Monday, January 30, 2006

Moral Development

My wife is a psychology teacher, and she and I recently had a discussion about Kohlberg's stages of moral development. I was intrigued, so I started doing some research in the interest of evaluating on which stage of reasoning classical liberal principles are based. Most sources on the subject suggest that democratic society, and/or the Constitution are based on Stage 5 moral reasoning. I think this is a fair assessment, but I believe that the underlying principles of classical liberalism...the rights to life, liberty, and property go beyond Stage 5 reasoning and into Stage 6.

Now maybe this is just me being arrogant. After all, Kohlberg himself had a difficult time finding enough individuals who operate at such a high stage of reasoning to prove conclusively that such a stage actually exists. Still, history and the works of many great liberal economists have shown that these principles are indeed universal, and that they bring the greatest benefit to the greatest number. This thought gives me a little more perspective on the difficulty of the task of adhering to and standing up for these principles.

It also provides some insight into the moral reasoning of various other groups of individuals. The State, for instance, appears to reason at Stage 4 but act according to Stage 3. The common criminal may reason at Stage 1, concerned only with the potential consequences of his actions. In fact, it's interesting to note that the greater the extent of the ubiquity of Stage 1 reasoning across society is ignored, the more obvious its proliferation becomes.

Caplan and Public Policy

One thing that bothers me about Bryan Caplan's new book (to be published by Princeton University Press) is that superficially, at least, it has what I consider to be a mistaken policy conclusion: if we want better, more rational citizens and voters, then the solution is to spend more on education. This conclusion follows (again, superficially) from Bryan's finding that people with more education have more "sensible" views about economics, i.e. in his data their beliefs are closer to those of economists. Bryan never explicitly supports this conclusion, but the conclusion has been made by many thinkers in the past, from John Stewart Mill to John Dewey.

I have a response to that claim, where I basically argue that education itself does little to raise the cost of holding what Bryan would call "irrational" beliefs. In another paper I argue, using data from the General Social Survey, that previous empirical work showing high "Civic Returns" to education fails to control for cognitive ability, and thus overestimate the value of education in democratic societies. In a paper that Bryan and I are co-authoring, we apply that same approach of controlling for intelligence to his finding that education is associated with "sensible" views about economics -- our finding is that the effect of education on "thinking like an economist" was overstated in Bryan's original paper in the Journal of Law and Economics on this topic (Word doc - watch out).

Unfortunately, I think, these specific findings about education, intelligence, and public opinion will have to wait for another book.

Sunday, January 29, 2006

Growing Inequality?

Any study that presents data on income inequality that 1) doesn't look at the same people over time, 2) doesn't consider income from redistribution programs, 3) doesn't look at net income rather than untaxed gross income, 4) doesn't consider employer-provided (non-wage) benefits, 5) doesn't control for peoples' ages, 6) doesn't control for household size and, most of all, 7) doesn't take immigration into account is at best sloppy and at worst intellectually dishonest.

HT: Cafe Hayek and XYZ the nutcase at the MacAddict Forums.

Framing Matters

Ron asks:
"Was there a difference between the answers when you presented "business owners or politicians" and "business or government" as the available choices? Did your victim favor business owners over politicians, but choose government over business? Is there a distinction in the unit of responsibility...individuals versus organizations or groups of individuals?"

The answer is yes, there's a difference, and yes, it matters. One thing I've learned from looking hard at survey evidence is that it matters very much how a question is framed. Most people are more willing to say they trust government than they are to say they trust politicians, or bureaucrats for that matter. Ron's real question seems to be, why don't people realize that government is nothing but groups of people -- politicians and bureaucrats?

Again, I refer the reader to the Mencken quote at the top of the page. Why would you trust a third of your income, the education of your children, or even (I'm getting David Friedman on you here) your own personal safety and security to people who aren't directly accountable for their failures?

Ron's answer #2 pretty much nails it.

Things people know but conveniently forget

I'm just gonna jump right in here with a question for that's stumped me for a while. This is highly unscientific, so bear with me.

Ask anyone you know what they think of politicians in general. I'm betting 99% of the time the answer will be exactly what you'd expect...that they think politicians are shady, crooked, or downright evil. In fact, if you can find one out of 100 people who doesn't think politicians are at least somewhat dishonest, I'll eat my hat.

Now ask them what they think about business owners in general...small, large, multinational, whatever. This time I imagine you'll get more of a mixed bag. Most will probably say big business is bad and small business is good, but overall the impression of business and business owners will be less hostile than that toward politicians.

Next, ask them who they would be more likely to trust to end poverty in owners or politicians. And finally, ask them who they would trust more to educate their or government. My bet is that this time in most cases they will contradict their previous answers by saying they would trust government over business.

Or maybe not. Was there a difference between the answers when you presented "business owners or politicians" and "business or government" as the available choices? Did your victim favor business owners over politicians, but choose government over business? Is there a distinction in the unit of responsibility...individuals versus organizations or groups of individuals?

Why is it, that even though we believe the individuals within a group to be shady we still are willing to trust that group over a group to which we at least give partial benefit of the doubt? I think there are a couple of reasons:

1) When individuals are organized into a group, often the character of those individuals are abstracted by the group itself. I think people are more likely to trust government than politicians because the character of politicians is somehow overshadowed by the the view of government as a whole.

2) It's easier for people to believe that government is motivated by some higher purpose than profit. Profit is what motivates all businesses. Everyone knows this. When it comes to government, though, every onlooker is free to choose what he or she believes motivates government at any given time. The motivation of the State is a moving target, requiring much more effort to pin down. It's easier to just believe what you want to believe.

Job Market Update

A few facts and thoughts about the job market and my experience so far:

The average number of applications sent out for ABD/Ph.D. economists on the junior faculty job market is in the mid-70s. I sent out roughly 40 apps myself.

I had only 3 interviews at the AEA/ASSA meetings in Boston. I was briefly discouraged by this until I found out:

1) The average for schools of GMU's rank is 3.21 interviews.
2) A number of schools I've been in contact with didn't bother to hold interviews in Boston.

So, in spite of only having three interviews, as far as I know I'm still in the running for (i.e. I haven't been "cut" yet), right now, five jobs (without naming names):

1) A rapidly growing state university in Florida
2) A small Catholic university in Florida
3) A small state military college in rural Georgia
4) A private Christian university in Tennessee
5) A state university in North Carolina

And I have what seems to be a standing offer to work at a private research institution in New England. This seems to be my best option if my goal were to maximize my lifetime earnings, while still working on issues in political economy (consulting, for example, pays more).

The only bad news I have so far is that I'm out of the running for what was probably my top choice, a state school here in Maryland. Not only is it local, but they have what I believe to be a very good economics department.

But to answer the question, "What can a GMU grad on the job market expect?" The answer is you can expect the most attention from small, but growing schools in the South. Now, others have done better than I, and received more attention from higher-ranked schools (Pete Leeson is the best recent example), but I am probably a more typical example of a GMU Austrian/Public Choice guy on the market. If you take a look at Leeson's CV, you'll know what I mean -- he's an incredibly productive scholar.

I probably have a different set of priorities than many of my fellow GMU students who are or will soon be on the job market: I'm currently 32 years old with a family (wife and 1.5 kids). I even drive a minivan now. My largest priority is to find a job that allows me to provide for my family, yet spend time with them. I have an aggressive research agenda, but part of that agenda includes eventually turning all this work on education, intelligence, and belief into a book, of all things.

Speaking of books, Bryan Caplan's forthcoming book on voter irrationality has been receiving a lot of attention in the blogosphere lately. Since I've actually read the latest draft of the whole thing (not just the excerpt Bryan put on the web), I'll definitely be commenting on it in future posts.

For those who don't know, I was Bryan's research assistant for three years, and he's on my dissertation committee, and my dissertation is very closely related to much of Bryan's work, and we're co-authoring a series of papers on public opinion in politics and economics.

Saturday, January 28, 2006

Welcome, Ron!

I've asked Ron Jennings to join me in posting here. Ron is an old friend, and is a good complement to my abstract ramblings, as he is much more likely to spout off about first principles, libertarian philosophy, and concrete policy proposals and legislation. Ron has what we academics might call a "real job" -- something to do with databases and the software that databases need to be useful. In the past couple of years he's had a bit of a political awakening, and has become interested in political economy, in spite of not being paid to think about it.

The Tragedy of the Commons

This blog has only been up for a couple of hours, and I already have a question from a reader:

What is the tragedy of the commons?

Well, there's a pretty decent Wikipedia entry, though the stuff about the "tragedy" not necessarily being a real tragedy is kind of silly. Of course it's a tragedy that something meant for common use tends to be degraded or even destroyed. That's the tragedy of the commons by the way: you have a commons, a public place or shared good for all to enjoy for "free," and if available to and used by enough people it goes to hell pretty quickly. Anyone who's had a roommate (or four) can probably relate. Two roommates have a shot at coordinating with each other to keep utility bills down, to keep the dishes and carpets clean, etc. But as you add roommates, this coordination becomes more difficult. It's not that the problem can't be addressed, it surely can. But it's costly in terms of time and effort. When I lived in a house with five other people, the owner of the house eventually solved the problem by paying someone to come and thoroughly clean the entire house once a week. Governments can do the same thing: hire people to tend to the commons, and collect taxes to pay for it. But there is another way, one that's considered evil and sinful by those who worship at the altar of the state: privatize the commons. All that really means is that people pay for what they get. In the case of the roommates it would mean everybody has his own apartment with metered utilities rather than a shared home with shared utility bills. In the case of public roads, one of my favorite examples, it means collecting tolls rather than allowing people to drive as much as they want for free, regardless of whether and how much they've paid for roads in taxes.

Now on a case-by-case basis we can ask whether the privatization solution would really work. My view is that more often than not privatization does work, especially if a particular commons seems to be over-used and chaotic. London had horrible commuter traffic before using tolls, and traffic certainly got better afterwards. But maybe in rural Kentucky, for example, tolls would just be a pain. Maybe for some groups of people, sharing a house works out well. But I am much happier living in my own apartment -- and I think most other people are, too.

Statism as religion

I've started this blog to address what I believe are important questions in the field of political economy. My academic research so far has been focused on the economics of belief, and specifically the roles played by education and intelligence in belief and preference formation. A related subject is how people perceive the state, and their beliefs about the role of government. For many, there is no question: the role of government is simply to act in the public interest; whatever it takes to promote the public interest is a legitimate function of government. For those versed in the language of economics, the role of government is to step in where markets fail, and "market failures" are everywhere. Therefore, the reasoning goes, state intervention is necessary to correct market failure: to provide public goods, and to internalize externalities.

The problem, though, is that government failure is easily as big a problem as market failure. Public goods provision has unintended consequences; the "tragedy of the commons" being one of the more notable ones. At its worst, government serves as a tool for oppressive tyrants and mass-murderers, and provides more public "bads" than "goods."

Consider the Mencken quote at the top of this page. Public Choice argues that people holding public office are no more noble and no less self-interested than private citizens; Mencken argues (correctly, I believe) that they are typically worse.