The Ambrosini Critique

… they don’t like filling out the forms.

Just more evidence that people will take any hypothesis seriously as long as it scores appropriate political points.

Hey, did you hear supporting encroaching government power over individuals’ lives causes cancer? Give me a sec and I’ll google up a brain-scan paper in support of this contention.

FYI: Lost in Love, All Out of Love and Every Woman In the World are, in fact, different songs. I discovered this by observing a little pause between the songs when I play “The best of Air Supply: Ones that you love” in rhapsody.

Has anyone replicated the syth-orchestra with, you know, an actual orchestra? That would be totally rad.

I really enjoy Lane Kenworthy’s blog. He writes mostly on inequality and he tilts a little too towards advocacy for my tastes, but he always brings a lot of data to the discussion.

He posted on international opinions of inequality the other day. People say they prefer a normal distribution of income rather than one that has overall more income, but skewed towards the rich.

He suggests this means that people care more about inequality than efficiency. The problem is that people may have a some sense of diminishing returns to income in their minds when they answer these questions. There may be more income overall, but some lower income groups have lower incomes in the skewed distribution (see the forth and fifth rows in distribution E). If those groups suffer more from there losses than the rich gain, then preferences for efficiency would suggest the normal distribution over the higher-income skewed distribution.

A more careful study of social preferences — answering the question, do people care about efficiency or inequality (or reciprocity)? — is Rabin’s Understanding Social Preferences with Simple Tests (pdf)¹. Virtues: doesn’t use survey data and it is careful to identify particular social preferences. Vices: relatively small sample size and only American and Spanish college students.

UPDATE: I got the interpretation of the diagrams a little goofed up in this post. The intuition remains the same though. My misinterpretation is evidence of measurement error inherent in surveys like these, so I’ll refrain from editing.

1. There’s about a billion citations to this paper at Google scholar, too. Go crazy, but be sure to report back. [↩]

This was on James Hamilton’s blog over the weekend:

Not the sort of headlines [bankruptices of a regional airline and a towel store] you’d expect to see if you thought we’re not in a recession. And not what you’d want to see if you still had hopes of avoiding one.

Ummm… headlines are exogenous to beliefs we’re in a recession? Don’t think so.

(h/t Craig “not craigslist” Newmark)

This hurts my American sensibilities (and don’t say there’s freedom of speech in Canada):

The law declares that the Mexican nation has original ownership to all land and water in Mexico, as well as minerals, salts, ore deposits, natural gas and oil; but that such ownership may be assigned to individuals.

The Mexican Constitution prohibits direct ownership of real estate by foreigners in what has come to be known as the “restricted zone.” The restricted zone encompasses all land located within 100 kilometers (about 62 miles) of any Mexican border, and within 50 kilometers (about 31 miles) of any Mexican coastline. However, in order to permit foreign investment in these areas, the Mexican government created the “fideicomiso,” (FEE-DAY-E-CO-ME-SO) which is, roughly translated, a real estate trust. Essentially, this type of trust is similar to trusts set up in the United States, but a Mexican bank must be designated as the trustee and, as such, has title to the property and is the owner of record. The Mexican Government created the “fideicomiso” to reconcile the problems involved in developing the restricted zone and to attract foreign capital. This enabled foreigners, as beneficiaries of the trusts, to enjoy unrestricted use of land located in the restricted zone without violating the law.

I’m not sure how reliable that source is… my google-fu is a bit worn these days.

Anyway, this post at The Economist reminded me to relay a conversation I had this weekend with somebody while I was down in Arizona at my cousin’s wedding. My interlocutor was saying that she thought Americans (usually rich Americans) who had their Mexican homes taken away via the above laws were “stupid. They should have known better! Everyone knows Americans only lease their property from the Mexican government!”

Knowing her political sensibilities¹, I asked her if those who took out sub-prime loans were similarly “stupid.”

The mental gymnastics induced by cognitive dissonance should be an Olympic sport.

1. ”the terrorists hate us because of 8 years of Bush” (I guess they anticipated his election a year in advance) was one gem and she takes notes in a “womyn’s” notepad were both indications of certain political affiliations [↩]

How juggernauts are born…

(BTW, to anyone attending my brownbag next week, this is what I’ll mean when I talk about “large-scale software”.)

What do we mean when we say that first of all we seek liberty? I often wonder whether we do not rest our hopes too much upon constitutions, upon laws and upon courts. These are false hopes; believe me, these are false hopes. Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can even do much to help it. While it lies there it needs no constitution, no law, no court to save it. And what is this liberty which must lie in the hearts of men and women? It is not the ruthless, the unbridled will; it is not freedom to do as one likes. That is the denial of liberty, and leads straight to its overthrow. A society in which men recognize no check upon their freedom soon becomes a society where freedom is the possession of only a savage few; as we have learned to our sorrow.

What then is the spirit of liberty? I cannot define it; I can only tell you my own faith. The spirit of liberty is the spirit which is not too sure that it is right; the spirit of liberty is the spirit which seeks to understand the mind of other men and women; the spirit of liberty is the spirit which weighs their interests alongside its own without bias; the spirit of liberty remembers that not even a sparrow falls to earth unheeded; the spirit of liberty is the spirit of Him who, near two thousand years ago, taught mankind that lesson it has never learned but never quite forgotten; that there may be a kingdom where the least shall be heard and considered side by side with the greatest.

— Learned Hand via VC

(Wow, never noticed how similar those word are…)

This graph is cool¹

In 1968 abortion was legalized in the U.K. Adoption rates declined dramatically, but children taken into State custody remained at about the same rate. The authors of the article suggest this is one more chink in the armor of the abortion caused lower crime hypothesis. In the Levitt story, unwanted children — who are future criminals (obviously) — stopped being born after abortion was legalized, i.e. if a woman didn’t want a kid, she’d get an abortion instead of having the kid and raising it to be a criminal. However, adopted babies are, if nothing, the definition of wanted children so if abortion reduced adoptions significantly, its safe to say there weren’t that many “unwanted” kids being born before the legalization of abortion. Adoption and abortion are substitutes.

The best² part of this new thesis is that because of mass substitution from adoption to abortion, the adoption infrastructure suffered. This means for the marginal unwanted baby, it was harder for her mother to get an adoption and thus more likely for that baby to be raised in a bad, criminal creating, home. Creating marginally more restrictive abortion laws³ would generate more crime.

Another explanation for the constant number of State interventions, though, is that fixed-budget child welfare bureaucrats started taking less marginal children away from their parents. In other words, in absolute terms, less unwanted kids, even accounting for adoptions, were being born, but more kids were being taken from their homes than would have been otherwise. The bureaucrats have to justify their budgets.

The above is a discussion of the supply side factors, but what about demand? Are “unwanted” children being underproduced?

(h/t SM,CI & SS… Andrew Gelman has a good discussion of testing long term mechanisms via short term effects. I call this, “testing the other implications of a theory.”)

1. In the “wow, look at the pretty data” sense not the “wow, isn’t abortion cool” sense. See this. [↩]
2. ibid [↩]
3. e.g. roe v. wade? [↩]

…and asked about your PPP homework. The numbers didn’t make sense because the exchange data were wrong. They should have been pounds per dollar not dollars per pound.

There. That’s better.

Ok, ok. I admit my last post on the children and happiness issue didn’t, in the end, add much to the debate. Economists that have studied the issue have found negative (and small) effects of children on happiness and they’ve done so without including controls for squishily measured variables¹.

But I’m still skeptical. Until I see a good mechanism to explain this result, I’ll remain so. Here’s an old post by Dan Gilmore that addresses why my intuition might be mistaken:

First, when something makes us happy we are willing to pay a lot for it, which is why the worst Belgian chocolate is more expensive than the best Belgian tofu. But that process can work in reverse: when we pay a lot for something, we assume it makes us happy, which is why we swear to the wonders of bottled water and Armani socks. The compulsion to care for our children was long ago written into our DNA, so we toil and sweat, lose sleep and hair, play nurse, housekeeper, chauffeur and cook, and we do all that because nature just won’t have it any other way. Given the high price we pay, it isn’t surprising that we rationalize those costs and conclude that our children must be repaying us with happiness.

Second, if the Red Sox and the Yankees were scoreless until Manny Ramirez hit a grand slam in the bottom of the ninth, you can be sure that Boston fans would remember it as the best game of the season. Memories are dominated by their most powerful—and not their most typical—instances. Just as a glorious game-winning homer can erase our memory of 8 1/2 dull innings, the sublime moment when our 3-year-old looks up from the mess she is making with her mashed potatoes and says, “I wub you, Daddy,” can erase eight hours of no, not yet, not now and stop asking. Children may not make us happy very often, but when they do, that happiness is both transcendent and amnesic.

Third, although most of us think of heroin as a source of human misery, shooting heroin doesn’t actually make people feel miserable. It makes them feel really, really good—so good, in fact, that it crowds out every other source of pleasure. Family, friends, work, play, food, sex—none can compete with the narcotic experience; hence all fall by the wayside. The analogy to children is all too clear. Even if their company were an unremitting pleasure, the fact that they require so much company means that other sources of pleasure will all but disappear. Movies, theater, parties, travel—those are just a few of the English nouns that parents of young children quickly forget how to pronounce. We believe our children are our greatest joy, and we’re absolutely right. When you have one joy, it’s bound to be the greatest.

Gee, maybe day to day, minute by minute experienced happiness isn’t the only thing people care about?

1. But the analysis is still valid in general! [↩]