A focus on jobs

A colleague stepped into my office yesterday and asked me if I was excited about “one of my kind” being named to head the Council of Economic Advisers. My quizzical look was met with an exasperated response, “he’s a labor economist. Isn’t that what you call yourself?”

In my first day of class yesterday, I explained to my students (in 3 classes they number fewer than 50 in total–fewer than I’ve ever taught in a single class), that I am a labor economist, but that basically means I can do anything I want. It garnered a few laughs, which is nice, but I really meant it. Really, I can do whatever I want.

Alan Krueger, however, cannot do whatever he wants anymore. Though he might have before, now, he has to figure out how to create jobs for the American economy (assuming his nomination gets through Congress). I’ve read a handful of analyses about the Krueger appointment. Approval from the center, criticism from the left, nods of approval from the right, crazy talk from the far right. I thought Matt Yglesias’ commentary was rather salient. He suggested that instead of an economist who concentrates on small problems, we need a macro person, someone to look at the big picture and provide a large-scale solution.

Among labor economists, Krueger is best known for things like his paper with Card on fast-food workers in Pennsylvania and New Jersey (conclusion: raise the minimum wage; it won’t hurt employment like you think). During his limited tenure in government, he’s become known for things like the Cash for Clunkers program. The programs he designed and/or analyzed all have the feature that they’re small. And well, like me, he’s a microeconomist. Cash for Clunkers ran out of money quickly, and its effect was widely believed to have distorted new car sales in time, but not necessarily boosted new car sales. That is to say that people who were going to buy new cars anyway just bought them earlier because of the program. It didn’t actually incentivize that many people to buy cars who weren’t going to anyway. If those earlier sales had saved a car company or two from oblivion, or if the timing of that cash infusion had been instrumental in creating a lot of jobs, we would have cheered it more heartily, but the fact is that it probably did neither of those things. And so while car sales increased during the program, they didn’t manage to save Chrysler.

The big criticism of Krueger (and others who do similar work) is that we can measure these tiny effects in time, but we’re not able to measure the general effects in the economy. The minimum wage paper, in my opinion, is a pretty good paper. You can quibble with the choice of counterfactual and claim there are cultural differences in New Jersey and Pennsylvania, but no counterfactual is perfect. While that paper may do a good job of explaining what happens if we raise the minimum wage in New Jersey, it doesn’t tell us what will happen if we raise the minimum wage in the whole country. Will companies be able to pass on the costs in every state? Are there enough people whose reservation wage lies between the current minimum wage and some theoretical increased wage that we would get more productive or better workers? There remain many questions.

On the plus side, I have to imagine that Alan Krueger knows these things. I, a lowly, recently defended PhD, liberal arts college teacher probably doesn’t have to tell a tenured Princeton professor to think about general equilibrium effects. And while we might need something large scale to reset the economy and get things going, I’ve often though that the CEA could use an infusion of clever and creative labor economics ala Krueger or Angrist.

And at least he hasn’t gone off and told the world that women are bad at math and science.

More of them or more willing to say it?

Today’s NYT had an article on the cities with the highest proportion of gay couples. Interestingly, the list doesn’t include many high-density cities or the well-known gay neighborhoods. The lack of historical data and rapidly changing social norms make it difficult to differentiate between whether there are simply more gay couples living in places like Rehoboth Beach, DE, or whether they’re simply more visible and more willing to disclose their orientation.

While this limitation means we cannot make  statements about the changing demographics in these cities, I think it does say something pretty profound about standards of acceptable social behavior in small towns and, to some extent, all over the country.

How we measure violence

I’ve noticed lately that the way we talk about prevalence of gender-based violence has changed lately. While we used to talk mostly about incidence of violence, a measure riddled with problems of underreporting and non-response, more scholars, NGOs and thus media outlets are concentrating more on measures of acceptability of violence. The questions “is wife-beating ever justified?” and “when is wife-beating justified” are garnering more attention than ones that seek to pin down the number of times a wife was actually beaten. The extremely high affirmative response rate to these questions (a recent TrustLaw post cites a UN study claiming at least 25% of people think it’s justifiable for a man to beat his wife in 17 of 41 countries surveyed) reinforces the notion that we might be missing a lot with surveys that get at instance.
it of course, does nothing to mitigate problems of reporting in places where the practice is outwardly condemned. In the US, I’d imagine, the statistic isn’t very useful as you’re unlikely to find many people who would assert that domestic violence is justifiable.
Additionally, it seems that, just like with incidence reports, the answers are subject to social norms and prevailing custom. In that sense, though, the question about justifiability may more closely measure the social norms themselves than questions about incidence.

To market, to market

I often have to convince people that I what I do is actually economics. While most economists take it at face value, I find that many non-economists, i.e. most people in the world, find it odd that I would consider my process of analyzing investments in children and marriage markets and relationship quality economics. The reason, though not always expressly put, is that most people think economics is about money. An economist, they think, should talk about GDP or the stock market or inflation or the debt crisis.

Lots of economists do, and I do, too. Despite being a microeconomist, I have enough knowledge and background and read the news enough to talk at least somewhat intelligently about macroeconomic issues. Although, once a student asked me in an intermediate macro class to explain credit default swaps. I declined to answer due to time constraints, but really, there are better people who can answer that question than me. Just like there are better people than me to answer questions about why the stock market tanked again today.

But I’m getting off topic. I started reading the NYT this morning after a weekend in the mountains and stumbled upon the Magazine’s Modern Love column, about blogging exes, and another that seemed to call out for my own blog post, before I had even read it. I hadn’t gotten two paragraphs through it before this line appeared: “In short, there really is a marriage market in countries around the world, and economic principles apply to it.” The author, Robert H Frank, had spent the preceding paragraphs discussing dowries, implying that you actually need money to have a market.

Though Frank goes on to discuss how principles of supply and demand have shifted cultural expectations and allows for the existence of a market where money doesn’t change hands, the initial statement does something of a disservice to the field. Markets exist without money. Marriage markets certainly exist, both with and without money. His sentence could have been easily modified to say something about markets how they are popularly understood, or something. It’s semantics, I know, but semantics are important when you’re faced with reinforcing stereotypes. And for the people who don’t make it past that third graf, they perhaps stay with that idea that markets need money to function.

Regardless of the initial misstep, the rest of the piece suggests something rather extraordinary, but also astoundingly simple. While much of the cultural phenomena of later marriage, sex outside of marriage, women going back to work and getting more schooling have, at least in economics papers, been attributed to the introduction of reliable birth control and time-saving devices like the in-home washing machine, Frank suggests that, at least in the US, an oversupply of women in the baby boom generation “bent cultural norm towards men’s preferences.” That is to say that as men were scarce, society played to their more open sexual attitudes, leading to, in particular, more sex outside of marriage and perhaps the decline of marriage as an institution. It’s the war’s fault, essentially, that we’re promiscuous and we cheat and we divorce our spouses at a high rate.

He goes on to use the US, post-war example as a parallel to the much-hyped sex ratio imbalance in China right now. He cites a paper where the authors show that families with sons are spending more on conspicuous consumption goods, particularly housing, in order to display their wealth and better attract a wife for their son. The sudden oversupply of men in China (and other countries in Asia) means that men are changing their spending habits to appear more stable, more able to provide for a wife and children long-term.

The comparison doesn’t seem quite right to me, though. In particular, there is a tremendous waste of resources associated with building bigger homes (or homes that just look like they’re bigger) for the purpose of attracting a mate. For families who are building with money that is marginal, that might otherwise be saved for retirement, or a child’s education (the son they’re trying to marry off or a future generation), spending on house improvements, though necessary according to the authors, is not necessarily the best use of money, nor is it sufficient to find a wife. One could argue that delaying marriage is a waste of resources in terms of producing quantity of children as women spend their most fruitful childbearing years on other things, but I think we can agree that more education for women is not necessarily a bad thing. Even if you want to go that route and get into money spent on IVF for older women, etc, it’s not as overtly wasteful as building sham third stories.

But more importantly, in societies where decisions about marriage are often still made by a family elder (a patriarch?), the shift might not really be towards women’s preferences–the preferences of the scarce resource, as it may be–but preferences of women’s fathers, or both parents. In fact, it’s pretty thinly justified by evolutionary biology and even downright sexist to suggest that women are just in it for bigger houses. Then the comparison breaks down entirely. Supply and demand may be giving more influence to one group, but it’s not the underrepresented group, it’s the group that controls the scarce resource.

The idea that an oversupply of men would shift a world to be more accepting and respectful of women and girls and their wishes and desires is wonderful. The pull of a simple economic explanation (particularly one that is backed by another science, biology in this case) is strong, but likely missing much of the story. Evolutionary biology likely does play a role in cultural norms, but the preponderance of gender-based violence, bride-buying, trafficking of women, son preference, bride burning, etc should make us wary of explanations that rely on assumptions that women are suddenly powerful and influential due to being scarce without exploring their cultural roles in shaping their own lives.

Not back to normal, yet

My plan was to post here twice a week and to be back in the swing of things by August. I started off well, but well, August is a slow news month and also a slow new working papers month and a busy, let’s move to Pennsylvania month. At least for me.

So, I defended my dissertation on Monday and though I have a few revisions, I’m, well, kind of done! It’s exciting. But I’m still not really up to blogging regularly, at least for now. Once I finish this paper, I think we’ll be good.