n))</div>
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<br /></div>
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where n <img alt="\in \!\," class="tex" src="http://upload.wikimedia.org/math/7/b/3/7b327af63e7c8eee3ba86fe1a4c7cff0.png" style="border: none; font-family: sans-serif; font-size: 13px; line-height: 19.1875px; text-align: -webkit-center; vertical-align: middle;" /> [1,2,3], obviously.<br />
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Basically what I've done is asked the GSS how folks feel about (in this case) federal spending on crime prevention and looked at the margins based on their IQ proxy, which is the ability to get vocabulary words right. I then, for reasons not entirely germane to this post in particular, wrung two separate series out of each margins command, divvied up by sex. Nothing especially fancy.<br />
<br />
But the results are very curious, and they seem to more or less hold up across a multitude of these spending questions. At the low end, we see noise (indicated by the big error bars), which is what we expect of folks with low IQ: they have inconsistent, often irrational beliefs. No big news there. But the hell of it is in the point estimates. What's with the horseshoe? Someone who only gets 2 of 10 vocabulary words right is about as likely to think that the government spends too little on crime as someone who gets 9 of 10 words right. But someone who gets 5 right is about 7% more likely to hold the same opinion. Now, I haven't done pairwise significance testing, but the eyeball check shows point estimates outside rival error bars, so it's probably teasing the 95% threshold at least, but even without that, I find the shape of these curves compelling.<br />
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And I'm not entirely sure what to make of it. For the crime stuff anyway, we might imagine that low-IQ folks are of the "I don't trust the police" type and the high IQ folks are in the "violent crime has empirically decreased in the past century" camp, with the middling folks picking up the slack, but that's just a wild guess.<br />
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Anyway, I thought it was a cool little snippet of empirical evidence I thought would be fun to share. Enjoy the rest of your day, and drive safely.</div>
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Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-43582783346523443612013-11-22T14:20:00.001-05:002013-11-22T14:20:57.460-05:00Medical Professionals, Political Preferences, and Party IdentificationIt started with this tweet from Matt Y.<br />
<blockquote class="twitter-tweet" lang="en">
American conservatives’ curious affection for the doctors’ cartel: <a href="http://t.co/iRsAlQ3Yn5">http://t.co/iRsAlQ3Yn5</a><br />
— Matt Yglesias (@mattyglesias) <a href="https://twitter.com/mattyglesias/statuses/403545853371379712">November 21, 2013</a></blockquote>
My good friend Bryan Caplan remarked:<br />
<blockquote class="twitter-tweet" lang="en">
.<a href="https://twitter.com/mattyglesias">@mattyglesias</a> <a href="https://twitter.com/ATabarrok">@ATabarrok</a> Another good example of the Respect Motive at work, even though MDs are moving Dem. <a href="http://t.co/XrUEfEVC0f">http://t.co/XrUEfEVC0f</a><br />
— Bryan Caplan (@bryan_caplan) <a href="https://twitter.com/bryan_caplan/statuses/403553995198717953">November 21, 2013</a></blockquote>
Click through for the rest of the conversation. The upshot is that I got to wondering how well self-reported political preferences predict party affiliation among doctors. If you're stopped by here before, you might recognize this question as one I've applied to immigrants.<br />
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For medical professionals, there are different effects than with typical immigrants. For doctors, one of the big treatments is education. There's also a bit of natural teamsmanship that happens when a person is a member of various professional organizations (AMA, <i>eg</i>), so my hunch is that political preferences (liberal vs conservative) would do a worse job predicting partisan affiliation for docs compared to everyone else. Let's see if I'm right.<br />
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<b>A quick note on variable definitions</b><br />
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For this, I defined medical professionals as GSS respondents who had Census occupation codes related to the medical profession, and let me tell you, it was kind of frustrating, since there are three code batches in the data coming from 1970, 1980, and 2010. I can't fault the census for not making up its mind, since the types of jobs out there have changed a lot in those 40 years (shout out to my man Izzy K!). So the 'medicalprofessional' variable isn't strictly physicians, but includes dentists and diagnosticians and all that. Since the original question was about medical professionals, I judged this to be fair. If you're unhappy with these inclusions, please feel free to write me a referee report and I'll adjust my approach in the final published piece (snicker).<br />
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<b>Econometric specification</b> (I can't be bothered to write out the equations, so forgive me my sins, gentle reader):<br />
<hr />
oprobit [Party Identification] [Political Views] [Medical Profession Dummy]<br />
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margins [Political Views]#[Medical Profession Dummy], predict(outcome([0-7])<br />
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marginsplot<br />
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The graphs below are the margins plots for each of the seven results, starting with strong democrat, all the way to Strong Republican, plus a bonus, Other Party. Please note that for these plots, the original regression is uncontrolled, and it has no fancy standard errors. It's as plain-jane, bare-bones as an ordered probit regression gets. Which is a weird way to describe it, since ordered probits are pretty abstruse to non-specialists.<script async="" charset="utf-8" src="//platform.twitter.com/widgets.js"></script>
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But please don't be intimidated. It's just a nice, clear way to express probability. You want to know what the odds are that a randomly-chosen moderate doctor will identify as a Democrat? I got you covered, bro. Check out graphs 1-3. Easy! You can also get a pretty good idea of base rates of docs vs non-docs by just looking at whether or not the series are above each other. Also easy!<br />
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So avoiding further ado, here are the <b>Democratic Party</b> margins plots<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYvlHw6l0u2xCCV5gDbp7Nj8Szbs0C3T0dvgESrDeUmd8u3L03uleEuPEBjCSQfGSPKc0QBazSNIgYFCfEuBDRP6Acb25ISgb3TxVegfO7r87Aht0cXcvYu03UgLTFH3gmAO2G1ZbfiTc/s1600/strongdem.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYvlHw6l0u2xCCV5gDbp7Nj8Szbs0C3T0dvgESrDeUmd8u3L03uleEuPEBjCSQfGSPKc0QBazSNIgYFCfEuBDRP6Acb25ISgb3TxVegfO7r87Aht0cXcvYu03UgLTFH3gmAO2G1ZbfiTc/s1600/strongdem.png" /></a></div>
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Fig 1: Strong (D)</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeKgEWbpM0HOdzQqXOhU_YlzW9MtIGyztv7dsxUYtbDpxq-A_oAcMfNBX_A513qGsco8BIcEjimcBT8oKp5A4uslFIsce7u3qAftzhM3rmpjjX3WMzHUuEyUkzgYqpSMNFITtklhlYMo0/s1600/notstrongdem.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeKgEWbpM0HOdzQqXOhU_YlzW9MtIGyztv7dsxUYtbDpxq-A_oAcMfNBX_A513qGsco8BIcEjimcBT8oKp5A4uslFIsce7u3qAftzhM3rmpjjX3WMzHUuEyUkzgYqpSMNFITtklhlYMo0/s1600/notstrongdem.png" /></a></div>
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Fig 2: Not Strong (D)</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5QkzFz9fpc0dadDLr1s99GnjOaZgy-0r-7vNKgFxzctHktNuSNguzth2wBR-sA6-qvltT0bm5eKdliRjnywFxTqdcZKLd7jWURJhDrLrHHVk3h4euuEUfIgjT3sIM35oVjglBb8tjbh4/s1600/indneardem.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5QkzFz9fpc0dadDLr1s99GnjOaZgy-0r-7vNKgFxzctHktNuSNguzth2wBR-sA6-qvltT0bm5eKdliRjnywFxTqdcZKLd7jWURJhDrLrHHVk3h4euuEUfIgjT3sIM35oVjglBb8tjbh4/s1600/indneardem.png" /></a></div>
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Fig 3: Independent, Near (D)</div>
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Okay, so what are we looking at with these? First off, in overall terms, medical professionals (the series in red) tend to be <b>less </b>likely overall (compared to all other respondents) to identify with the Democratic Party, with the excepetion of liberal docs going independent with (D) tendencies. So, even if doc voters are leaning (D) in the past few elections, they're still not identifying (D) in response to GSS surveys. That's fine, it doesn't prove Caplan wrong. Indeed, when you look at voting patterns, it shouldn't surprise you that well-educated people buck party lines in the voting booth. Not a particularly noteworthy result, ladies and gentlemen.<br />
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But that little crossover there sure is interesting, isn't it? Let's see what the probabilities for straight Independents are:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi39rxisl9yB5gb8z2AwYRGXGLrGLcK1xXJZIWa1V5_DA34W9SHS5T6YU85TnPdSknqGI1Ibilz7wurebS6MRT9odwgCcFCrgYnoZ2ctAwpbdZ9h70xM1k99cwRMcnxYBY08CGgtI8ETRU/s1600/independent.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi39rxisl9yB5gb8z2AwYRGXGLrGLcK1xXJZIWa1V5_DA34W9SHS5T6YU85TnPdSknqGI1Ibilz7wurebS6MRT9odwgCcFCrgYnoZ2ctAwpbdZ9h70xM1k99cwRMcnxYBY08CGgtI8ETRU/s1600/independent.png" /></a></div>
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Fig 4: Independent</div>
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The effect is even stronger. Compared to other respondents, liberal docs are more likely to be independent than their conservative pals. Good gravy. Of course, strictly speaking, the 95% intervals cross, so it's not a statistically significant effect, especially considering that I didn't use robust standard errors in the original regression and my eyeball checks suggested some heteroskedasticity (anyone else have to look the spelling of that word up <i>every damn time</i>?).<br />
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That leaves the <b>Republican Party</b> margins plots.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihtokFKd4dwpjCyIlRT50l29ofLiNIcBgLRoLl-3Ulu57MJsGjjmRLjOd4uvPAuY9WshJk5hUTtDHJ0voRA-TpOIMznArV60jj4vppMTgXQp2IyOCEwZLqAsZwjGOwRbpP3SbyyVOISrM/s1600/indnearrep.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihtokFKd4dwpjCyIlRT50l29ofLiNIcBgLRoLl-3Ulu57MJsGjjmRLjOd4uvPAuY9WshJk5hUTtDHJ0voRA-TpOIMznArV60jj4vppMTgXQp2IyOCEwZLqAsZwjGOwRbpP3SbyyVOISrM/s1600/indnearrep.png" /></a></div>
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Fig 5: Independent, Near (R)</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjiLmOgHY18cGkKYHgmN4wIlG8mbyBDSmObUItLWtdaX-o_Wj00_4_JVuYSd-_zeTVxK6MFHa5wZsk9UvTuZGfvEKtxWOvMRtTYvINjHj5-WMrMC5cfJZ3DnXx5I8LSQHH_zS8JaZ1_4cU/s1600/notstrongrep.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjiLmOgHY18cGkKYHgmN4wIlG8mbyBDSmObUItLWtdaX-o_Wj00_4_JVuYSd-_zeTVxK6MFHa5wZsk9UvTuZGfvEKtxWOvMRtTYvINjHj5-WMrMC5cfJZ3DnXx5I8LSQHH_zS8JaZ1_4cU/s1600/notstrongrep.png" /></a></div>
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Fig 6: Not Strong (R)</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhruNNrFLK4IDMHaohTBhqjodSVaCVi1HNGx3L390vYdnZFdF1Xs2jh3LTmx6CF-1Wwh-igdYK3RDNcrKcgu32ctqKrsu5fnWNyyehvoCGH34YF9qaqOS6t42iW7YUz4I55UgVQ30JepDs/s1600/strongrep.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhruNNrFLK4IDMHaohTBhqjodSVaCVi1HNGx3L390vYdnZFdF1Xs2jh3LTmx6CF-1Wwh-igdYK3RDNcrKcgu32ctqKrsu5fnWNyyehvoCGH34YF9qaqOS6t42iW7YUz4I55UgVQ30JepDs/s1600/strongrep.png" /></a></div>
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Fig 7: Strong (R)</div>
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Medical professionals are more likely to be Republicans. But pay attention to where the largest departures are. Liberal/very liberal docs are more likely than liberal/very liberal ordinary citizens to go the independent/(R)-leaning route. Very conservative docs are even more likely than regular citizens to identify strongly with the Republican Party.<br />
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What's all that about? Well, to find out, let's run a controlled regression and see if results change.<br />
<br />
oprobit partyid i.medicalprofessional i.polviews i.immcat i.wordsum i.female i.race, vce(robust)<br />
<br />
You have no way of knowing if this is true, but I am liveblogging these results. The stuff above I ran before I started writing this post, but from here on out, I am composing this blog post without first looking at the results. How daring of me! Whatever, here's the ordered probit results<strike> in handy-dandy HTML table form</strike> no:<br />
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<span style="font-family: Courier New, Courier, monospace;">Iteration 0: log pseudolikelihood = -47539.228 </span></div>
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<span style="font-family: Courier New, Courier, monospace;">Iteration 1: log pseudolikelihood = -45102.581 </span></div>
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<span style="font-family: Courier New, Courier, monospace;">Iteration 2: log pseudolikelihood = -45100.282 </span></div>
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<span style="font-family: Courier New, Courier, monospace;">Iteration 3: log pseudolikelihood = -45100.282 </span></div>
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<span style="font-family: Courier New, Courier, monospace;"><br /></span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">Ordered probit regression Number of obs<span class="Apple-tab-span" style="white-space: pre;"> </span>= 24342</span></div>
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<span style="font-family: Courier New, Courier, monospace;">Wald chi2(23)<span class="Apple-tab-span" style="white-space: pre;"> </span>= 4100.19</span></div>
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<span style="font-family: Courier New, Courier, monospace;">Prob > chi2<span class="Apple-tab-span" style="white-space: pre;"> </span>= 0.0000</span></div>
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<span style="font-family: Courier New, Courier, monospace;">Log pseudolikelihood = -45100.282 Pseudo R2<span class="Apple-tab-span" style="white-space: pre;"> </span>= 0.0513</span></div>
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<span style="font-family: Courier New, Courier, monospace;"><br /></span></div>
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<span class="Apple-tab-span" style="white-space: pre;"><span style="font-family: Courier New, Courier, monospace;"> </span></span></div>
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<span style="font-family: Courier New, Courier, monospace;"><br /></span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">partyid Robust</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;"> Coef. Std. Err. z P>z<span class="Apple-tab-span" style="white-space: pre;"> </span> [95% Conf. Interval]</span></div>
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<span class="Apple-tab-span" style="white-space: pre;"><span style="font-family: Courier New, Courier, monospace;"> </span></span></div>
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<span style="font-family: Courier New, Courier, monospace;">1.medicalprofessional </span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;"> .037221 .0372723 1.00 0.318<span class="Apple-tab-span" style="white-space: pre;"> </span>-.0358314 .1102734</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;"> </span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">polviews </span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">2 -.0042378 .0572077 -0.07 0.941<span class="Apple-tab-span" style="white-space: pre;"> </span>-.1163628 .1078872</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">3 .2543847 .0558183 4.56 0.000<span class="Apple-tab-span" style="white-space: pre;"> </span>.1449828 .3637866</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">4 .4465486 .0541506 8.25 0.000<span class="Apple-tab-span" style="white-space: pre;"> </span>.3404153 .5526818</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">5 .7458233 .0557274 13.38 0.000<span class="Apple-tab-span" style="white-space: pre;"> </span>.6365996 .855047</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">6 1.073725 .0568146 18.90 0.000<span class="Apple-tab-span" style="white-space: pre;"> </span>.9623707 1.18508</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">7 1.071495 .0686654 15.60 0.000<span class="Apple-tab-span" style="white-space: pre;"> </span>.9369131 1.206077</span></div>
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<span style="font-family: Courier New, Courier, monospace;"> </span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">immcat </span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">1 .0759376 .0297705 2.55 0.011<span class="Apple-tab-span" style="white-space: pre;"> </span>.0175884 .1342868</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">2 -.2237079 .0358137 -6.25 0.000<span class="Apple-tab-span" style="white-space: pre;"> </span>-.2939016 -.1535143</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">3 -.094237 .0322473 -2.92 0.003<span class="Apple-tab-span" style="white-space: pre;"> </span>-.1574406 -.0310334</span></div>
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<span style="font-family: Courier New, Courier, monospace;"> </span></div>
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<span style="font-family: Courier New, Courier, monospace;">wordsum </span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">1 -.0183601 .1146955 -0.16 0.873<span class="Apple-tab-span" style="white-space: pre;"> </span>-.2431592 .2064389</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">2 -.1406865 .1074688 -1.31 0.191<span class="Apple-tab-span" style="white-space: pre;"> </span>-.3513215 .0699486</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">3 -.1088001 .1033581 -1.05 0.293<span class="Apple-tab-span" style="white-space: pre;"> </span>-.3113783 .0937782</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">4 -.0730759 .1012778 -0.72 0.471<span class="Apple-tab-span" style="white-space: pre;"> </span>-.2715768 .1254249</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">5 -.0292433 .100435 -0.29 0.771<span class="Apple-tab-span" style="white-space: pre;"> </span>-.2260924 .1676058</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">6 .0542896 .1000425 0.54 0.587<span class="Apple-tab-span" style="white-space: pre;"> </span>-.1417901 .2503694</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">7 .0885638 .1003957 0.88 0.378<span class="Apple-tab-span" style="white-space: pre;"> </span>-.1082082 .2853357</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">8 .1268125 .1010346 1.26 0.209<span class="Apple-tab-span" style="white-space: pre;"> </span>-.0712117 .3248366</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">9 .1211953 .1016877 1.19 0.233<span class="Apple-tab-span" style="white-space: pre;"> </span>-.078109 .3204995</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">10 .0712821 .1027608 0.69 0.488<span class="Apple-tab-span" style="white-space: pre;"> </span>-.1301253 .2726896</span></div>
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<span style="font-family: Courier New, Courier, monospace;"> </span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">1.female -.1058552 .0134334 -7.88 0.000<span class="Apple-tab-span" style="white-space: pre;"> </span>-.1321842 -.0795261</span></div>
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<span style="font-family: Courier New, Courier, monospace;"> </span></div>
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<span style="font-family: Courier New, Courier, monospace;">race </span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">2 -.8595719 .0219832 -39.10 0.000<span class="Apple-tab-span" style="white-space: pre;"> </span>-.9026582 -.8164856</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">3 -.2088881 .0355149 -5.88 0.000<span class="Apple-tab-span" style="white-space: pre;"> </span>-.2784961 -.1392802</span></div>
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<span class="Apple-tab-span" style="white-space: pre;"><span style="font-family: Courier New, Courier, monospace;"> </span></span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">/cut1 -.7557187 .1122173<span class="Apple-tab-span" style="white-space: pre;"> </span>-.9756606 -.5357768</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">/cut2 -.0160698 .1121541<span class="Apple-tab-span" style="white-space: pre;"> </span>-.2358878 .2037481</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">/cut3 .3430329 .1121672<span class="Apple-tab-span" style="white-space: pre;"> </span>.1231892 .5628765</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">/cut4 .7309348 .1122396<span class="Apple-tab-span" style="white-space: pre;"> </span>.5109493 .9509203</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">/cut5 1.022414 .1123512<span class="Apple-tab-span" style="white-space: pre;"> </span>.8022098 1.242618</span></div>
<div>
<span style="font-family: Courier New, Courier, monospace;">/cut6 1.72903 .1128808<span class="Apple-tab-span" style="white-space: pre;"> </span>1.507788 1.950273</span></div>
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<span style="font-family: Courier New, Courier, monospace;">/cut7 2.782055 .116267<span class="Apple-tab-span" style="white-space: pre;"> </span>2.554176 3.009934</span></div>
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<span class="Apple-tab-span" style="white-space: pre;"> </span></div>
<div>
<br /></div>
You'll want to do yourself a favor and look at that on a proper computer monitor. For obvious reasons. Category definitions are what you'd imagine. Medicalprofessional = 1 for medical professionals; polviews are from 1=extremely liberal to 7=extremely conservative; female = 1 for female; race: 1=white, 2=black 3=other. Anyway, let's redo the Independent affiliation margins to see if it's any different (are you excited? I'm excited! Let's go!)<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgY8GBHt3h90_ybA7KgJQpCKzuiUpvmmESOWiKmirWCn7bgOo062SBmRXV0eTN11LkQHdz3F-E_dhoZ3xD0I6rVSzGfQDfGnjIUbUj8TihsZ8rDAA76enIveqU7mry9ri7ulXN3m_vjonM/s1600/independentcont.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgY8GBHt3h90_ybA7KgJQpCKzuiUpvmmESOWiKmirWCn7bgOo062SBmRXV0eTN11LkQHdz3F-E_dhoZ3xD0I6rVSzGfQDfGnjIUbUj8TihsZ8rDAA76enIveqU7mry9ri7ulXN3m_vjonM/s1600/independentcont.png" /></a></div>
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Fig. 8: Independent, with Controls</div>
<br />
<br />
Wow, that took a long time to run. I have more important things to do than run all of these over again, so I won't. Anyway, let's see what we've got... hm. Same results, with less statistical significance. How anti-climactic.<br />
<br />
Maybe we can salvage this pig though. How does medical profession stack up against, say, gender for predicting party affiliation? In other words, let's find interactions of [medical professional]#[political views]#[gender]<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2F32ILuL13fXPzNpaGb4iqDPogdcos9UISMHZRV1L4ZFCUTVGlsTpmTaq8ciOU28v7qesV6RCGZJ69fsf-WqHgouYi-SEqVzQKaTKPL9M08Epms6b3g28zzzU2qKu1xja1oeN8jLEFJk/s1600/independentcontfemale.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2F32ILuL13fXPzNpaGb4iqDPogdcos9UISMHZRV1L4ZFCUTVGlsTpmTaq8ciOU28v7qesV6RCGZJ69fsf-WqHgouYi-SEqVzQKaTKPL9M08Epms6b3g28zzzU2qKu1xja1oeN8jLEFJk/s1600/independentcontfemale.png" /></a></div>
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Fig 9: Independent, with Controls, by Gender</div>
<br />
Okay, so that's not so easy to see, but the red and yellow series are for females and the blue and green are for males. Note that the professional gaps (red-to-yellow and blue-to-green) are modest compared to the gender gaps (blue-to-red and green-to-yellow). I did not expressly choose the colors, if that matters.<br />
<br />
So what's the takeaway of this last graph? Well, from where I sit, there's nothing particularly compelling about the medical profession when it comes to party identification, at least not compared to gender (and there are a few other horse races I could run, provided I could muster the interest, which I can't).<br />
<br />
But that does not mean that docs necessarily agree with the general population on specific issues. That might be worth a closer look. I imagine I could chase this down a pretty deep rabbit hole, which is why I think I should stop for now.<br />
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Which is exactly what I'm doing now. Stopping.<br />
<br />Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-52026409855944108722013-10-16T11:56:00.001-04:002013-10-16T12:01:54.125-04:00More on the Political Externalities of ImmigrationThis is a follow-up to a <a href="http://spivonomy.blogspot.com/2013/04/coming-to-party-in-usa-then-dancing.html">post I wrote a while back</a> on the attitudes <i>of</i> (rather than <i>towards</i>) immigrants. There, I asked whether or not migrant status predicted party affiliation (it does) and how well the interaction of immigrant status and political views predicted party affiliation (there's a strong bias towards the Democratic party among immigrants). Today, I'll take a look at how these variables interact to predict specific policy positions.<br />
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<a name='more'></a><br />
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Much like last time, the heavy lifting will be done using ordered probit. Unlike last time, I ditched assumptions of normality for a few variables and just went with categorical transformations. Here's an example.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhF_tS7_7-J6pfjqR6e4ZaFKRRNjOidc5fMym9KUyu8f23dTzHd6kTSFRiVgAJgjmq-ACACyGbnuHMgOWpYhk5U-rSQFdikj8mSYCcoVNgXfjasCjGnyIA9lZEGvudlgH9Iu0zYQZd4tIU/s1600/RealhhincomeAgeGenderGSS.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhF_tS7_7-J6pfjqR6e4ZaFKRRNjOidc5fMym9KUyu8f23dTzHd6kTSFRiVgAJgjmq-ACACyGbnuHMgOWpYhk5U-rSQFdikj8mSYCcoVNgXfjasCjGnyIA9lZEGvudlgH9Iu0zYQZd4tIU/s1600/RealhhincomeAgeGenderGSS.png" /></a></div>
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This comes from an OLS regression for income on age and sex with immigrant status and highest degree received as controls. Here's the STATA command:<br />
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<b>reg loginc i.degree i.female i.immcat i.age , cluster(year)</b><br />
<b><br /></b>
The margins plot you see up there isn't a core result of this inquiry, but it does give you a snapshot of how nonlinear variable transformations can possibly be troublesome. Sure, I could include different squared, cubed, log, whatever transformations of age to get useful OLS coefficients, but if you ask me, puzzling through interpretations of third degree polynomial estimates is far more trouble than what I've presented here. I mean, look at that. That plot has lifecycle effects, it captures teenagers still living with their parents, (uncontrolled) gender-based wage premiums, and it shows you the importance of noise. If you look really closely, you can even see a white-space bubble during women's child-bearing years. The point is, after some fiddling around with alternate econometric specifications, I found that an expanded role for indicator variables useful for expository purposes.<br />
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Here's another example, this time using an ordered probit with degree attained as the dependent variable. For this, I was curious what effect immigration status and parents' education had on respondents' own educational attainment. The specification is:<br />
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<b>oprobit degree i.immcat i.female i.race i.madeg i.padeg i.year age age2 if age >= 24, vce(robust)</b><br />
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I chose 24 as my age breakpoint more or less arbitrarily, but one-year increments up to age 30 made no meaningful difference to the results, so I beg you to grant me some latitude. Anyway, here's the margins of father's degree interacted with immigrant category for [less than high school]:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXLwIbRI-y076uwXnBZ-GGo0wpjixe46ubR69N1AYYYP9dvfitxUBET-t8NxsOA8nNr9sCSIDv50jFVewyhVe51uLJO03yUbbu9SBqzxj7heYBNjQzALIirEuf0wkmGhXfvHnKf3Fbj1c/s1600/MarginsPadegImmcatLTHS.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXLwIbRI-y076uwXnBZ-GGo0wpjixe46ubR69N1AYYYP9dvfitxUBET-t8NxsOA8nNr9sCSIDv50jFVewyhVe51uLJO03yUbbu9SBqzxj7heYBNjQzALIirEuf0wkmGhXfvHnKf3Fbj1c/s1600/MarginsPadegImmcatLTHS.png" /></a></div>
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So, as you'd expect, high school dropouts tend to have kids who are high school dropouts. No surprise there, but note how this relationship weakens for immigrants. It's unlikely for college-educated parents to have HS dropout kids, but it's even <i>less</i> likely for immigrants to exhibit this pattern. This basic pattern holds for HS diploma as well, but there's an inflection in the margins for junior college:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIXC8a3IGOrZTOmafdJAZPBWN3f1JXzo9tD20_QBST1nikBukabj-2rTe0-cOeCRdRdJmlJnrFbLCyJrsP405Cimq_xO7CSZ3BsztFvnfewLOIBHbERhPO5nnOxOfqS8oAsqMCqFCSQGI/s1600/MarginsPadegImmcatJC.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIXC8a3IGOrZTOmafdJAZPBWN3f1JXzo9tD20_QBST1nikBukabj-2rTe0-cOeCRdRdJmlJnrFbLCyJrsP405Cimq_xO7CSZ3BsztFvnfewLOIBHbERhPO5nnOxOfqS8oAsqMCqFCSQGI/s1600/MarginsPadegImmcatJC.png" /></a></div>
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Now, we've got a case where low-educated immigrants tend to have better-educated children. Except for the elite: immigrant doctors don't tend to have (marginally) poorly educated children. They, perhaps predictably, tend to have well-educated kids:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiu9qkePG9JA0yr_GQjfTLOdzCj-0VhInPUoMlWS0JMaemkwamDKBzA5n5mgbvd5Ngm3eJN6GZquRYjjzqx3-duyVsX6IVn6EDjdbe_vVpQS0Wxlttbl59tXrKnFxyJU_mNZ_7Qs1SHrck/s1600/MarginsPadegImmcatGrad.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiu9qkePG9JA0yr_GQjfTLOdzCj-0VhInPUoMlWS0JMaemkwamDKBzA5n5mgbvd5Ngm3eJN6GZquRYjjzqx3-duyVsX6IVn6EDjdbe_vVpQS0Wxlttbl59tXrKnFxyJU_mNZ_7Qs1SHrck/s1600/MarginsPadegImmcatGrad.png" /></a></div>
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So the basic story these graphs tell supports an established empirical result: immigrants take education more seriously than native-born Americans. I don't necessarily want to get into underlying causes here, but you can pretty easily imagine what some of the lurking variables might be: conscientiousness, selection, conformity, or something similar might be good candidates. These naive, unpartitioned estimates are meant more to show you why I've been using categorical variables and that the contents of the GSS sample I've got are consistent with the established literature. Nothing fancy, people.<br />
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To the meat of today's post, then. Here's a question about foreign aid:<br />
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<b>oprobit nataid i.immcat, cluster(year)</b><br />
<br />
<div style="text-align: center;">
</div>
<div>
<table align="center" border=""><tbody>
<tr><td>Ordered Probit</td><td></td><td></td><td></td><td>n</td><td>=</td><td>31506</td></tr>
<tr><td>Regression</td><td></td><td></td><td></td><td>Wald chi2(3)</td><td>=</td><td>258.65</td></tr>
<tr><td></td><td></td><td></td><td></td><td>Prob > chi2</td><td>=</td><td>0.0000</td></tr>
<tr><td></td><td></td><td></td><td></td><td>Pseudo R2</td><td>=</td><td>0.0084</td></tr>
<tr><td></td><td></td><td></td><td></td><td>Log Pseudolikelihood</td><td>=</td><td>-23582.334</td></tr>
<tr><td></td><td></td><td></td><td></td><td><br /></td><td><br /></td><td><br /></td></tr>
<tr><th><b>Foreign Aid [NATAID]</b></th><th><div style="text-align: center;">
<b>Coef.</b></div>
</th><th><div style="text-align: center;">
<b>Robust</b></div>
<div style="text-align: center;">
<b>Std. Err.</b></div>
</th><th><div style="text-align: center;">
<b>z</b></div>
</th><th><div style="text-align: center;">
<b>P>z</b></div>
</th><th colspan="2">[95 % Conf.<br />
Interval]</th></tr>
<tr></tr>
<tr><td><b>Immigrant Category</b></td><td><br /></td><td><br /></td><td><br /></td><td><br /></td><td><br /></td><td></td></tr>
<tr><td>First-Gen</td><td>-0.5415</td><td>0.0524</td><td>-10.34</td><td>0.000</td><td>-0.6441</td><td>-0.4389</td></tr>
<tr><td>Second-Gen</td><td>-0.0498</td><td>0.0486</td><td>-1.03</td><td>0.305</td><td>-0.1451</td><td>0.0454</td></tr>
<tr><td>Third-Gen</td><td>-0.0047</td><td>0.0411</td><td>-0.11</td><td>0.909</td><td>-0.0852</td><td>0.0759</td></tr>
<tr></tr>
<tr><td><br /></td><td><br /></td><td><br /></td><td><br /></td><td><br /></td><td><br /></td><td></td></tr>
<tr><td>/cut 1</td><td>-1.5952</td><td>0.0340</td><td><br /></td><td><br /></td><td>-1.6619</td><td>-1.5286</td></tr>
<tr><td>/cut 2</td><td>-0.5862</td><td>0.0298</td><td><br /></td><td><br /></td><td>-0.6446</td><td>-0.5287</td></tr>
</tbody></table>
</div>
<div>
This is one of what I call a "Goldilocks" questions. It has three response possibilities: too little, just right, and too much. Unfortunately, there's no saliency measure. My dodge around this is that there's no saliency measure in voting either (I agree that this is a poor dodge for some issues given the possibility of Coasean bargaining, but that's a subject for a follow-up post). Anyway, here are the marginsplots for each outcome, in order:</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMPsyNU7YpKts1CNB3lXgKpEDLte-gSdHIMBMty3oz9B0QSzZI79wkS8KlHypfDI4KjM1rM0jXSVGKKWqGwu535lhMxegvDW2yJbp7x69dzaYY_7XC9gBsYU1_PCKlk4IMWazPQlmHJ_U/s1600/MarginNataidToolittle.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMPsyNU7YpKts1CNB3lXgKpEDLte-gSdHIMBMty3oz9B0QSzZI79wkS8KlHypfDI4KjM1rM0jXSVGKKWqGwu535lhMxegvDW2yJbp7x69dzaYY_7XC9gBsYU1_PCKlk4IMWazPQlmHJ_U/s1600/MarginNataidToolittle.png" /></a></div>
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Too Little </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4Gc8ERyzUh6W4CPqbt60XIcTH_yQvn04EF-uUMKJCGHDLRo_dYeMh323-wKSSnO8L9tmlCug8NS1-Y61Lk9xeLgv3mTyAc0bKWkTkXixRtXwpIzzO-XjCNddYGOs4o_4efxeIcrJofoU/s1600/MarginNataidJustright.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4Gc8ERyzUh6W4CPqbt60XIcTH_yQvn04EF-uUMKJCGHDLRo_dYeMh323-wKSSnO8L9tmlCug8NS1-Y61Lk9xeLgv3mTyAc0bKWkTkXixRtXwpIzzO-XjCNddYGOs4o_4efxeIcrJofoU/s1600/MarginNataidJustright.png" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
About Right</div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqUtkicxxpFdMl-3Z4yoo8AabS0rp_oqY6F2GzX7SENBgdVy8SHOdfTS22WHVLcr-Dq4k8idYIC6wHedmQiUSpCOTt-x0jOfC9MDtB6ajWGudMuYCPx54xGPYT6Gro4jjghjwN45Artuk/s1600/MarginNataidToomuch.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqUtkicxxpFdMl-3Z4yoo8AabS0rp_oqY6F2GzX7SENBgdVy8SHOdfTS22WHVLcr-Dq4k8idYIC6wHedmQiUSpCOTt-x0jOfC9MDtB6ajWGudMuYCPx54xGPYT6Gro4jjghjwN45Artuk/s1600/MarginNataidToomuch.png" /></a></div>
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Too Much</div>
<div>
<br /></div>
<div>
The specific result is (if you ask me) less relevant than the pattern. First-generation immigrants' preferences depart from those of native-born Americans, and second- or third-generation immigrants are statistically indistinguishable from native-born citizens who can trace their ancestry to the 50 states back to at least their grandparents.</div>
<div>
<br /></div>
<div>
Now then, I checked every government-spending policy question available in the GSS and cut it up this way. Most of the questions weren't even this dramatic. For example, on environmental spending, <i>no</i> immigrant category was any different than any other.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4hhxdyqT1beYw44mGsfNirJLl_4fSgVjmdB_tc1JtIK-mrVBhtAa_JJxiK6IXzQvbF0VzQ9NJEy_dFMSykdvuxt7xqHg8u28qLI3FyeHBj4wj3i8IfnYcfHCnjZMbucOSS1IGqyZmp6s/s1600/MarginEnvirJustright.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4hhxdyqT1beYw44mGsfNirJLl_4fSgVjmdB_tc1JtIK-mrVBhtAa_JJxiK6IXzQvbF0VzQ9NJEy_dFMSykdvuxt7xqHg8u28qLI3FyeHBj4wj3i8IfnYcfHCnjZMbucOSS1IGqyZmp6s/s1600/MarginEnvirJustright.png" /></a></div>
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Environment (about right)</div>
<br />
For others, the immigrant bias was either in favor of the status quo or in favor of less spending (roads, for example). First-generation immigrants tend to favor more income redistribution, but not second or third.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8HPKVsxTMmPkhdihAvPhECobf6Zan6agF5eAtNVNdziK3e8Hmns_W0dpqbsvcvm4CgfPhCxxq6IFoCsElEZWFe6k53HD4uoWlbf1bKSQw6vDGLSxOJeSIh8YktZTqIpyfxPEFZ5dXrO0/s1600/MarginEqincToolittle.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8HPKVsxTMmPkhdihAvPhECobf6Zan6agF5eAtNVNdziK3e8Hmns_W0dpqbsvcvm4CgfPhCxxq6IFoCsElEZWFe6k53HD4uoWlbf1bKSQw6vDGLSxOJeSIh8YktZTqIpyfxPEFZ5dXrO0/s1600/MarginEqincToolittle.png" /></a></div>
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Income Redistribution (too little)</div>
<br />
The one unusual example I found was spending on NASA, which was strong for third generation immigrants. Of course, this largely went away once I introduced controls, meaning that immigrant status was masking other variables (in this instance, education).</div>
<div>
<br /></div>
<div>
Another thing I did was to take a few of these questions and look at more finely divided margins. Sure, immigrant status predicts policy positions on a few of these issues, but how does it stack up against education, sex, race, or politics? The short answer is that it's piffling. The long answer is that we can look at the actual plots. </div>
<div>
<br /></div>
<div>
And the long answer is sufficiently long that it deserves its own post, which I'll save for another day. Once again, please stay tuned. I'll try to make it so that you don't have to wait six months between updates.</div>
Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com1tag:blogger.com,1999:blog-7120698411132485795.post-37062310753619583412013-04-08T17:03:00.000-04:002013-04-22T11:40:52.353-04:00Coming to the Party in the USA, then Dancing with the Stars on the Ceiling in the StreetsHello friends. You might be wondering why I'm posting this here and not over at <a href="http://euvoluntaryexchange.blogspot.com/">Euvoluntary Exchange</a>, where I'm typically found. The short answer is that this is off-topic. The long answer is that this is off-topic and I can't think of an easy way to shoehorn it on-topic. So here we are. I'm putting a fold here because this post will be gigantic thanks to all the tables and graphs I'll be using.<br />
<a name='more'></a>There's a bit of a puzzle in my ongoing investigation of immigrants' policy preferences. In a whole host of ordered probit regressions, I keep finding a few stylized facts:<br />
<ol>
<li>First generation immigrants hold very similar policy preference profiles to native-born Americans, particularly when controlling for political party affiliation.</li>
<li>Second-generation immigrants buck party lines on a wide range of questions.</li>
<li>Third-generation immigrants are almost completely indistinguishable from the native-born population.</li>
</ol>
But what of party selection? The expected trope is that liberals identify with the Democratic Party and conservatives identify with the Republican Party. The misfits that identify with the Libertarian Party are too few to be reliable in the relatively small sample size of the GSS. Is this trope grounded in good empirics? Let's find out!<br />
<br />
<b><u>The Plan</u></b><br />
To get at what's going on, I'll do what I can to answer the following questions:<br />
<ul>
<li>Does immigrant status predict party affiliation? (this is a set of uncontrolled regressions)</li>
<li>Do political views predict party affiliation?</li>
<ul>
<li>For everyone (uncontrolled and controlled)</li>
<li>For 1st, 2nd, and 3rd gen immigrants (uncontrolled and controlled)</li>
</ul>
</ul>
All data for this investigation were taken from the most recent release of the <a href="http://www3.norc.org/GSS+Website/Download/STATA+v8.0+Format/">General Social Survey</a> and analyzed using Stata 12. Background music used during analysis was my custom Spotify channel "Other Industrial", which I should really rename, since I've got, like, Erasure and Bloodhound Gang and Metallica and whatever else catches my fancy in there now. For in-text notation purposes, I'll put all the GSS variables in parenthetical all caps, but I'll do my best to switch to plain English only in the tables and suchlike. Clarity is important.<br />
<br />
<b><u>First Steps</u></b><br />
First off, let's see how strongly it is in general that political views (POLVIEWS) predict party affiliation <i>compared to other covariates</i>. This is an important econometric point, since it's way easy to get snookered by mere statistical significance. Depending on how often you referee, you may or may not get sheaves of empirical papers that leave out something as basic as beta estimates. Statistical significance tells you if the effect is different than zero, but it doesn't say bupkis about whether or not the effect is particularly strong. I owe it to you, gentle reader, to peer into the swerve power of relevant independent variables, to standardize the elephant vs the shrew in this horserace. That's what the '<u>be</u>ta' option is for. It converts your coefficients into z-scores. Cool, huh?<br />
<br />
Here's the first regression result. I used the same covariates that Caplan and Miller used for the piece that eventually ended up as part of The Myth of the Rational Voter. The chief explanatory variable I want to draw to your attention is respondents' political views (POLVIEWS). This runs in seven categories from extremely liberal to extremely conservative. The dependent variable, party affiliation (PARTYID) runs in <i>eight</i> categories from strong democrat to strong republican, with the eighth as "other party". The standard tale would imply a pretty little monotonic relationship 1-1, 2-2 all the way up to 7-7. When you look at the crosstab, this is mostly what you get. Observe:<br />
<br />
<table align="center" border=""><tbody>
<tr><td>think of self as<br />
liberal or<br />
conservative</td><td></td><td>party affiliation</td></tr>
<tr><td><br /></td><td>strong D</td><td>not <br />
strong <br />
D</td><td>ind, <br />
near D</td><td>ind</td><td>ind,<br />
near R</td><td>not <br />
strong R</td><td>strong R</td><td>other party</td><td>Total</td></tr>
<tr><td>extremely liberal</td><td>476</td><td>232</td><td>243</td><td>168</td><td>43</td><td>53</td><td>51</td><td>56</td><td>1,322 </td></tr>
<tr><td>liberal</td><td>1,749</td><td>1,382</td><td>934</td><td>633</td><td>250</td><td>380</td><td>168</td><td>70</td><td>5,566 </td></tr>
<tr><td>slightly liberal</td><td>1,120</td><td>1,737</td><td>1,154</td><td>759</td><td>448</td><td>679</td><td>208</td><td>60</td><td>6,165 </td></tr>
<tr><td>moderate</td><td>2,641</td><td>4,394</td><td>2,350</td><td>3,357</td><td>1,622</td><td>2,916</td><td>900</td><td>224</td><td>18,404 </td></tr>
<tr><td>slightly conservative</td><td>725</td><td>1,358</td><td>712</td><td>893</td><td>1,027</td><td>2,049</td><td>812</td><td>90</td><td>7,666 </td></tr>
<tr><td>conservative</td><td>671</td><td>825</td><td>401</td><td>691</td><td>791</td><td>1,534</td><td>2,070</td><td>90</td><td>7,073 </td></tr>
<tr><td>extremely conservative</td><td>222</td><td>166</td><td>88</td><td>156</td><td>137</td><td>188</td><td>506</td><td>34</td><td>1,497 </td></tr>
<tr><td>Total</td><td>7,604</td><td>10,094</td><td>5,882</td><td>6,657</td><td>4,318</td><td>7,799</td><td>4,715</td><td>624</td><td>47,693 </td></tr>
</tbody></table>
<div style="text-align: center;">
Table 1</div>
<br />
The diagonal is as thick as you'd expect. Not a whole lot of extremely liberal strong Republicans. <strike>Warning for those viewing on the blogspot website: the table seems to be truncated in the preview, so you might want to switch to an RSS feed to see the whole thing in its HTMLish glory.</strike> Fixed<br />
<br />
So let's hop right to a linear regression. I freely acknowledge that there are some severe problems with using an OLS approach to this data. We have no <i>ex ante</i> reason to expect that these self-reported (and unnaturally constrained, I might add) categories to track monotonically or to boast normal underlying distributions or anything like that. OLS isn't <i>great</i> to use here, but for a quick and dirty look at magnitudes, it's not embarrassingly terrible. Here's the specification (writing out the model equations gilds the lily for a blog post, and I'm not sure I want to bother to learn how to do so in HTML anyway, so please bear with me). Naturally, all commands will be compatible with Stata. Note that I omit "other party" in the OLS regression. Yes, it screws up the standard errors, but we're not super concerned with statistical significance anyway, so I won't wring my hands about it too much.<br />
<br />
<span style="font-family: Courier New, Courier, monospace;">reg partyid polviews loginc female age age2 i.race i.finalter i.joblose if partyid!=8, vce(robust) be</span><br />
<br />
<br />
<table align="center" border=""><tbody>
<tr><td>Linear regression</td><td></td><td></td><td>n</td><td>= </td><td>16084</td></tr>
<tr><td>(OLS)</td><td></td><td></td><td>F( 13, 16070)</td><td>= </td><td>357.24</td></tr>
<tr><td></td><td></td><td></td><td>Prob > F</td><td>= </td><td>0.0000</td></tr>
<tr><td></td><td></td><td></td><td>R-squared</td><td>=</td><td>0.2127</td></tr>
<tr><td></td><td></td><td></td><td>Root MSE </td><td>= </td><td>1.792</td></tr>
<tr><td><div style="text-align: left;">
party affiliation</div>
</td><td><div style="text-align: center;">
Coef.</div>
</td><td><div style="text-align: center;">
Robust</div>
<div style="text-align: center;">
Std. Err.</div>
</td><td><div style="text-align: center;">
t</div>
</td><td><div style="text-align: center;">
P>|t|</div>
</td><td><div style="text-align: center;">
<b><span style="color: red;">Beta</span></b></div>
</td></tr>
<tr></tr>
<tr><td><b>pol. views</b></td><td>.5091</td><td>.0109</td><td>46.72</td><td>0.000</td><td><span style="color: red;">.344</span></td></tr>
<tr><td><b>(log) income</b></td><td>.1017</td><td>.0181</td><td>5.62</td><td>0.000</td><td>.043</td></tr>
<tr><td><b>female</b></td><td>-.2206</td><td>.0287</td><td>-7.68</td><td>0.000</td><td>-.055</td></tr>
<tr><td><b>age</b></td><td>-.0444</td><td>.0069</td><td>-6.46</td><td>0.000</td><td>-.278</td></tr>
<tr><td><b>age^2</b></td><td>.0004</td><td>.0001</td><td>4.97</td><td>0.000</td><td>.214</td></tr>
<tr></tr>
<tr><td><b>race</b></td></tr>
<tr><td>2 (black)</td><td>-1.5265</td><td>.0402</td><td>-37.96</td><td>0.000</td><td>-.252</td></tr>
<tr><td>3 (other)</td><td>-.6308</td><td>.0608</td><td>-10.38</td><td>0.000</td><td>-.070</td></tr>
<tr></tr>
<tr><td><b>financial <br />situation alter</b></td></tr>
<tr><td>2 (worse)</td><td>-.1180</td><td>.0397</td><td>-2.97</td><td>0.003</td><td>-.023</td></tr>
<tr><td>3 (same)</td><td>-.0812</td><td>.0326</td><td>-2.49</td><td>0.013</td><td>-.019</td></tr>
<tr></tr>
<tr><td><b>prob. of job loss</b></td></tr>
<tr><td>2 (fairly likely)</td><td>-.0185</td><td>.0875</td><td>-0.21</td><td>0.833</td><td>-.002</td></tr>
<tr><td>3 (not too likely)</td><td>-.0242</td><td>.0707</td><td>-0.34</td><td>0.732</td><td>-.005</td></tr>
<tr><td>4 (not likely)</td><td>.0802</td><td>.0679</td><td>1.18</td><td>0.238</td><td>.019</td></tr>
<tr><td>5 (leaving l.f.)</td><td>-.0208</td><td>.8050</td><td>-0.03</td><td>0.979</td><td>-.000</td></tr>
<tr></tr>
<tr><td><b>constant</b></td><td>1.1378</td><td>.2113</td><td>5.38</td><td>0.000</td></tr>
<tr></tr>
</tbody></table>
<div style="text-align: center;">
Table 2<br />
<br />
<div style="text-align: left;">
As more or less expected, political views beats the pants off of everything else (.344 standard deviations). The closest contenders are age (the older you get, the more likely you are to be a Democrat, though with notable nonlinear effects) and race (if you're black, you're more likely to register (D)). Yet, even holding all that stuff constant (and notice how puny income is), political ideology dominates, just plain dominates. So far, so good. Caplan-Miller holds when we use the most recent release. No surprise there.</div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
<b><u>Does Immigrant Status Predict Party Affiliation?</u></b></div>
<div style="text-align: left;">
This is a very basic question. Without controlling for anything else, if we throw the crib door wide, let the people crawl inside, what will happen to the prosthetic foreheads? I want to be a little more careful about my assumptions for this question. I'll abandon (well, more relax than abandon) the OLS conditions and go straight for an ordered probit.</div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
If you're not all that familiar with LDV models, don't be put off. The intuitions are still the same. The independent variables have some marginal effect on the probability of an outcome. The advantage to using this approach is that we can very carefully parse each margin to find discontinuities. It's not enough to just cram a dummy for immigration into an OLS regression, even with an interaction term since this approach lacks precision and discipline. Crane stance, Daniel-san.</div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
Since generational fade-out or assimilation is something people seem to care about, we'll want to compare margins for a) first generation, b) second generation and c) third generation immigrants. I constructed these variables from BORN, PARBORN, and GRANBORN. I consider a respondent to be an immigrant (IMM) iff not born in this country. I consider a respondent to be second generation (SG) iff born in this country and both parents not born in this country. I consider a respondent to be third generation (TGO) iff born in this country, both parents born in this country, and all four grandparents not born in this country. </div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
Perhaps this is a bit more restrictive than is necessary for analysis, but if these empirics are to be deployed in an immigration debate, I think it's better to err on the side of caution. Few people would spend a lot of time objecting that a person who has one grandparent from Romania, but the rest from Iowa is in any way distinguishable from any other cornhusker. Split-parent homes are a slightly different matter. That one's ambiguous enough to omit. My wife is Lithuanian and my daughter was born in Virginia. I'm from dirtkicker Oakie stock, so what does that make my little girl? Immigration policy (and probably public opinion) is already pretty favorable towards <i>jus soli</i> citizenship and immigration rights by marriage, so I think it's fair enough to call one-immigrant-parent respondents full-blown Americans. Running the regressions with the oddballs omitted doesn't meaningfully change the results anyway, so we've got that going for us, which is good.<br />
<br />
So here is the first regression to run: an ordered probit with Political Party as the dependent variable (PARTYID) and immigrant status (IMM|SG|TGO) as the one and only one independent variable. After that's been run, I crank though marginal results for each DV category running the spectrum from "Strong Democrat" to "Strong Republican". Here's the code in case you want to run these guys at home:<br />
<br />
<span style="font-family: Courier New, Courier, monospace;">forvalues aa=1/7 { </span><br />
<span style="font-family: Courier New, Courier, monospace;">quietly oprobit partyid i.imm if partyid!=8 & sg!=1&tgo!=1,vce(robust) nolog</span><br />
<span style="font-family: Courier New, Courier, monospace;">quietly estadd margins imm, predict(outcome(`aa'))
eststo mar`aa' </span><br />
<span style="font-family: Courier New, Courier, monospace;"> } </span><br />
<span style="font-family: Courier New, Courier, monospace;"> estout mar1 mar2 mar3 mar4 mar5 mar6 mar7, cells(margins_b margins_se) </span><br />
<span style="font-family: Courier New, Courier, monospace;"><br /></span>
<span style="font-family: Courier New, Courier, monospace;">forvalues aa=1/7 { </span><br />
<span style="font-family: Courier New, Courier, monospace;">quietly oprobit partyid i.sg if partyid!=8 & imm!=1&tgo!=1,vce(robust) nolog </span><br />
<span style="font-family: Courier New, Courier, monospace;">quietly estadd margins sg, predict(outcome(`aa'))
eststo mars`aa' </span><br />
<span style="font-family: Courier New, Courier, monospace;"> } </span><br />
<span style="font-family: Courier New, Courier, monospace;"> estout mars1 mars2 mars3 mars4 mars5 mars6 mars7, cells(margins_b margins_se) </span><br />
<span style="font-family: Courier New, Courier, monospace;"><br /></span>
<span style="font-family: Courier New, Courier, monospace;">forvalues aa=1/7 { </span><br />
<span style="font-family: Courier New, Courier, monospace;">quietly oprobit partyid i.tgo if partyid!=8 & imm!=1&sg!=1,vce(robust) nolog </span><br />
<span style="font-family: Courier New, Courier, monospace;"> quietly estadd margins tgo, predict(outcome(`aa'))
eststo mart`aa'</span><br />
<span style="font-family: Courier New, Courier, monospace;"> }</span><br />
<span style="font-family: Courier New, Courier, monospace;">estout mart1 mart2 mart3 mart4 mart5 mart6 mart7, cells(margins_b margins_se)</span><br />
<br />
Obviously, you'll need to have estadd installed. Obviously. There's more than one way to skin a cat though, so you might have luck with some other approach though. Here are the tabulated results. Please note that, yes, the sample changes a little in each run, so the native-born margins jump around a little, but the magnitude of the effect is piddling, so don't sweat it too much, says I.</div>
<div style="text-align: left;">
<br />
<table align="center" border=""><tbody>
<tr><td></td><td>Str D</td><td>Not Str D</td><td>Ind Near D</td><td>Ind</td><td>Ind near R</td><td>Not Str R</td><td>Str R</td></tr>
<tr><td></td><td>margins</td><td>margins</td><td>margins</td><td>margins</td><td>margins</td><td>margins</td><td>margins</td></tr>
<tr><td>Native-Born</td><td>.2037</td><td>.1161</td><td>.1536</td><td>.0902</td><td>.1642</td><td><b>.1025</b></td><td><b>.0140</b></td></tr>
<tr><td></td><td>(.0020)</td><td>(.0015)</td><td>(.0017)</td><td>(.00147)</td><td>(.0018)</td><td>(.0015)</td><td>(.0006)</td></tr>
<tr><td>First-Gen</td><td>.2117</td><td>.1173</td><td>.1521</td><td>.0876</td><td>.1556</td><td><b>.0931</b></td><td><b>.0120</b></td></tr>
<tr><td></td><td>(.0027)</td><td>(.0016)</td><td>(.0018)</td><td>(.0015)</td><td>(.0026)</td><td>(.0025)</td><td>(.0007)</td></tr>
<tr><td>Second-Gen</td><td>.2290</td><td>.1177</td><td>.1362</td><td>.0818</td><td>.1398</td><td><b>.0760</b></td><td><b>.0078</b></td></tr>
<tr><td></td><td>(.0031)</td><td>(.0016)</td><td>(.0019)</td><td>(.0017)</td><td>(.0034)</td><td>(.0031)</td><td>(.0006)</td></tr>
<tr><td>Third-Gen</td><td>.2092</td><td>.1175</td><td>.1425</td><td>.0893</td><td>.1660</td><td><b>.1036</b></td><td><b>.0159</b></td></tr>
<tr><td></td><td>(.0034)</td><td>(.0015)</td><td>(.0016)</td><td>(.0015)</td><td>(.0034)</td><td>(.0036)</td><td>(.0010)</td></tr>
</tbody></table>
<div style="text-align: center;">
Table 3</div>
<br />
I have to admit I had to do a few double-takes (multi-takes?) at these results. The unpartitioned margins show incontrovertible marginal effects of immigrant status on party affiliation, but when we look closer, the picture isn't quite so simple.<br />
<br />
I suppose it would help if I explained how to read this table. The marginal effect of immigrant status is presented without parentheses, the (robust) standard error is presented with parentheses. So to get the 95% confidence interval for the actual marginal effect (holding <i>nothing</i> else constant) of being native-born on identifying as "Strong Democrat", add and subtract 0.0020 to 0.2037, meaning that the actual marginal effect of being native-born on party identification is between 0.2017 and 0.2057. Now, there are rigorous statistical methods to tell us whether or not the contents of one cell are <i>actually</i> different from that of another. I could do a big ol' hypothesis-testing pairwise comparison of native-born to the other categories in each column, but this is an in-depth blog post, not a superficial journal article draft, so I'll spare you (and myself) the tedium. Instead, let's just eyeball what we've got and see what jumps out.<br />
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And what jumps out is decidedly on the right. Margins for second-generation immigrants on all of the Republican cells are considerably weaker against native-born than both first- and third-generation respondents. It's almost as if first-generation immigrants have similar political party preferences as the native-born population, but then their kids jump ship for hard-left Democratic Party affiliation and then their grandkids mosey back over to the status quo. Not to wax prophetic, but I do wonder if this helps establish a pattern we might see later on.<br />
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<b><u>How Does Immigrant Status Interact with Political Views to Predict Party Affiliation?</u></b></div>
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Let's now look at carefully folding political ideology into this here cake batter. The skeleton form of the ordered probit that will let us look at our margins is like so:</div>
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<span style="font-family: Courier New, Courier, monospace;">oprobit partyid [i.imm|i.sg|i.tgo] i.polviews [loginc female age age2 i.race i.finalter i.joblose i.year] if partyid!=8 [sg!=1&tgo!=1|imm!=1&tgo!=1|imm!=1&sg!=1], vce(robust)</span></div>
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The year fixed effects make these output tables, well, let's call them unwieldy. They also contains not much in the way of useful information. Probit and logit coefficients can't be interpreted the same way as OLS coefficients. Margins <i>can </i>though, more or less. That's what I'll share, <i>almost </i>the same as I did above. For these regressions, there's a lot more information, so I'll show you the same things... <i>in graph form</i>! Note also how I changed POLVIEWS to an indicator variable. You must do this to get all the interaction effects you're looking for. </div>
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Let's first do the uncontrolled regressions, shall we? Here's an example of the model:<br />
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<span style="font-family: Courier New, Courier, monospace;">oprobit partyid i.sg i.polviews if partyid!=8 & sg!=1&tgo!=1, vce(robust)</span><br />
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And an example of the margins command:<br />
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<span style="font-family: Courier New, Courier, monospace;">margins r.polviews@imm, contrast(nowald) predict(outcome(1))</span><br />
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And here's how I built the graph:<br />
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<span style="font-family: Courier New, Courier, monospace;">marginsplot, name(sg1uc) nolab title("Adj. Predictions of Pol. Views on Party with 95% C.I.") ytitle ("Pr(Str. D)") xtitle("{&larr} More Liberal More Conservative {&rarr}") legend(order(1 "Native-Born" 2 "First-Gen"))</span><br />
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Note the oddity in the "legend" option. It's different from what you might be used to in a twoway graph. If you've little experience with marginsplot, it's a good little bit of trivia you might want to sock away for future use. Also note that it'll take your computer a while to crank through all 21 of these suckers, so <i>caveat </i>um... <i>computor</i>. Another little tidbit I found is the {&larr|&rarr} commands. Those will give you left arrows and right arrows, respectively. You can find a complete list of symbolic characters at http://www.stata.com/bookstore/pdf/g_text.pdf.<br />
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So here are the seven trios of graphs. What you're looking at within each trio is from left to right, top to bottom are the margins profiles for, in order, native-born vs. first-gen; native-born vs. second-gen; and native-born vs. third-gen. The x-axis is your standard liberal-to-conservative spectrum, the y-axis is the partial probability of identifying with the selected party. Just like in Table 3, the party identification runs from Strong Democrat through Independent to Strong Republican. It might still be a wee bit confusing so I'll comment along the way. Here we go!<br />
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Fig. 1: Immigrant Margins on "Strong Democrat" (Uncontrolled)</div>
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Right off the bat, we have the response curve we expect. Generally speaking, the folks we expect to see identifying as "Strong Democrat" are also folks who tend to identify as more liberal. But take a peek at the second-generation graph in the top right. Across the belief spectrum, second-generation immigrants are more likely than native-born folks to identify as the bluest of blue. Then in the bottom graph, the third-gen folks are right back to looking no different than native-born. Sound familiar?</div>
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<span style="text-align: center;">Fig. 2: Immigrant Margins on "Not Strong Democrat" (Uncontrolled)</span></div>
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<span style="text-align: center;">Basically the same story. Second-gen immigrants are drawn to the Democratic Party in disproportionate numbers relative to native-born folks. Third-gen folks have assimilated.</span></div>
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Fig. 3: Immigrant Margins on "Independent Near Democrat" (Uncontrolled)</div>
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<span style="text-align: center;">Ditto, but look at how the story is a hair different. Now we have second-gen folks who consider themselves <i>conservative </i>actively embracing identification as blue Independent. The effect is absent for liberal-leaning respondents. How very curious.</span></div>
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Fig. 4: Immigrant Margins on "Independent" (Uncontrolled)</div>
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<span style="text-align: center;">The effects we saw in the last graph are moderated here just a little bit. Conservative-leaning second-gen folks are still disproportionately identifying as Independent. Let's see if we round the corner on the next graph...</span></div>
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Fig. 5: Immigrant Margins on "Independent Near Republican" (Uncontrolled)</div>
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<span style="text-align: center;">Here we go. Second gen folks look similar to native-born folks when it comes to leaning over the right side of the fence. Very interesting. Let's step a little further into Republican territory (if we dare).</span></div>
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Fig. 6: Immigrant Margins on "Not Strong Republican" (Uncontrolled)</div>
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Well, this is the mirror of what we saw earlier. Native-born conservative Americans identify Republican. Second-generation conservative Americans don't. Hm. I can't <i>imagine</i> why.</div>
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Fig. 7: Immigrant Margins on "Strong Republican" (Uncontrolled)</div>
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Ditto. It's almost as if, now hold on a minute here... it's almost as if there's something about the Republican Party that alienates second-generation immigrants. How interesting. </div>
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Now it could be that there are other explanations besides the xenophobia associated with the political kayfabe tied to the (R) brand. maybe there are some personal characteristics of respondents that can explain the gulf. With that in mind, let's add in some control variables and see what falls out. Here's a modified regression specification:</div>
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<span style="font-family: Courier New, Courier, monospace;">oprobit partyid i.tgo i.polviews loginc female age age2 i.race i.finalter i.joblose i.year if partyid!=8 & imm!=1&sg!=1, vce(robust)</span></div>
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Now, I could pretty easily do the margins on each of these indicator variables, and I will in the real-deal, proper journal-worthy investigation, but it's gilding the lily here. Let's just stick with what should be the biggest predictor of party affiliation: ideology. Let's get right to it then, shall we?<br />
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Fig. 8: Immigrant Margins on "Strong Democrat" (Controlled)</div>
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Well this is a little bit different. We see the same basic margins curves as in Fig. 1, but without the second-generation divergence. Interesting.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMJtSvvrZ7rEOfUD60mnnP9x7aTr_e6BLaptt2BjFZmJevoCHcIeW-fQGSxVSpuSeJMy88f-cVryS0fpzAvfo6dhFRGzONmp8SP6miY0gWM32PVnfu9yCT_NrJJwF86GWY5sSAYwXp69E/s1600/Controlled2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMJtSvvrZ7rEOfUD60mnnP9x7aTr_e6BLaptt2BjFZmJevoCHcIeW-fQGSxVSpuSeJMy88f-cVryS0fpzAvfo6dhFRGzONmp8SP6miY0gWM32PVnfu9yCT_NrJJwF86GWY5sSAYwXp69E/s1600/Controlled2.jpg" /></a></div>
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Fig. 9: Immigrant Margins on "Not Strong Democrat" (Controlled)</div>
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Okay, take a deep breath. Both second <i>and</i> third generation respondents more likely to identify as "Not Strong Democrat" after controlling for stuff like income, age, race, change in financial status, job loss and <b>survey year fixed effects</b>? Good gravy. Could it be that ideology was perhaps masking some other effects in the uncontrolled regressions?<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCkE_-OiKwxvmsdEwKBLwe6iiIaS_q-_-riqci7x3W-sMTjkXyHsMMLkdxPldSgcXzbQzwkL96y1JCboEaKnh_Fpj4kf2OzHmAm1nPXiSwSCmneWiJoYQiECBJPjvIGfyTV6jbw8IO-k4/s1600/Controlled3.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCkE_-OiKwxvmsdEwKBLwe6iiIaS_q-_-riqci7x3W-sMTjkXyHsMMLkdxPldSgcXzbQzwkL96y1JCboEaKnh_Fpj4kf2OzHmAm1nPXiSwSCmneWiJoYQiECBJPjvIGfyTV6jbw8IO-k4/s1600/Controlled3.jpg" /></a></div>
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Fig. 10: Immigrant Margins on "Independent Near Democrat" (Controlled)</div>
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Again, we see some flight from the extreme party affiliation we saw in the last graph. More conservative-identifying second- and third-gen respondents have a marginally higher propensity to identify in the Independent range.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm2wX0eZhAXt6rPMaLny792pepIqrxuStcNfHCwM3wkFF-0n1mQpkgC_Yv9V_JoKCD1q5FwjdVFzvVs1F5HrDaEEyOmC9WqjCivfqLm-kpyErftvv9BI468wGVgj__pyEa0fQ-8Ruj_Fs/s1600/Controlled4.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm2wX0eZhAXt6rPMaLny792pepIqrxuStcNfHCwM3wkFF-0n1mQpkgC_Yv9V_JoKCD1q5FwjdVFzvVs1F5HrDaEEyOmC9WqjCivfqLm-kpyErftvv9BI468wGVgj__pyEa0fQ-8Ruj_Fs/s1600/Controlled4.jpg" /></a></div>
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Fig 11: Immigrant Margins on "Independent" (Controlled)</div>
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Ditto, with the effects concentrated again on the conservative side.<br />
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Fig 12: Immigrant Margins on "Independent Near Republican" (Controlled)</div>
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So far, we've been seeing 2/3G immigrants piling up on the Independent pile. Could this be the crossover category?<br />
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Fig 13: Immigrant Margins on "Not Strong Republican" (Controlled)</div>
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Yes it could. We now see immigrants' children and grandchildren shying away from the Republican Party after controlling for a few demographic and economic variables.<br />
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Fig 14: Immigrant Margins on "Strong Republican" (Controlled)</div>
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And the same holds true for strong identification with the Republican Party. Immigrants just ain't having any of that nonsense.<br />
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So there is some difference with party identification, and by the time we get to the third gen folks, the main explanatory variable, political ideology has its roots in other causes. What those might be deserves further investigation, but the naive generational convergence suggests to me that the story is a heck of a lot richer than what you usually hear, which is something like, "if we let a bunch of immigrants in, they'll come here and vote themselves a welfare state." Since it seems, if anything, immigrants are more likely to side with Independents, this claim now has at least a little more empirical shade over it.<br />
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I'll continue this investigation in the future. Stay tuned.<br />
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Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-62874654793029034602012-08-01T09:35:00.000-04:002012-08-01T09:37:53.907-04:00Supply et DemandRecently, there was a mongo power outage in India. 350 million+ people were sans electricity in a country not especially well known for having an especially reliable grid even under the best conditions. While this may not be a tragedy comparable to the Haiti quake or the Japanese tsunami, wholesale power loss threatens hospital patients and can compromise secure nuclear locations if recovery is sufficiently delayed.
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Analysts blame the power losses on a lackluster monsoon season: farmers were running well pumps longer and harder than usual and there was insufficient river flow to crank the hydroelectric plants. That's interesting, but the reporting on it this morning on NPR was cringeworthy. Either the host or the guest (I have a short commute, so I wasn't listening long enough to nail down reliable identification) described it as a "problem with supply and demand; demand increased and the supply wasn't there."
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That's actually paraphrased, so the quotes are inappropriate. Please accept my lazy editing for the purposes of making a broader point.
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And that broader point is simply this: in economics, the terms "supply" and "demand" are elements of a story about prices and quantity. The problem with Indian power distribution isn't one of a spike in demand and a lag in a supply response, it's one of interference with price signals, unimpressive property rights, and more than all else, an insatiable leviathan who feeds on the entrepreneurial spirit. Starting even an ordinary retail business is tough enough in India. Improving the power generation and distribution network is next to impossible. Describing this as some kind of technical failure or blaming it solely on the weather is intellectually dishonest.
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I understand the appeal of looking just at proximate causes and assigning blame. It's easy and it's a decent way to grind an ideological axe if that's your thing. It's poor reasoning though. You probably don't have to go back to the first protozoa crawling out of the primordial soup, but you can at least point to significant contributing factors, especially when they've got far-reaching consequences. In this case, the Indian regulatory apparatus is a tight throttle on the prosperity of the Indian people. Why not report on that?Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-51238149400937522272012-03-03T12:15:00.002-05:002012-03-03T12:20:39.043-05:00In Quaerere ParentumIf Buchanan is right about <a href="http://www.esi2.us.es/~mbilbao/pdffiles/buchanan.pdf">parentalism</a>, the implication for welfare reform is that social control will shift to non-pecuniary margins. The sort of warping of choice sets under these conditions could exacerbate sorting effects. <div><br /></div><div>A negative income tax could imply social fractionalization the likes of which even Paul Atredies himself can scarcely imagine. Could the United States balkanize? Yes--this is my new most shocking prediction. </div>Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-87908516254401188712012-02-15T22:37:00.000-05:002012-02-15T22:37:09.506-05:00Euvoluntary Exchange: Heirs Eat Oats and Does Eat Oats<a href="http://euvoluntaryexchange.blogspot.com/2012/02/professor-of-economics-and-political.html#links">Euvoluntary Exchange: Heirs Eat Oats and Does Eat Oats</a><div><br /></div><div>I like mocking the rich. If I could, I would punch them in their smug faces.</div><div><br /></div><div>But I'd never condone taking their stuff. Mild assault (especially considering my weak, birdlike wrists) isn't remotely as awful as theft or taxation.</div>Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-82012581077838808332012-02-15T22:01:00.000-05:002012-02-15T22:07:28.795-05:00Get the lead outYou know what they say: the trouble with lead in your gas is the... um, well, there's no saying about that, but there is plenty of research to suggest that a drop in environmental lead may be a causative factor in declining violent crime rates.<div><br /></div><div>Holy smokes! What if this is related to the Flynn Effect? Curious.</div><div><br /></div><div>I am working on some slow-moving research pinning atmospheric lead to AFQT scores, with the hook that the National Guard may act as a sort of third option for intellectual eccentricity. </div><div><br /></div><div>Need the data still. I asked someone who has already done some leg work, but I've not heard back. I think I may have to do my own FOIA request from the, well, I forget the acronym, but it's the good folks who monitor air quality on behalf of Congress.</div>Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-48265533453420514352009-11-16T15:56:00.000-05:002009-11-16T17:29:37.325-05:00A Dreddful AppetiteThose of us who have at one time or another, sheepishly or otherwise, have cracked open a D&D book know of the character alignment system. Two dimensions are plotted: a good vs evil dimension and a law vs chaos dimension. Neither dimension is especially well defined, not at least to my satisfaction. Ostensibly, a lawful good character will obey the law and serve his fellow man, but what happens if you find yourself living in a land ruled by a tyrant whose idea of law is to imprison dissidents and, I dunno, raise an army of ghouls to wage war on his neighbors? The same dude who might have been all law-abiding and junk in his home country is now at odds with the law, and becomes chaotic good. The Platonist in me tells me that this arrangement is smellier than a haversack that's been sitting under Smaug's dorsal vent for well nigh on a month. <div><br /></div><div>I like to think of law as arising as that set (bundle if you will) of rights and protections that best serve the community from which they arise. A corrupt dictator no sooner makes law than a Vogon makes fine poetry (pardon the liquid universe borders). His decrees are arbitrary and serve only him. Obedience to spurious legislation is not necessarily lawful, and so say the Civil Rights Movement. However, just as the cleric of Tymora in Thay, so Martin Luther King in Alabama. The good Reverend was following natural law, divine law if you will, in that he righteously opposed the unjust rule of man. This was an inherently lawful act, even if it was illegal. MLK was LG. </div><div><br /></div><div>Chaotic Good is arbitrary do-goodiness. You find this sort engaged in humanistic radicalism and optimistic social engineering. It's chaotic for the very reason that it's untested, whimsical social engineering. Anti-goblin discrimination legislation might be fine and dandy for homo-gobloid relations in the marble chambers of Waterdeep, but without the Hayekian emergent order, history has shown again and again how nature points out the folly of men.</div><div><br /></div><div>Godzilla.</div><div><br /></div><div>On the evil side, LE is tough to categorize. Traditionally, and according to Bryan Caplan's comment on my facebook page, LE types cherish obeying the letter of the law, especially if it means getting to smash a few faces in. These are the guys responsible for holocausts, purges, and the worst sort of organized violence that the imagination has to offer. Okay, I can buy that, but on the condition that "lawful" in this sense means "predictable", as if the cruelty and violence runs consonant with the emergent order of that particular society. In a world populated by multiple sentient races, it's utterly conceivable that one race will be completely inimical to another. Indeed, one can well imagine orcish bedtime stories where mama snoutface tells her wee little porker to go to sleep or the vicious dwarves will come and eat him in his sleep. Evil is relative, see? It then becomes a matter of identifying predictable vs unpredictable behavior. If I'm in a country with a known predilection for slaughtering those of my particular race, I can consider the inhabitants of that land to be lawful, so long as that sort of behavior results in some sort of evolutionary advantage for that race. Elves (some of them anyway) can be considered lawful in this sense because they rarely skip an opportunity to dispatch members of the so-called evil races without so much as a how-do-you-do.</div><div><br /></div><div>I still haven't made up my mind about the conditionality of goodness. The right kind of political assassination can be considered a good act, though again, the view changes whether you're near or far, and an outsider or an insider. </div><div><br /></div><div>Maybe there are other dimensions along which we could expand the character alignment space. Perhaps we could have attributes that illustrate political beliefs as well as beliefs about the size and scope of government, or about interracial tolerance. </div><div><br /></div><div>Then again, it's just a game. I'm almost positive I'm fretting over nothing.</div>Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-65002621270729533602009-10-29T13:10:00.000-04:002009-10-29T13:35:35.451-04:00eXXXecutive payThere's an old logical fallacy. It lives in a grubby tin hut in the middle of an Alabama swamp, tends bar on weekends, draws disability insurance, and chews homegrown tobacco. The name of this bucktoothed error in reasoning is Slippery Slope. Slippery Slope finished a year and a half of vocational school before retiring to the middle of the Alabama swamp to herd alligators and brew potent corn moonshine. Slippery Slope, bumpkin though he may be, nevertheless makes frequent stops all o'er this great wide world of ours, his shoeless, unwashed shanks parading through the halls of parliament as often as he is splashed across the opinion page of your local paper.<div><br /></div><div>Slippery Slope tells us about giving an inch, then watching as they take a mile. Slippery Slope warns of razor-edge equilibria. He tells us that if we allow homosexuals to marry, the next thing you know, crazed citizens will be flocking to the courthouse, demanding nuptuals with barbecues, sheep, and vinyl hoop skirts (perhaps all three, and at once). Slippery Slope wants us to think that there is a think red line dividing Civilization from Chaos. You know what's funny? Sometimes, even though he's often dead wrong, Slippery Slope is, and this is just once in a while here folks, 100% correct.</div><div><br /></div><div>Other times he's just a little right. I tend to think he's a little right in the case of offering authority figures additional authority. When it is in the power of people to usurp more power, we've often seen over the course of history that they do just that.</div><div><br /></div><div>So it is to the dismay of at least a few economists and both big and little-L libertarians that Government has elected themselves the authority to cap pay. Yes, it's only for seven companies (for now), and only for firms that have accepted relief money, and one might even make an argument that it could pass a Constitutionality test (and with this SCOTUS, they might be right). Still, the clear fact remains that this farce (and it is a farce, as it's a hell of a lot like calling the fire brigade after the embers have cooled) could very easily spread.</div><div><br /></div><div>I won't belabor the good observations already made, or even the predictions cast by those far smarter than me (see Alex Tabarrok's posts on MarginalRevolution.com). I'll just mention that in the event that executive compensation limitations do spread, as well they might (I'll give it a 2% chance), you can probably expect Wall Street to pull up stakes and move to the Grand Caymans. If automobile manufacturing can move Detroit to Seoul, you can be sure that investment banking can move Manhattan to George Town. </div><div><br /></div><div>And then what? Barriers to foreign investment? Could be. Another 2% chance. The US could be a banana republic in the twinkling of an eye. </div><div><br /></div><div>Boy, I sure hope ol' Slippery Slope is talking out his butt again, all drunk on his corn moonshine. The possibilities are terrifying if he isn't.</div>Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-30854207707275899282009-10-27T08:42:00.000-04:002009-10-27T12:16:01.785-04:00The Economics of VulgarityClaims that modern society is somehow more vulgar or coarse than our whitewashed memory of yore strike a chord with the thumb-twiddling conservative lurking somewhere around our left ventricle. Notions of equity with respect to ethnicity, faith, gender, sexuality or disability join a growing herd of sacred cows whose names we dare not utter lest we attract the scorn of the high-collared progressive checking his e-mail in our right atrium. This combination of historical myopia and a propensity to meddle, cross, and censure make for easy tirades against the slack moral fiber of society, often culminating in the all-too-frequent Sticking of Noses into the Business of Other People.<br /><br />Indeed, we have substantial industries and endeavors devoted to the marginal refinement of our frumpy Civilization. Apart from assigning frequencies to operators, no small portion of the job of the FCC is to monitor the content of public (ha!*) broadcasts. Corporations hire sensitivity consultants to tell low-level executives not to pinch secretaries' butts. Concerned Mothers band together to oppose pornography, junior high school kids band together to oppose swearing, nonsmokers (probably many of them ex-smokers, like me) band together to oppose tobacco in public; banding together to oppose peeves is as common as it is noisome. The preceding list, as I'm sure you well know, is far from comprehensive.<br /><br />*I chortle because radios and televisions are hardly public goods<br /><br />So we have at least two possibilities: either society really has taken a significant turn for the worse and it needs to be corrected, or meddling meddlers like to meddle. Since I was born into the sordid debauchery of the 1970s, I can’t really vouch for the accuracy of claims of heightened moral turpitude (of course, it could always be a level effect, and not a growth effect), but there’s no shortage of evidence that folks have been wailing about the corruption of virtue since antiquity. After all, what were Luther’s theses if not a condemnation of vice? What indeed was the point of the Ten Commandments if not an indictment of the behavior of the Israelites? So, perhaps society has become more vulgar, perhaps not. While I find myself inclined to believe the latter, the more interesting investigation is in finding what factors lead to either refinement or vulgarity.<br /><br />I submit to you that civility is the astroglide of social intercourse. Being nice is uncomfortable, but it is a discomfort we gladly bear when we expect reciprocation. Sure, putting it on is kind of gross, but imagine how much more unpleasant things would be in its absence.<br /><br />So, as with other things, we adopt civility so long as the marginal benefit of it exceeds the marginal cost. In the event that being rude becomes relatively less expensive, we will naturally be more inclined to consume more of it. Heck, if you like, you can think of partisan politics as an example of the relative price of civility. Anonymity reduces the cost of rudeness, as it becomes less likely to be on the receiving end of unlubricated social contact.<br /><br />Of course, all of this is on the margins. Plenty of people will be unfailingly nice to strangers no matter the circumstances. I call those people bozos because what are they going to do about it? Offer me a cup of tea and a biscuit?Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com1tag:blogger.com,1999:blog-7120698411132485795.post-40758258848214060742009-10-24T03:01:00.000-04:002009-10-24T03:18:43.947-04:00Glove SlapDuels are consensual acts of violence. Why prohibit them?<br /><br /><span style="font-style:italic;">Ex ante</span>, both parties expect to be better off having dueled. Only <span style="font-style:italic;">ex post</span> do we identify a clear loser. Is the same logic regulating payday loans and lemon sales that which bans honorable single combat?<br /><br />Aaron Burr. What a character.Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-46062509361192825662009-10-22T15:10:00.000-04:002009-10-22T15:25:55.687-04:00Tubes, Rubes, and BoobsQuestion: why aren't jobs advertised on the television?<br /><br />Answer: I don't know. The history of the television and its regulatory environment ensure that early in its history, the near-monopoly of the major broadcasters all but homogenized television viewing, perhaps a bit similar to some aspects of radio. This may have made it impractical and expensive to put help wanted ads up on the idiot box. Plus, TV is a recreational device, and who wants to think about being productive when it's time to relax? There seems like there might be both supply and demand side reasons for this seemingly odd phenomenon. You'd think that at least someone would have tried it. Or is it a volume issue? TV reaches a lot of eyeballs, and at a very low relative cost. One might inundate the HR department with applications, and possibly poor applications. Is this a signaling issue? What signal would it send to put out help wanted ads on the TV? What signals are embedded in the relative difficulty in obtaining information about potential jobs? Is there a status argument in there?<br /><br />I need to ask someone about this. Professors Hanson or Cowen might be good resources.Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-49386159404425687812009-10-17T12:03:00.000-04:002009-10-17T15:02:59.043-04:00An Energetic ConcernHow good are prices? How efficient? Prices exist as a universal shorthand that allow people to communicate across time, across space, and across insurmountable language barriers. Prices distill relevant information into one single signal that everyone understands without having to learn troublesome conjugation or weird syntax. Prices hit us right where we care, with all the force of a swift kick to the groin. But are they really as useful or as efficient as we might like to imagine. There's no good way for the average person to untangle the galaxy of individual effects on any given list price, just as there's no good way to trace the whole, complete, and unmolested chain of production leading to any given final product (don't believe me? Try to think of the entire set of inputs that go into making, say, a comfortable pair of shoes. Be thorough; incomplete answers will be marked down). <div><br /></div><div>So how can anyone tell when and where price distortions arise? Sometimes, the answer is clear enough that there isn't much room for debate. It's pretty well clear both analytically and empirically that something like direct price controls for gasoline create artificial shortages, but when interference is milder, more diffuse, or further up the supply chain, tracing the thread of causality becomes vastly more challenging. Take the CPSC for example. The Consumer Products Safety Commission creates regulation for a really quite impressive array of consumer goods. Indeed, I never really understood how many until I just checked, just now. If you're interested in the legislation, here's the most recent version of the Consumer Products Safety Act: <a href="http://www.cpsc.gov/businfo/cpsa.pdf">http://www.cpsc.gov/businfo/cpsa.pdf</a>. This agency is charged with keeping potentially harmful products out of the hands of individuals who, due to ignorance, inattention, or carelessness, are unable or unwilling to discover the hazards of products on their own. Similarly, this commission exists to help provide a buffer between consumers and producers, the latter or whom may have an incentive to hide or otherwise obscure the hidden costs of their products, including but not limited to health risks from dangerous chemicals, choking hazards, injury risks, or radiation poisoning. </div><div><br /></div><div>Let's pick one product at random. My random product generator (scrolling down blindly) lands on isobutane, ostensibly used as cigarette lighter fuel. This chemical is regulated under the Federal Hazardous Substances Act, which gives labeling and banning authority to the CPSC (and probably other agencies too, for all I know; I'd imagine OSHA relies on this legislation as well). Anyway, here's the relevant passage from the Code of Federal Regulations:</div><div><blockquote>(29) Cigarette lighters containing butane and/or isobutane fuel are<br />exempt from the labeling requirements of section 2(p)(1) of the act<br />(repeated in Sec. 1500.3(b)(14)(i)) insofar as such requirements would<br />otherwise be necessary because the fuel therein is extremely flammable<br />and under pressure, provided that:<br /> (i) The lighters contain not more than 12 grams of fuel at the time<br />of sale; and<br /> (ii) The fuel reservoir is designed to withstand a pressure of at<br />least 1\1/2\ times the maximum pressure which will be developed in the<br />container at 120 [deg]F.</blockquote>Now, for a large, well-diversified lighter company, like, say, Bic, the cost of compliance per unit is pretty low. Sure, the QA division might have a few more rules to remember, but overall, it's not too tough to ensure that there aren't more than 12 grams of fuel are in the lighter and that the fuel reservoir is strong enough to contain the pressure of warmed fuel. Indeed, this seems like kind of a fluff regulation, hard to object to. Nobody wants lighters blowing up in their faces when they're about to take the small stroll to Flavor Country, right? </div><div><br /></div><div>Right. Especially not Bic. It isn't really in their interest to have their customers maimed when using their product, so how could it be at all possible that they might develop a pocket-sized time bomb ready to detonate under a hapless smoker's schnozz at the drop of a hat? Well, to answer my own smug question, if it's possible, it's unlikely, at least as long as the costs of developing better quality control standards are outweighed by the <i>ex ante</i> expected costs of litigation. So what does this have to do with price distortions? Bic would probably comply anyway, so what's the fuss?</div><div><br /></div><div>Well, the fuss is about off-brands. Large firms can eat the costs of regulation and come back for seconds. As I pointed out, the cost of compliance per unit sold is insignificant so long as you have a whole bunch of units sold. Bic has a whole bunch of units sold. </div><div><br /></div><div>Okay, this is kind of a sidebar note, but at this point in the blog post, I'm compelled to go look up the annual report for Bic, and it turns out the SEC doesn't have a filing more recent than 1995. The company's own website lists the most recent annual report as 2005, and more interestingly, it looks like Bic moved to Europe a while back. I had no idea about this. How amazing.</div><div><br /></div><div>Anyway, 1st Half 2004 earnings for Bic were 683 billion euros. EBIT were 90 billion euros. EPS ratio was 1.04, and they did a stock buyback. Pretty strong for 2004, particularly considering some of their more interesting expansions, including an increased presence in the kayak sector. </div><div><br /></div><div>Kayaks, huh? How about that.</div><div><br /></div><div>So, Bic shouldn't have much trouble keeping up with isobutane regulation. In fact, I daresay they support such regulation wholeheartedly. After all, they've always put a premium on safety and even if one of their cherished customers decides to make the decision to switch to another brand, Bic is almost certainly dedicated to their safety (this is not, as far as I've been able to find, Bic's official position, but if Bic decided to take the contrapositive stance, it would assuredly raise eyebrows). Bic can easily make a humanitarian case for supporting regulation, the same way concerned citizens and legislators can. </div><div><br /></div><div>Now, it may be that Bic honestly and truly believes that they are helping to make the world a better place, and it's just coincidence that their weaker competition is unable to meet the testing requirements to ensure that fuel reservoirs for isobutane lighters are sufficiently rugged to meet standards, but Bic benefits nonetheless through regulatory protection. Bic can charge monopolistic prices (or, at least, prices closer to those a monopolist might charge) on this variety of lighter by letting the sickle of government harvest the weak, nascent firms who might have otherwise been able to compete on an unregulated field. <i>Voila</i>, distorted prices from well-intentioned, otherwise sensible regulation. Meanwhile, consumers pay double for this, both in the higher prices paid for the lighters and in government expenditures needed to provide monitoring and enforcement of the isobutane regulation (see how charitable I am? I'm not even mentioning deadweight bureaucratic waste). </div><div><br /></div><div>I don't want it to seem like I'm picking on Bic specifically (though the CPSC regulates both ink cartridges and razors as well), since my selection of isobutane really was random. Because of this, it should be clear that regulation favors incumbents, and we (by we, I mean frazzled, shocked first year economics PhD. students) should refrain from thinking that prices contain the sort of utility-maximizing, cost-reducing calculus we embrace in the classroom. Hell, I didn't even talk about the demand side of inefficient prices, so maybe I'll get to that in another post. I wanted to spend the remainder of our time together talking about James Buchanan's 90th birthday party.</div><div><br /></div><div>James Buchanan turned 90 last Wednesday, or at least had his party for his 90th birthday last Wednesday. Both Dan Houser, the new department chair and Don Boudreaux, the former department chair, made some stirring remarks. Don's can be found <a href="http://economics.gmu.edu/news/Buchanans90thRemarks.htm">here</a>. After Don spoke, the wizened Dr. Buchanan made some rather... I think compelling is the right word here... yes, compelling remarks. Well, compelling in the sense that they generated a small flurry of discussion about just what he meant and what the implications might be. The first comment that caught my attention was the the 2007- crisis was sparked by a constitutional failure. At least, I heard it as a small "c" constitutional. I think others heard it as a big "C" Constitutional failure, especially once he started talking about one of the enumerated powers of Congress: to coin money. The way I heard "constitutional" was in the medical sense, that the body of law (I use the word law to represent something other than legislation, as I normally do) had become sick though repeated insults to its character and integrity. In this sense, I think the cherished old man had it right. The body in this case is not just the perverse regulatory environment that rewards vasty financial enterprises, but the odd set of incentives in place for lenders, as well as the thinned green blood pumping around the shambling beast (if that metaphor is too abstruse, I mean the tidal increase in the money supply). Various promises abounded from this quarter and that, not the least of which was the implicit guarantee of good ol' Unk Sam, coal shovel in hand, ready to stoke the furnaces of crony capitalism every time the engine threatened to falter. Oof. Now I'm really starting to mix my metaphors. I better quit while the quittin's good. I think you get the picture anyway. There was no one specific failure you can point to. The elephant in the room is that there's a fucking elephant in the room, not a snake or a trash can or a rope or whate'er. As far as the mahout astride the beast, he wears many faces, but one hat: interference. I'd like to say that it's misguided interference, but in the case of central planning, <i>all</i> interference is misguided interference. That is to say, there is no pure signal, free from interference, that can possibly tell any central authority how best to direct resources other than the wisdom of a well-ordered crowd.</div><div><br /></div><div>Anyway, that's my inner Austrian grumbling. I better feed him or he'll be liable to pillage a coastal fishing village. Dr. Buchanan's other controversial comment was that if money is a natural monopoly, then it makes sense to auction off its production to the highest bidder. That was, rents will be captured by the public. Well, the conclusion makes sense, but it seemed like the audience had a hard time swallowing the premises. The audience, including me. My friend Garrett even asked how, under this system, exchange rates would be managed (a sensible question for which he received no answer), but the next question appeared to be the one on the tips of almost everyone else's tongue: under what circumstances could money be considered a natural monopoly? I still find myself puzzling over this one. With purely fiat money, the case for a single issuer might be slightly stronger for a monopolist, but not by much. Under any commodity standard, especially one with a 100% reserve requirement (which I still don't support, no matter the arguments I hear), it shouldn't matter one fig, jot, or tittle whence the script. You could have competing currencies even within a town of 1,000 citizens. As far as a fractional reserve system with fiat money, a private, independent currency rating firm would mop up the slobbery mess of uncertainty. I have a hard time imagining a case for a monopoly in money apart from perhaps interbank exchange rates, but again, this is a problem supremely easy to overcome, especially with today's communication efficiencies. </div><div><br /></div><div>At any rate, he did mention the big-C Constitution, as I noted earlier, with respect to Congress' charge to utter currency. I'd like to hear what he would have had to say about a competing world currency, and idea I suspect might have some merit. Well, that and I would have like him to sign my copy of <span class="Apple-style-span" style="text-decoration: underline;">Cost and Choice</span>, but he was being so thronged by faculty (understandable) that I would have needed a forklift to get anywhere near him.</div><div><br /></div><div>Anyway, happy birthday sir. Here's to hoping for another decade of your uncommon wisdom.</div>Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-38947363811981916922009-08-31T15:38:00.000-04:002009-08-31T15:50:34.659-04:00GULAGWhy was (is) the Gulag such a feared place? Why does the casual mention of Siberia transmit bone-chilling horror to people thousands of miles away, comfortably insulated by double-glazing, hot chocolate, and lazy Retrievers napping by the hearth?<br /><br />To be sure, the spectre of Dr. Zhivago's icy transportation lingers in the memories of anyone who has sat through the whole film. Still, that depiction isn't of the desperation found in a true-red gulag. It was just some dude having a fling with a saucy bolshie wench in the countryside. A real gulag is indeed a horror on earth, and it's nothing to do with tundra.<br /><br />The horror of a gulag is in its lack of specialization and trade <em>in the context of the frozen North</em>. Indeed, if the Kremlin wanted to punish dissidents, it could have done so via banishment to any old place in Mother Russia and the effects would have been a difference in scale, but not in kind. As soon as you remove the ability of people to ply their trade, particularly if its a trade of the mind rather than of the hands, you doom them to ineffectuality, poverty, and misery. Cut off from the ability to trade, the flower of humanity withers on the grave of its stillborn sons and daughters. The harsh climate of Siberia was insult to injury, but the real injury was in making the expunged fend for themselves. That is indeed a terrifying fate, one that would spell a prolonged doom for the very large bulk of us. A doom likely punctuated by cannibalism, rape, murder and pottery, not always in that order.Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-27529156179026706512009-08-06T22:31:00.001-04:002009-08-06T22:38:28.957-04:00The Myth of the PendulumThere is no political pendulum, swinging back and forth between left and right. There is only the steady march, sometimes faster, sometimes slower to greater and greater state control. If there is ever a drive to increased self-determination, less central planning, and more government accountability, it is so easily marginalized or subverted as to be meaningless.<br /><br />It's a liberating time to believe in freedom. You can rant and rave at the top of your lungs, and you'll still end up being on the hook for other peoples' cars, prostate exams, investment strategies, and electricity.<br /><br />I can see the appeal of becoming a fringe whacko. It's not like I could hurt the cause of liberty more than it's already been injured.Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-59409088372035392202009-07-01T22:22:00.000-04:002009-07-02T00:13:00.600-04:00Mike Patton is the greatest vocalist of a generationSocial "scientists" spend much of their time explaining phenomena. Part, if not most of the challenge in this lies in addressing influences. Statisticians understand this quite well. Indeed, since many of the social "sciences" rely so heavily on statistics, you probably won't be able to find one social "scientist" (okay, I'm getting fed up with the quote marks; I think you get the point) in a million who won't blurt out, "correlation does not necessarily imply causation" with little to no prompting. Despite this, we are routinely treated to a near non-stop torrent of vacuous, feeble reasoning centered on either a false or a proximate cause. Why does this happen?<br /><br />Let me first explain what I mean by a proximate cause, then move on to some possible motivations for their use. A proximate cause stands apart from the root cause in that it is merely one link in a chain of events that leads to some outcome. For example, suppose a dog bites your toddler. Better yet, suppose an infected dog bites your toddler and he turns into a zombie. Proximate causes for the zombification of your child would include: a) failure of the owners to obey leash laws b) the natural disposition of zombies to consume raw flesh c) your decision to take the kids for a walk in the dog park following a zombie outbreak or d) your child had half a dozen severed toes in the back pocket of his Garanimals (or whatever the hell it is brats are wearing these days). However, each of these proximate causes has a root cause, as follows: a) the owners themselves were zombies, and less likely than the fully-living to conform to city ordinance b) the virus that causes zombification attacks the prefrontal cortex, resulting in unususal appetites c) you didn't know about the outbreak, and you wanted to take a nice stroll; after all, it's a nice day, and the dog park is close by and d) your kid has yet to break the habit of picking up stray debris he finds on the sidewalk. By digging a little deeper in each of these instances, we can fund a more fundamental cause of the situation. Note also that there may be more than one underlying cause. In the above example, we face a situation of multiple causality. This is actually quite common when we have multiple agents interacting. It is the job of the social scientist to untangle the web of events to find and expose the fundamental causes of stuff, to better provide reliable advice on how to avoid future zombie outbreaks.<br /><br />One proximate/fundamental cause issue that intro macro students often see (I know I did) was on the causes of inflation. I, like probably far too many students, was taught about cost-push and demand-pull inflation. If you haven't heard of this, don't worry. The former simply says that prices rise because the price of input goods rise and that these costs are passed along to consumers. The latter just says that if more people want a fixed amount of goods, they will bid up the price. We actually see this in action when plywood and bottled water prices shoot up during natural disasters. Still, these are both just simple mechanisms by which inflation manifests itself. The underlying cause of all inflation is more banknotes chasing the same number of products (or some variation on this theme).<br /><br />The issue so many economists seem to be squabbling over now is the 2008/2009 (and beyond?) financial crisis. Some folks are blaming private firms run amok, others blame a naughty Federal Reserve, yet others point to poorly designed legislation, or the development of arcane financial instruments, or badly executed deregulation... the list goes on and on. It's rather fascinating stuff, and it will certainly keep economists busy for some time to come. I just hope that the discussion doesn't get stuck on some inconsequential proximate cause, because that often spells disaster for corrective action.<br /><br />I, and folks who think like me, tend to believe that bad outcomes arise from the intersection between business and politics. To those on my team, we see favortism, rent-seeking, protectionism, and piles of moral hazard flowing out from under the crack of the door to the back room where deals between corporate officers and politicians are brokered. This is often what we see as the fundamental cause of no shortage of modern woes, from persistent poverty, to crime, to corporate plunder and beyond. Still, we do live in a representative democracy, and we tend to get something at least vaguely resembling what we vote for, so perhaps we've no one to blame but ourselves and each other. Perhaps there is a statistically significant chunk of us that thinks that banning Chinese imports is good, or that our children will be worse off than we are. If this is the case, then we free-market types (and I use the label very loosely) haven't yet identified the fundamental cause ourselves and we're just barking up the bad side of the wrong cedar.<br /><br />I'll save my thoughts on this line of reasoning for another post.<br /><br />The danger in resting on proximate causes, especially close ones (like saying the housing market collapsed because of greed) is that conclusions like these usually lead to solutions that end up being worse than the problems they were meant to solve. One of the primary doctrines in economics is the doctrine of unintended consequences, which basically states that no matter how well-intentioned a piece of legislation is, there are often unforseen results which may or may not please the people who wrote or the people who hope to benefit from the legislation. For example, CAFE standards encouraged people to buy Japanese automobiles, sugar quotas make Americans fat, and the minimum wage encourages chronic poverty. As long as we continue to incorrectly identify proximate causes as the target for legislation and regulation, we will exacerbate the problems of unintended consequences. Thoughtful, careful diagnosis is needed to figure out true fundamental causes. Only once this is done should be even begin discussing possible remedies. This, I believe, is a truism regardless of political bent or school of economic thought. Our first duty is to the truth. Our second duty is to stop the zombie infestation. Remember kids, aim for the head.Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com1tag:blogger.com,1999:blog-7120698411132485795.post-38722806363048679302009-06-26T13:17:00.000-04:002009-06-26T14:53:28.526-04:00Battle of the Century: stocks vs. flows"The rich get richer while the poor get poorer". The famous rallying cry for more equality used to impress me before I bothered to take the time to be more thoughtful about it. Usually, the above statement (which, by the by, to save you the suspense, is false) is accompanied by income statistics showing rising inequality of incomes over the course of the 20th Century. I could reproduce some of those graphs here, but criticisms of their methodology and conclusions have been handled by people a hell of a lot smarter and accomplished than me. No, the problem I have with looking at income statistics is that it misses the point completely. Inequality concerns should stem from income immobility, <em>wealth</em> differences, and the source of the inequality. I have a really hard time begrudging a wealthy business owner his billions. After all, he took the risks and provided the public with something they wanted, be it delicious cake, useful software, or the better living we enjoy through chemistry. I do however have a problem with wealth accumulated by force, usually these days under government sanction. I cannot condone theft, be it by a common thug in the street or by a sponsored thug in a boardroom, giggling over a no-bid defense contract. Also, if you don't think the former proliferates because of government sponsorship, ask yourself how much crime occurs because peddling drugs is the most attractive opportunity for a lot of young people. Then ask yourself if holding down a part time job below the government-mandated minimum wage might be a better use of their time. Then press the issue by wondering what might happen to streetcorner purchases of drugs if their sale were legal. No one buys corn furtively or shoots someone else for stealing their stash of sofa cushions.<br /><br />Enough preaching though. Rants against the minimum wage and drug laws are best left for another post (if at all, since all the good arguments have already been made, and made better by proper economists). No, I wanted to talk briefly about stocks and flows, and we can imagine this in several ways. If you're mathematically inclined (and I suspect you'll read this, mom, so this one's for you), you can think of a stock as the initial function, <em>f(x)</em> and a flow as its first derivative, <em>f'(x)</em>. Indeed, that's how economists usually think of it. Well, that's at least how I've often heard it described to me. For the rest of us, we can imagine a stock as a pond, and the flows as the streams leading in and out of the pond. Or perhaps the stock is a balloon, and the flows are the guy blowing it up, as well as the pinhole leaks deflating it. When we think of income and wealth, we see income as a flow and wealth as the stock. Well, we see income as an <em>inflow</em> to the stock of wealth, but we can easily imagine outflows as well: consumption expenditures, like ice cream and hookers (more of a service, really, but let's not pick nits); consumer durable expenditures, like cars and mailboxes; and investment goods, like houses and financial instruments.<br /><br />Now, any good economist should be hopping up and down, ready to put a big fat F with a circle around it across the end of my last paragraph. I know I would if I were grading this. Consumer durables and investments <em>do not</em> drain the wealth pond. Consumables do, of course, but your car is part of your wealth, as is that deck you built last summer and the new siding and the shed out back. Sure, these things depreciate, but they're more a conversion into an illiquid form of wealth than any sort of consumption. Yes, we get pleasure from seeing our beautiful home; we enjoy driving up to a manicured lawn, but these things increase our total wealth in a way that enjoying a snifter of VSOP brandy never could. So, the point is, it's a mistake to mistake cash for wealth. Hell, there's a good case to be made that friendship makes us wealthy. Indeed, I pretty clearly recall Bryan Caplan making just that very argument in the not-too-distant past. I thought it was a great point. Look at your friendships as stocks instead of flows, and you will be able to forgive minor slights much more easily. Do the same with your intimate relationships and your business relationships, and your family and you might very well find yourself making more rational decisions, as well as improving your forbearance and spiritual charity.<br /><br />Now, before I go getting all maudlin, I should move on to the reason I decided to write this post. I really wanted to address so-called government regulation. Like many other things we commonly mistake for flows, this one is, in fact, a stock. Every bureaucrat that makes up another little rule we have to follow adds to the already-impressive burden of compliance we face at work or elsewhere. Don't believe me? Look for an unabridged OSHA manual.<br /><br />I doubt many readers caught Veronique De Rugy's testimony on midnight regulation. The YouTube clip boasts a whopping 72 hits, three of which are mine. Yet, she makes an almost obscenely obvious point: as if the normal progression of increased regulatory agency burden isn't bad enough, lame duck administrations have even more incentive to pile on the bureaucracy, especially when it seems likely that power will shift to the other party. It's like opening the sluice gates into our little pond. It will certainly drown out marginally poor swimmers.<br /><br />The causes of the run-of-the-mill increases in regulatory burden are pretty plain to see. Bureaucrats need to justify their existence and their budget. Of course they have every incentive to craft new regulations. And when our legal system makes it all but impossible to challenge shitty regulations, we just adjust to things and move along, looking for the next loophole and contorting in an effort to comply. This is human nature, no different than adjusting to living with lions in the neighborhood (solution: get in the car) or dealing with drought in Kansas (solution: go West [life is peaceful there] go West [in the open air]). Still, the more contorted we get, the greater the regulatory burden, the harder it is for new folks to jump in the pond, so we end up with porcine natators, bobbing on their government-issued flotation devices, urging the regulators (who very, very, very often once worked, or expect to work in the future for the very companies they regulate) to keep the faucets running. The threat of nimble competition is frightening, as well it should be. It's in their best interests to have a formidable stock of regulation to keep them well-insulated against the speedo-bedecked Michael Phelpses of the world who could swim circles around them if they could just manage to get in the water.<br /><br />Okay, so that analogy got dumb. So what? The point is, with the regulatory burden getting bigger and bigger all the time, we can probably expect big corporations (those organizations that have the resources to comply with the regulations) to take up an increasing share of the business world. This is not Hayek's emergent order. This is something else. This is artifice, brought on by the intersection of private greed and public coercive authority. This is the ongoing threat to liberty and prosperity we face, and these are the sluiceworks from the ponds of our wealth to theirs.Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-36783335354823659252009-06-22T12:53:00.000-04:002009-06-22T17:00:00.236-04:00TEToDiHTEconomists love models. They luuuuurve models. In fact, models are to economists the way mudkipz are to anonymous. Some of the models are simple, straightforward affairs, such as ye olde law of demand, while others can be massive, multivariable monstrosities replete with scary-looking matrices and bone-chilling equations that, in other circumstances, might explain the origins of the Universe. Whatever the interesting phenomenon however, as long as it involves the interaction of people, you can slumber in comfort knowing that somewhere, there is some economist ready to man the trenches and provide the world with a mathematical interpretation of the goings-on.<br /><br />In contrast to the luuuurve economists have for models, most drivers have an abiding hatred for traffic. It's a loathsome irritant, a delay, a fly in the ointment, a nettlesome, needling, noisome bother that all motorists have to put up with at one time or another.<br /><br />I won't bother to catalog the differences in driving styles here. I'm sure anyone reading this has read a Dave Barry column or something similar in the past, and can well imagine how to caricature doddering grannies, gun-rack libertarians, NORP commuters, and enraged mall punks. The point is, we have a heterogenous blend of drivers on our roads, each with their own preferences, patterns, and peccadilloes.<br /><br />I feel I should pause here for a moment to explain one of the foundations of economic thinking: margins. If you've been through an econ course or two, you've likely been browbeaten into thinking on the margin. If not, you should have been. Margins are simply what happen at the cusp of indifference. That should clarify things. Let's move along.<br /><br />Just joshing. Oh, what a splendid jape. Let me be more clear. Any time when large groups of people interact, the interaction produces changes. The interesting thing is that these changes happen with a relatively few number of actions. For example, imagine a busy restaurant. Say, 50 covers for dinner. Naturally, there will be some level of background noise, from diners eating to kitchen noise to music to what-have-you. If but one table begins a conversation, there is an increase in overall noise experienced by everyone in the restaurant. Interesting, eh? We see this phenomenon everywhere. The standard classroom usage is with prices. If you raise the price of apples by a penny, there will be some people on the margin who will stop buying apples. This is a marginal change and the people who stop buying apples are marginal consumers. It is they who define the environment and they who determine prices (and I use a very broad definition of "prices" here). In the context of traffic decisions, we have a few types of marginal drivers: those who change lanes, hoping for faster travel; those who exit and enter the system; and those who create noise. I'll explain the latter later. The lane-changers are the interesting folks, so I'll spend a bit more time illustrating how they affect the dynamics of a traffic jam.<br /><br />Let's start the way all economists start: we'll build a road (don't let the title and the tenure fool you; economists are actually well-dressed construction workers). We'll start with a simple 2-lane road with no exits, no blind curves, and nothing blocking the smooth flow of automobiles. Got that built? Well done. Crap. I just splattered ice cream on my shirt. Okay, ice cream notwithstanding, let's put some drivers on this sucker. No sense in having empty roads, right Ted Stevens? We'll say in our model that one lane holds 50 cars per minute. That is to say that at the average driving speed, any given point along the road will see 50 cars pass in one minute. No problems so far, but what happens when we double the number of drivers that want to use the road? We have to increase the traffic density, say, by double. Now, at a given speed, this means less following distance. Invariably, with an upper limit on speed (which there will be for any number of reasons), this leads to congestion, slowdowns, and short tempers.<br /><br />Enter the next lane. With two lanes to choose from, we are back to a situation where each lane once again holds 50 cars per minute. No sweat. We can keep adding cars and lanes until we've got, say 4 lanes of 50 car per minute traffic, all zipping along, happy as clams on the road to nowhere. This is kind of boring. Let's add a little chaos. Let's add some exists, and maybe a David Byrne concert at the fairgrounds. The concert lets out and a monsoon of middle aged tax accountants and barbers hits the road in their Pontiacs and Mitsubishis. As they merge into the right lane, they greatly increase the density in this lane, creating an incentive for motorists there to switch to a relatively sparsely populated lane. These shifts propagate as the density information gets transmitted throughout the system. Well, at first, it's easy to see that it makes sense to move over a lane. There is clearly no sense in traveling in a lane moving at 20 mph when there's one going 60 a mere flick of the wrist away. The cost of switching lanes is small (though it does exist), and the benefit is quite noticable. However, a half mile down the road, things have started to even out, and the lane differentials are lower. Yet, we still see the North American Weaverbird, switching lanes madly, edging for that small advantage, hoping to make good time, despite only moderately discernible differences in average lane speed.<br /><br />This driver is what we call an <em>arbitrageur</em>. We see this same sort of behavior in financial markets. These are the people who look for small differences in price in order to make profits from sytemic irregularities. In the stock market, they are the marginal actors, and prices swirl around their skirts as they drive inefficiency out with the ruthlessness of a rat exterminator or a Britsh Schoolmaster. On the roads, they provide much the same function. By exploiting small differences in the density of traffic in each lane, they help to provide uniformity across every lane. They are why if there's an accident in the right lane, the traffic in the left lane slows down.<br /><br />The typical economic explanation stops there. Often glossed over are the hidden cost of traffic arbitrage. I can tell you from my own driving experiences that these drivers put the rage back in arbitrage. They are the buttholes who cut you off just when you manage to get a confortable driving distance, or who leapfrog across three lanes just to pass one car, then swerve back over, tracing a pattern that would dizzy a professional seamstress. To use more economic jargon, these are externalities, costs imposed on others. Sometimes, they occur as actual threats to safety and can produce collisions (though distracted and drunk driving probably poses more of a threat), or as irritants, as we fume at the aggressivve jerk who just tore ahead of us, zipping back and forth. The former is pretty clearly illegal under reckless driving statutes and the tort of negligence, while the latter, though annoying, is well within the purview of the law (which is probably why we find it so infuriating).<br /><br />Well, take heart, for even though that aggressive jerk can get on our nerves individually, by exploiting arbitrage opportunities for his own gain, he is providing a valuable service for the rest of us by eliminating lane speed differentials and allowing the rest of us non-marginal drivers to coast along in our own lane, fairly well confident that, on average, we won't be much better or worse off than in any other lane. Those guys do all the adjusting, so that we can enjoy one price. The only thing we have to worry about is whether or not we choose to drive or take the train, or bus, or camel, or teleporter. My advice is to just relax, listen to some Vivaldi (or Slayer [or both]) and realize that even if that douche in the Toyota just cut you off, you'll still get where you're going at pretty much the same time anyway and that you spend more time at red lights than you can reasonably expect to make up by going 5 mph faster on the freeway. Or something. Try the math yourself.<br /><br />Also, this whole lane change thing makes for a rather interesting mathematical model. You can assign probabilities to gains made from lane changes, quantify costs, add in the noise term, and do all sorts of cool shit with the numbers. I might keep this in mind for a term paper later on.Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-30326388589072957262009-06-18T14:25:00.000-04:002009-06-18T16:05:50.419-04:00The Good Ol' DaysI got a whiff of pessimism bias yesterday. Someone said to me something along the lines of, "people have to work so much these days", as if the amount of time people spent working was somehow beyond their control. I tried to explain to him the benefits we enjoy now as well as the fabulous, nearly opulent wealth virtually everyone in the secular West has access to. I'm not sure how successful I was with this explanation.<br /><br />The way I like to look at it is that there is an interesting list of things I can do that my parents were unable to do at my age. I then substitute "grandparents" for "parents", then "great-grandparents" for "grandparents", etc. Here are some off-the-cuff samples:<br /><br /><u>Things I can enjoy at my age</u>:<br /><ul><li>Good CGI in movies</li><li>Cheap whole bean coffee in the local grocery store</li><li>Encyclopaedia Dramatica</li><li>Easy air travel to St. Petersburg (the one in Russia: who wants to go to Florida?) </li><li>Hundreds of television channels in vibrant digital color</li></ul><p><u>Things my parents could enjoy at my age</u>:</p><ul><li>Good set design in movies</li><li>Premium ground coffee in the local grocery store</li><li>USENET trolls</li><li>Easy air travel to St. Petersburg (the one in Florida)</li><li>Dozens of television channels in technicolor</li></ul><p><u>Things my grandparents could enjoy at my age</u>:</p><ul><li>Good dialogue in movies</li><li>Yuban</li><li>IRL trolls Lenny Bruce and Richard Nixon ("I am not a crook" is pretty much his way of saying "YHBT")</li><li>Easy road travel to St. Petersburg (the one in Florida)</li><li>Less than a dozen television channels in monochrome</li></ul><p><u>Things my great-grandparents could enjoy at my age</u>: </p><ul><li>Newsreels </li><li>Joe black drip coffee for a nickel</li><li>IRL trolls Hitler and Helen Keller (probably the lulziest American communist to have ever lived)</li><li>Difficult road travel to St. Petersburg (the one in Florida)</li><li>Radio</li></ul><p><u>Things my great-great-grandparents could enjoy at my age</u>:</p><ul><li>Silent film</li><li>Joe black drip coffee for a nickel</li><li>IRL trolls Woodrow Wilson and V.I. Lenin</li><li>Difficult sea travel to St. Petersburg (the one in Russia)</li><li>Barn dances</li></ul><p>And so on it goes. The interesting thing is that I am free to choose from anything on any one of those lists. Yes, even joe black coffee for a nickel, once we adjust for inflation. Well, okay, I guess I can't be trolled my Chairman Mao anymore, but the very nature of lulz is that they are fleeting. I have a vastly richer, more varied set of choices available to me than any of my ancestors had when they were my age, no matter what their income. I have the ability to enjoy the massive stock of public goods we now have, I have access to the accumulated knowledge and wisdom of thousands of years of human endeavor quite literally at my fingertips, and I can enjoy it in the comfort and peace of my own home. </p><p>Importantly, I have the ability to opt out of the sea of choices I have arrayed before me. For example, I have opted out of the hundreds of channels of television. I own a set, but have no service. Similarly, I do not avail myself of the countless millions of consumer products available in my area, nor do I subscribe to the many fine print publications available at my local tobacconist. Indeed, should it be my wont, I am very nearly able to reproduce the living standards enjoyed by almost any one of my ancestors either near or distant. Furthermore, I could do so and by working fewer hours. Oddly, I choose not to. Why might that be?</p><p> </p><p>Because that would suck.</p><p> </p><p>Have you ever done laundry by hand? I have. It sucks. Have you ever had to bake your bread from scratch, every time? I have. It's admittedly delicious, but it's a lot of work, and once I found a decent baker, I have to admit that I'm nowhere near as good as a lifelong professional. Have you ever had to slaughter, clean and dress livestock? This I haven't done, nor would I have the first clue how to. If you really pine for the good old days, you might want to figure that out, because you might not be able to find a competent butcher near your den.</p><p>How about getting around without major highways? Eating only local food and only when it's in season? How about chucking comfortable shoes or clothes or furniture? How would you like to do without penicillin or tampons or aspirin or skilled surgery or adequate police and fire protection or the comfort of knowing you're not under the constant threat of conscription?</p><p>The truth is, the past just wasn't as great as our romantic imagination might like to think. I'm not saying the present is perfect, far from it. However, looking over your shoulder to see where you're going is a good recipe to fall on your face. The complement to this is that hand-wringing over an imagined future decline can be counter-productive if channeled improperly. I think I'll save details on that for another post. This one is already tl;dr enough.</p>Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-29753146205285307892009-06-17T11:39:00.000-04:002009-06-17T12:36:50.324-04:00The Time Value of TimeA common economics question to answer runs along the lines of: "why do people eat at restaurants so much"? Apart from the pat response, "because they want to" (which is certainly true at face value), those of us drenched in the economic way of thinking immediately drag out one of our favorite horse corpses (horpses): opportunity cost. We plaster on a dastardly, sometimes smarmy grin and crow that, as a nation, we are quite wealthy (true) and that our time is increasingly valuable (also true).<br /><br />There is, however, a dreadful flaw committed when we press the point. The reasoning goes something like this:<br /><br />1. Wages are efficient (this is to say that workers are paid according to their productivity). I won't belabor this point or try to prove it here, as this is given ample attention in most intro micro courses. I will say that this is generally true, with a few notable exceptions.<br /><br />2. Time is a finite resource (unless you're the Highlander, but even then, there can be only one).<br /><br />3. The opportunity cost of an hour of leisure is an hour of labor.<br /><br />This last point justifies additional division of labor while a worker is off the clock. That isn't entirely unreasonable. Most of us could pick up an hour or two of overtime for a wee bump on the first or fifteenth, or we could call in sick to go fishin' down at the ooooooool' fishin' hole. In these cases, yeah, that time is precisely worth the marginal cost (product) of labor. However, as anyone who's worked double shifts for any extended period of time knows, you get sloppy when you don't have enough time off. The fancy economist way of saying this is that there are diminishing returns to labor in the absense of leisure. Well, I reckon that might be close to the fancy economist way of saything that at any rate.<br /><br />4. Since leisure time is equally as valuable as time spent laboring, this time is best spent as efficiently as possible, taking the greatest advantage of the division of labor as befits a marginal cost/marginal benefit analysis.<br /><br />Whoa. #4 is just a bunch of economic jargon. Spivonomist, you're just trying to make yourself look smart, you great douche. Speak clearly. Well, okay. Look, if I'm making 10 bucks an hour stocking shelves at the grocery store, then my time off should be worth ten bucks an hour to me. This seems kind of fair, since that's how much I give up when I call in sick. So, when I choose off-hours activities, they have to be able to be just as profitable to me as my work is. In other words, I have to be able to get ten bucks of enjoyment out of every hour I spend at home. Since I'm hucking cans of green beans in this example, that ain't so tough. I could probably get my money's worth by trolling some pudgy nerd on deviantART. Easy enough. The marginal cost is fairly low and so is the marginal benefit, but there is a difference there, and it is in fact, oh exploitable! Indeed, I'll troll until the lolcow has been milked of its fresh, creamy lulz (this touches again on the idea of diminishing marginal returns).<br /><br />By the same token, suppose I'm now a record company executive, raking in millions every year. Now all of a sudden, my time is vastly more valuable. It would be insane of me to piddle about cooking my own meals, tending my own garden, and washing my own car. What a waste of time! Look at it this way, instead of spending 30 mins scrubbing my Mercedes, I could be cutting a multi-million dollar deal. Which is a better use of my time?<br /><br />...and so the standard argument goes. And a convincing one it is. There are extremely good reasons to exchange services, especially as income rises (note I say "income" here and not "wealth"). Income is our proxy for the value of our time.<br /><br />It is my contention that it is an imperfect proxy, and occasionally, dead wrong.<br /><br />The value of our time is heterogenous. This is especially true during the hours of sleep, when no one is productive, except perhaps laboratory test subjects. But I maintain that it's also true in the routine course of things. Even for creative types (including economists), nobody can be running full throttle all the time, and the real opportunity cost of time is, and this is important, <em>the productivity capacity we possess at that time</em>. I'm generally not well aligned with Keynesian thinking, but I don't think even Murray Rothbard would suggest that wages should be a continuously variable function of productivity, varying throughout the day. There is indeed some stickiness in there, and I think it's fatuous to suggest otherwise, or to suggest that anyone's time is precisely worth their wage at all times in the course of a normal human day.<br /><br />If my productivity declines working 100-hour work weeks (which I have done in the past), and it does, then not all of my time is worth what I earn. Therefore, I have some wiggle room in determining which services I can rationally farm out and which I can do myself. This wiggle room explains why salaried professors can waste time blogging or puttering about in the garden when they should, by all rights, be publishing and attending conferences. It is my contention not that the division of labor is a dumb idea, but that Smith was right when he pointed out that someone who overspecializes is a dull and stupid creature, or words to that effect.<br /><br />Yep, heterogenity of productivity. Leisure time isn't quite as valuable as the rational economist wants you to believe.Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0tag:blogger.com,1999:blog-7120698411132485795.post-52454727279447845662009-06-16T14:20:00.000-04:002009-06-16T15:34:52.668-04:00Irrationality: Normal Goods(?)A normal good is one that sees a rise in demand as income increases. Demand for an inferior good drops as income increases. For example, I'm happy to cram my piehole full of ramen noodles and PBR when I'm unemployed and living on my musty sailboat in a discount marina just north of Bremerton, but once I've got a job with a decent wage, I'll dine on <em>nigiri sushi</em> and guzzle chilled <em>sake</em> on Lake Union.<br /><br />On average, products are normal. That is to say, as our income rises, we consume more stuff. This includes tangible stuff like housing, transportation, clothes, and haircuts. More interestingly, it may or may not include intanglibles: friendship, love, faith, curiosity, and humor (among many, many others). Disaggregated, each product will display certain characteristics to certain people. Take the interesting case of gardening... for the very poor, gardening is an inferior good: they will soon substitute away from subsistence farming the moment they are able, but for the wealthy, gardening is a normal good: a charming, rewarding hobby that reconnects the practitioner with the bounty of the soil (or whatever). Point is, the same activity (plowing soil, planting seeds, fertilizing and watering) displays different characteristics depending on the intersection of the person and the product.<br /><br />To the question of rationality (or lack thereof), context is everything. Most of the time, irrationality is mondo expensive. Imagine walking into a used car dealership and plunking down $45,000 on a '78 primer-gray Pinto with a rusted-out driveshaft. Sometimes, however, irrationality can be pretty close to free, as Bryan Caplan illustrated in <u>The Myth of the Rational Voter</u>. There can be some psychological comfort gained from holding irrational beliefs like "the minimum wage is good for society" or "Wal-Mart exploits its workers" or even "unions were responsible for American prosperity". There are a whole host of irrational, incorrect beliefs that make people feel good but that, importantly, never hit them where it counts: in the checkbook. Where it does hit them is in the voting booth. As Caplan argues, this is why we consistently have bad policy, and why plenty of people support it. Of course, his argument is far more detailed and convincing, and my contribution is to ask a fairly simple question: is voter irrationality a normal good?<br /><br />I hesitiate to look to cross-sectional data to answer this question. Differences in income and income growth and their correlation to irrationality at the polls face a vexing problem: hidden variables. As a person gets richer, they may or may not consume more voter irrationality, but what if a hidden variable, like talent or good genes could be driving both the increase in income and the tendency to vote one way or another? What if part of the process to becoming wealthy included exposure to economic thinking, either good or bad? No, measuring today's upwardly mobile with today's constant wage earners might be less than fruitful. I think it might be more valid to look at longitudinal attitude changes.<br /><br />It's far too premature for me to make any definite claims, but I think it might be possible to show some sort of correlation with a rise in income with a rise in irrational policy. This is under the assumption that terrible opinion shows up as terrible policy in accordance with the guidelines of public choice theory. I can cherrypick a few instances in recent US history: the 1920s were a period of general prosperity, but they were followed by close to a decade and a half of abysmally irrational policy, including preposterously high tarriffs, outrageous marginal tax rates, and simply silly price controls. Conversely, the 1970s saw a thundering gut-punch to the American economy, and it was only after we suffered through that we saw the benefits of controlling the money supply (though I might not want to make this a central point) and easing the tax burden on the rich.<br /><br />Well, whatever the case may be, if I end up nosing more deeply into public choice, I think this would be an interesting question to investigate. I have a follow-up question about the source of irrational beliefs, but I'll tuck that away for another post.Anonymoushttp://www.blogger.com/profile/07675280324246893316noreply@blogger.com0