Tuesday, May 30, 2006

My Class Autobiography

Warning: This is a long one!

Bryan Caplan has suggested that people do this somewhat silly bit of introspection -- here's Bryan's story.

Is it me or does everyone think that they're middle class, yet we're supposed to believe that the middle class is shrinking? I mean, I think of myself as middle class. I bet you, whoever you are, think of yourself as middle class. Maybe, maybe, you're one of these people who is self-pitying enough to think you're poor. Very few people consider themselves rich. Very few. It's an easy answer for me: Am I rich? Well let me see, my net worth is negative, so I guess I'm not rich. I must be middle class, because, you know, it's not like I'm homeless or making soup out of ketchup packets.

Ah, but are my parents rich? Well, no, duh, they're middle class. My mom works for the Social Security Administration, and has for the past 30? years. My dad, for most of my childhood, was a stay-at-home dad. There were a couple of years where he taught high school when I was very young. We lived in a narrow three-story brick house in South St. Louis. I'm not going to bother with inflation adjustments, but I know they sold the house in 1994 for $25,000, so we're not talking about a great house in a desirable neighborhood. I'm the oldest of five children, and we all went to a private Catholic school in the neighborhood. I have no idea what tuition was, I don't think it was much, but I know my parents made a lot of sacrifices to afford it. We qualified for reduced price school lunches, I think instead of six dollars a week per child my parents paid $1.25 a week. We're talking about a fairly large family with a tight budget, as you can tell. My grandmother, who maybe considers herself upper class, I don't know, likes to tell the story of my mother buying a coat for my sister for 25 cents at the thrift store and bragging about it. More on the grandparents later.

There's so much "class creep" going on that it's hard to throw around terms like "lower-middle class," etc. but I would say that for most of my childhood in terms of income per capita in the household we were lower middle-class. But it's hard to say, because I have no idea how much of my parents' thrift was necessary and how much was pathological. I mean my dad will still drive 20 miles when he's out of town to save a $2 ATM fee. I don't know how much a chicken cost in the 80s at Schnucks, but there were tight controls on how many pieces you got at dinner and who got what piece. My dad finally broke down when my brothers and I became teenagers and started cooking two chickens instead of one for seven people. I mean, doesn't a chicken only have eight pieces, not counting the back (which my dad insisted is a piece worth having)?

Some of us can infer a bit about class from cars. If you divide my childhood into thirds, the family cars were: a Plymouth Valiant, a Dodge Dart, and a Buick Station Wagon. All were more than a little used when purchased. When I was in high school at some point the Buick went belly-up and was replaced by a Chevy wagon that was almost new. Like only one or two years old, purchased from Enterprise as a former lease or rental car, I don't remember. Anyway we thought it was great to have such a nice car at the time, even if the third seat did face backwards.

But yes, my parents were educated. My mom had a BA in English, and my dad was ABD is some kind of English Lit/Language history stuff, at Washington University. My dad's parents were not college-educated. His father died when I was two, at age 51 from early-onset Alzheimer's. He worked at Wash U., which meant free tuition at the time for my dad (he went there as an undergrad also). I'm still not clear on what he did, some kind of electronic fix-it man or something. When he was sick, my grandmother had to take a job to support the family (my dad is also the oldest of five), and she worked as a support/nurse (not an RN) type person at a nursing home. They didn't call it Assisted Living or whatever the term is now.

My mom's parents are the other story. Her father was a medical doctor, who got part of his training or maybe all of it in the Navy during WWII. He had a small internal medicine practice in Belleville, IL. My grandmother was a housewife who was active in charity, politics, etc. Some stupid people think, "ooh a doctor," but as my mom has pointed out to me recently he never made more than $25K in a single year of his life, and when he had to close his practice in 1987 (before he died), that's simply not upper-class money. They weren't sitting on any wealth to speak of. But they had two Mercedes Benzes (15-20 year old cars when I was a kid) with leather seats, and they had soda, which we never had at our house, so we the kids thought they were rich. Or actually for most of my childhood I had no such thoughts. Other kids in my neighborhood had no such thoughts. But my cousins, who lived in Nashville, would say things about how my grandparents were well off. And then they would make comments about my parents house and our neighborhood -- like it was obvious that we weren't so well off. I had no idea until I was 10-12 years old.

I went to high school at a place called St. Louis University High School, where I got a considerable amount of need-based financial aid. For instance, in my freshman year (1987-88) tuition was $2500, but I got $1800 in total aid (including work-study), so my parents only had to pay $700 for that first year. Tuition went up while I was there, and in my last two years I think my aid fell a bit, maybe because of my mom's promotion. Sorry, I'm too lazy to do the inflation adjustments, these are all nominal figures from those years.

My grades through most of that time were mediocre. I got better as high school went along, and I found high school much more interesting than gradeschool. This is probably because SLUH was and is a strong academic high-school with competitive admissions. I was challenged, and I was no longer the smartest kid in the class (usually, maybe always the case in grade school).

I didn't go to college after high school, one of the few who didn't from my class. I enlisted in the Army instead, where because of my unique job ended up meeting a lot of really smart college dropouts (Hi, Ron!). When I got out of the Army, I had been stationed at Ft. Meade, MD a while, and had friends in the area, so I worked for a couple of years at retail jobs before I eventually went to Towson University just outside Baltimore. Blah blah blah, economics became my life, I went to grad school at GMU, and in the Fall I'll be a professor at WCU.

So how did class affect me? I think it motivated me. I think if at any point in my life I'd felt like I could get by, enjoy the standard of living I want for myself, without working any harder, I would have. I didn't want to prove anyone wrong, and I didn't have any lofty expectations to live up to. But before I started at Towson, I just wanted to work and live a regular life. I didn't really want to go to college, except as a way to get a better job. But after working as a luggage salesman, motorcycle parts manager at a dealership, and clothing salesman at a department store -- and saw what the promotion opportunities were in those fields -- I said to myself that I've got to do better. Is that Caplan-like elitism? I don't think so. At the time (1995-96) I was renting a room in an unfinished basement for $185 a month. It leaked when it rained so that I would have to jump over a puddle on the floor in my room to get out. I did three things: work, watch TV, and read novels. I didn't have a car, I had a bus pass. I began to make calculations in my head; I simply didn't like those jobs enough to want to move up and slowly make a little bit of money. It was obvious that I'd have more and better opportunities as a college graduate. I sort-of knew it anyway -- the reason I started working in the area in the first place was to establish Maryland residency for in-state tuition. Like Mark Thoma, Berkeley (or in my case, Georgetown, UMD, whatever) was a dream. But maybe not. I was picking Towson based on its location, mainly. Once I started college at Towson, I felt so much more alive and happy, even though my income had fallen.

So what if I were poor? Well what the heck is poor, anyway? To me poverty in the first world takes some work. There are a lot of crummy jobs out there, and they're easy to get -- I know because I've worked at so many of them. I didn't mention waiting tables, selling cookware, or caddying. Yes, I felt poor when I relied on those jobs to feed, shelter, and clothe myself. But by any kind of global or historical standard I was doing pretty well, and I had a sense of that even then. So what if I had grown up poor? I would've gone to public school in St. Louis City and I would've learned very little. But I don't think I learned much in Catholic grade school, really. I learned far more from the outdated set of encyclopedias from my grandmother (not the rich one who wasn't actually rich, but the one who was a working mother widow). Really what Catholic school gave me at the elementary and junior high level gave me was a safer environment. The nuns and lay teachers meant well, but they still taught at the pace of the slowest student, Jennifer Hertel. God she was stupid. Anyway, even as a product of the awful public schools in St. Louis I hopefully would've gotten into a magnet school for high school based on test scores. The end result would've been the same: I would have joined the Army, and would've worked at crappy jobs, and gotten fed up with it and gone to some local college once I got out. I would still be a Cardinals fan and LOVE LOVE LOVE Albert Pujols. Excuse me. I mean to say he is a very fine player.

What if I'd been rich? There's a good chance that I would've gone to SLUH, only without the financial aid. I probably wouldn't have joined the Army, and instead gone straight to college. And here's the thing -- I would have dropped out, or done poorly anyway. I was just not ready at that time for college. But if I came from the same class and background that many of my classmates came from in high school, I would've felt like college was my only option. I'm sure those guys looked down on me a bit anyway because of my clothes, etc., but I didn't impress many of them by joining the Army instead of going to college. That's not something they or their parents would accept very well.

Is my success so far an accident? Partly, but more for not being rich than not being poor. I actually feel sorry for the pressures and expectations that children of highly successful parents feel. I mean, it's enough for my friends and family that I have a Ph.D. -- they're not wondering why it's not from a higher-ranked school, or asking where my dissertation will be published. Look, I know I'm not some big academic star, but it's hard for me not to be happy about the way things turned out. And whatever advantages I did or didn't have, my children will have more.

Mark Thoma wrote a great class autobio, but geez he sure sounds bitter for someone whose career has turned out so well. Aww, you're not at Harvard, poor baby. Aww, I'm not at Towson, poor baby (I interviewed at my alma mater, but wasn't even close to making the short list for campus visits).

I mean here's a guy (Thoma) who was bright and motivated and did very well for himself, coming from a modest background. How does this prove that class matters? It seems to show that ability and effort are rewarded, regardless of "class." I wonder if class isn't just something for people in the upper-middle class and upper class like to dwell on because they're pissed off about not being in the upper-upper class. For some reason in my little world it seems good enough to do well for your abilities and be happy about it.

By the way, just after I joined the Army my dad published a fairly successful series of books on home brewing (he had an unsuccessful book when I was a kid), and became some kind of beer geek guru. While I was in the Army he also took a job as a brewmaster at a brewpub in St. Louis, and then moved to one in Nashville, TN. And before you go calling him upper-middle-class or (if you're an idiot) rich, you should check out what brewmasters at microbreweries and brewpubs actually make. He's a celebrity among a tiny subset of nerds. Like Bryan Caplan. ;-)

Sunday, May 28, 2006

Immigration and Self-Interest

Steve Sailer and others have been going around making the following argument in response to Alex Tabarrok's open letter on immigration:

For centuries, economists have been explaining that you shouldn't trust people who say, "Trust me, my motives are pure." Self-rationalizations are typically motivated by self-interest. But, now, in a stunning breakthrough, economists have discovered the one kind of human being who is above such tawdry concerns, whose viewpoint is wholly Olympian and disinterested: economists!

Others have asked, essentially, "Why should we trust economists, aren't they acting in their self-interest when they support more open immigration?"

Greg Mankiw responds, saying basically that economists are acting in their enlightened self-interest, and it is in their interest to search for the truth, because of reputational concerns, etc.

All of this back and forth, though, hasn't answered the one simple question I have for the anti-economics crowd: When it comes to a particular issue, immigration in this case, what exactly do economists have to gain from taking a strong position? Most of the anti-immigration crowd has argued that economists have little to lose from increasing legal immigration, or amnesty, etc. We're not in the low-skilled labor market, etc. We have tenure (even though many -- most? -- of us don't), or we don't face foreign competition (we most certainly do -- anyone who says otherwise is simply ignorant about what the job market for Ph.D. economists is like).

But I say fine, we have little to lose. What exactly do we have to gain? Sailer and others have hinted that economists somehow have something to gain here. I don't think we do, beyond Greg Mankiw's explanation that seeking truth is in our long-run, enlightened self-interest. That's hardly scandalous.

Is this the argument???

"Damn them, they're only supporting more immigration because they believe that people are the ultimate resource, and a growing population will improve long-run economic growth, and higher growth rates that follow policies they advocate make them look good! Then they'll get tenure and make more consulting money and be more respected! Those dirty bastards!"

Um, oooookaaaaaaay. Guilty as charged. Look, I don't think Steve Sailer has much to lose from increased immigration. Maybe I should frame my argument the other way, though, and argue that he has nothing to gain, so of course it's easy for him to go around talking about how terrible it is! Easy for you to say, Sailer, you're not desperate to work and live in a first-world country! He sneers at Tabarrok's point about economic ethics, but that seems to be exactly the difference between the economists who signed on to his open letter and the anti-immigration crowd. We, the economists, who have little to lose or gain, see a huge overall net benefit from increased immigration, and we see a net benefit because we bother to consider the benefit to the immigrants themselves. We don't see it as "us vs. them." Probably because we have little to lose.

That said, it's simply wrong to believe that economists enjoy substantial protection from foreign competition. Those of us who are native-born Americans (recently) on the job market know that we just have to differentiate our product in the wake of increased foreign competition. Even then, among the schools I interviewed with at the AEAs, the job I wanted most was offered to a Chinese citizen. I still received multiple offers, and am happy with the way things worked out. But if I were so inclined, I could be bitter about the offers I didn't get, especially those given to... foreigners! And I could be bitter about immigration. But I'm not, mostly because of the theory, empirical evidence, and ethics that Tabarrok points to. I don't know if I have the moral high ground here. But I do have what I believe is the better attitude toward my career, competition, and immigration -- one that it is in my self-interest to have.

Friday, May 12, 2006

U.S. Auto-Makers' Employment

Totally cross-posted from WombatEcon:

In the Soviet Union, there were frequent problems with production for its own sake, and the problem was often made worse because it was hard to monitor the managers in every industry -- the old joke is that an order for 1000 pounds of nails was just as likely to result in one 1000-pound nail as it was to result in 1000 pounds of "normal-sized" nails.

But getting back on topic:

Saying that the Detroit auto builders employ more workers per car built is just another way of saying they're less efficient. It's hard to believe that anyone thinks this should be a badge of honor.

There's an old story about an economist visiting the Soviet Union in the 60s. He is taken on a tour of a new dam project East of Moscow, and he observes that the workers are using shovels to prepare a foundation while various bulldozers and earth-movers sit idly by. "Why are the workers using shovels instead of heavy equipment?" he asked.

"Well, we can employ many more workers if they dig by hand," responded his tourguide.

To which the economist said: "Well, if the goal is to employ as many workers as possible, why not dig with teaspoons instead of shovels?"

A healthy business, industry, or even economy, does not function to provide employment. Employment is a side effect of a healthy, growing economy. The purpose of an economy is to produce goods and services that consumers will want to buy. One service provided is labor. But labor is only valuable when it is willingly bought by those who demand it. Employment for its own sake makes no more sense than production for its own sake (think of the 1000 pound nail).

Update: Russ Roberts of Cafe Hayek has an interesting take on this job creation nonsense.

Friday, May 05, 2006

Size Matters

First of all, McCloskey and Ziliak deserve a lot of credit for their thorough work on this topic.

The last time Steve Ziliak was at GMU, he told a statistical fable. Suppose, he says, you have two weight loss drugs: Precise and Oomph. The makers of Precise guarantee a total weight loss of 10-12 pounds if you use their product. Oomph's makers guarantee a total weight loss of 12-40 pounds if you use their product. Which product do you use? Which drug is more effective?

Obviously the answer depends on just how much weight you want to lose. But suppose you are 50 pounds overweight, then the answer is Oomph, right?

The problem with statistics in the social sciences (and as McCloskey and Ziliak show in their forthcoming book, this is also a problem in medicine and the hard sciences), is that the standard by which effectiveness is judged is statistical significance -- and statistical significance is much more a measure of statistical precision than it is of oomph, power, etc. So in a typical study, Precise would get an asterisk of being proven effective, because its effect is statistically significant, whereas Oomph, with its high variance, may not even show up as statistically significant. Yet it is clearly a more powerful drug.

Such is the case with many economic studies, including this one by Thomas Dee, blogged on by Greg Mankiw at Harvard. Dee seems to be resting a big part of his case on the finding that a teacher's gender affects a student's achievement by 0.04 standard deviations, i.e. 4% of a standard deviation. Not 4%, but 4% of a standard deviation. I'm sure, because he has a nice large sample, that Dee's finding is precise. But it has about as much oomph as a 1987 Toyota Tercel with flat tires and a worn clutch.

Dee is doing very interesting work on a variety of issues in public economics, and on education particularly. But he needs to stop making a big deal over results that merely show statistical significance.

Thursday, May 04, 2006


Okay, I haven't posted in a long time. I was very busy with travel (conferences and job interviews) and finishing up my dissertation. So, first things first: I had my successful defense on Tuesday, May 2nd. I turned in my paperwork later the same day, so I'm done. I have a Ph.D. in economics!

Now, the other news: I had to decide between three job offers, two in academics and one at a think tank or whatever AIER is. So one was the American Institute for Economic Research in Great Barrington, MA, i.e. the Berkshires. The first of the two academic offers (they both came on the same day, last Friday) was from Hillsdale College, a small liberal arts college in rural Michigan. The other was from Western Carolina University, which is in Cullowhee, NC, in the heart of the Smoky Mountains. Near the Blue Ridge Parkway and Deal's Gap (The Dragon), for you motorcycle types.

There were probably two things working in WCU's favor, being location and more emphasis on research. It's a more standard university, whereas at Hillsdale the emphasis is all on teaching. Teaching is great, but I'm pursuing an active research program and my understanding is that Hillsdale would require up to five preps a year (classes to prepare lectures for) versus two a year at WCU. Also, there just isn't much emphasis on research at Hillsdale. I'm not saying WCU is extremely research-focused, but I think the emphasis there strikes a balance between teaching, research, and service that is right for me. There was also the question of where I could see myself living, etc. I could see myself in the Berkshires at AIER, but I finally decided that I went to grad school in the first place to get an academic job, and that I should give that career track a real shot first.

So I'm getting psyched about the move, it's one of the most beautiful parts of the country, yet the cost of living is fairly low. And though we're moving away from Baltimore and Beth's family, we'll be much closer to my family in Nashville. To be honest, I don't like living in a large East Coast city so much. Or maybe I do like it allright, but at this point I'm just so sick of traffic I'm ready for a break. I guess I'm most excited about starting my career as an economics professor.

Wednesday, February 15, 2006

Meet the Market

I have many heroes in economics, but John List is my latest hero. What has he done, other than publish dozens of articles in top journals? He's taken Behavioral Bullshitters head on. When pro-behavioral types scream that they have "empirical" evidence (based on handing out mugs to students or asking people how they feel after a colonoscopy) that people don't behave rationally*, List says, "Behavioralists, meet the market," and then goes on to show how people experienced in market settings, in the world, doing what they do to actually make a living, act as economists would predict. Inexperienced agents, and college students in behavioral lab experiments, make all kinds of goofy mistakes that get people worked up, but market interaction has a knack for washing away those kinds of "irrationality."

Here is the abstract of his latest paper, "The Behavioralist Meets the Market: Measuring Social Preferences and Reputation Effects in Actual Transactions," published this month in the Journal of Political Economy:

The role of the market in mitigating and mediating various forms of behavior is perhaps the central issue facing behavioral economics today. This study designs a field experiment that is explicitly linked to a controlled laboratory experiment to examine whether, and to what extent, social preferences influence outcomes in actual market transactions. While agents drawn from a well-functioning marketplace behave in accord with social preference models in tightly controlled laboratory experiments, when they are observed in their naturally occurring settings, their behavior approaches what is predicted by self-interest theory. In the limit, much of the observed behavior in the marketplace that is consistent with social preferences is due to reputational concerns: suppliers who expect to have future interactions with buyers provide higher product quality only when the buyer can verify quality via a third-party certifier. The data also speak to theories of how reputation effects enhance market performance. In particular, reputation and the monitoring of quality are found to be complements, and findings suggest that the private market can solve the lemons problem through third-party verification.

*Many behavioralists don't even recognize that most microeconomic theory hinges on procedural rationality rather than substantive rationality, and that making mistakes, succumbing to bias, etc. are generally examples that violate the latter and not the former.

Friday, February 10, 2006

U.S.A.! U.S.A.!

(No this isn't about the Olympics.)

Just a thought...

Maybe there's a reason why people in the U.S., even the "poor" here, enjoy historically unprecedented standards of living.

And maybe, just maybe, it's a reason that's compatible with the notions of comparative advantage and positive-sum exchange. Maybe all that prosperity isn't stolen, and doesn't all come at others' expense.

Other prosperous nations, Sweden, the U.K., and Canada, for example, have something in common with the U.S. It's not flag-waving ass-kicking at the Olympics, or carpet-bombing Iraq that I'm talking about. It's trade. A lot of trade. And not just exports, but the most prosperous nations in the world have high levels of imports(I'll look for a per-capita measure when I find time). What exactly is the reasoning behind a belief that imports are bad?

On a related point, Don Boudreaux argues that a trade deficit is a silly thing to worry about.