Ask Edgeworth

Of Blogs, Boks, and Academia: A Screening Model

My first quarter as a junior professor is in the books. I did not post here once in the entire quarter!

I offer two possible explanations. Perhaps I lack the ability to produce lucid, satirical prose when my mind is tired, my energy depleted by new responsibilities. On the other hand, perhaps I only pretend to lack this ability. Perhaps I’m a very clever fellow with a game theorist’s temperament, and despite having boundless intellectual energy, I have intentionally made myself appear a wearier, slower, and less energetic blogger than I am (or could be) in order to send the right signal to academia.

Object lesson: During my long absence, University of Chicago denied tenure to political scientist and influential blogger Dan Dreizner. Is it possible that this was due to his consistent habit of posting thoughtful entries to a high-profile blog? One wonders. His publication record in scholarly journals was impressive, by all accounts.  But here’s the rub (and I’m trying to trance-channel some petty, curmudgeonly senior academic at this point): If he produced a high volume of excellent work while “wasting” countless hours on his blog, how much more could he have produced had he been singularly devoted to scholarly writing?

But wait a minute, you say to the curmudgeon. It may well be that engaging in public debate keeps an academic energized and connected to the real world, that an informed and practical perspective raises the quality of scholarly research, that to be out of touch with the perspectives of people outside the ivory towers is a bad thing. If a young researcher produces a high volume of high quality work, you say, we should not criticize him for the way he spends his leisure time, particularly if this activity could actually improve his research.

Not so, says my senior colleague, Dr. Edgeworth Boks. To impress academia, says Edgie, you must have no life outside of academia. Not only that, insists the good Doctor, you should appear to have no interest in ever having a life outside of academia. Why? Because if you care about something other than academia, if the real world matters to you in any way, shape, or form, then you are something of a flight risk. Departments screen for people who enjoy academia so much (and have so little talent for anything else) that they would never think to spend time on any activity outside of it. The narrower and shallower you are, the better. Dr. Boks proudly attributes his own academic success to having been, in his own words, “the narrowest, shallowest, and least interesting person at large in North America--with the possible exception of Paris Hilton.”

Consider a man with a fiance, says Edgie. She is perfect for him. She meets all his physical and emotional needs, loves him, showers attention on him. She is beyond reproach as a potential mate. She produces as much for him as he could hope for. However, she only sleeps 3 hours a night, whereas he sleeps 8 hours a night. She uses the 5 additional hours to entertain other men at the neighborhood bar. If he judges her strictly on output, he should choose to marry her. These 5 hours are a surplus. He could not expect anything more from a “normal” mate during those 5 hours, as a normal mate would be sleeping.

But this is to ignore the signal! Her behavior suggests that she is more likely to leave him. She has demonstrated a taste for the outside option.

The behavior of a junior professor is also a signal, Edgeworth proclaims. Academics perform many onerous duties such as reading and critiquing each other’s work, attending seminars and faculty meetings, recruiting new faculty, serving on committees. These behaviors may benefit the department more than they benefit the individual providing them. They are public goods. A department is wise, then, to screen for people with few outside tastes and even fewer outside abilities. Such a person will be more reliable as a provider of the public goods. This person will show up at every seminar, well prepared, perky and punctual, because this person has no outside life. (Moreover, this person would not even know where to look for a life if he or she wanted one.) 

But what if you suffer the misfortune of having been born with more than one rigidly defined talent? What if you care about the world around you? What if you rely on a wide-ranging curiosity to fuel your research? You could be mistaken for a person of depth and versatility, thoroughly unsuited for academia!

Never fear, says Edgie. You play the violin? Your talent is world class? This is a problem, but not insurmountable: Amputate a few fingers.

You are a brilliant chess player? Again, there is a simple solution: Cheat in a tournament and get yourself banned for life from any and all chess organizations.

You have children and you love them? No big deal. Make a show of being a negligent parent. Leave a seminar in panic, say, and explain that your 2-year-old was found wandering alone at the local Food-mart, mumbling something about being thirsty and needing milk.

You write cogently and are recruited to pen a column for a popular magazine or newspaper? Edgie has a solution for you. Produce columns so sloppily written and unbalanced that no one could mistake them for something you put thought into. (Yet another proof of the cleverness of a certain NY Times columnist, says Edgie).

I do not agree with Dr. Boks. In fact, we have had many arguments on the issue. Most recently, he chided me for knowing the name of the Prime Minister of England. (How do you expect to become a tenured academic if you actually know something? he said.)  We have agreed to disagree.

Meanwhile, Dan Dreizner appears to have landed on his feet (at Tufts, no less—though Edgie insists that Tufts erred in hiring him: Dreizner is not shallow enough to become a model academic.)  As for myself, dear readers, I confess that I am not the game theorist Edgie is. My meager blogging output is not a clever means of signaling my type. I simply lack the talent to blog frequently while teaching, attending seminars, and trying to produce a high volume of scholarly research. My postings will be less frequent. I cannot do both things at once and do them well. Research will take precedence.

(I can only thank my lucky stars that I’m not as versatile as Dan...)

-p.s.babcock

Ben Bernanke's Demotion?

Is it better to be a distinguished economics professor at Princeton or to be Chairman of the Fed? Someone asked me this question at the new faculty reception this week. I couldn't give an answer.I could have mumbled something about doing whatever makes you happiest. I could have said that Ben Bernanke preferred the latter to the former, and who are we to argue? But that wasn't really what the man was asking. Which job carries more status, he meant.

As Chairman of the Fed, Bernanke will be better known. Most successful academic economists receive the respect and admiration of a small group of academics. They spend their lives writing articles that few people read and fewer understand, and end up with fan clubs that would fit inside a phone booth. (And these are the lucky ones).

There is also the issue of power. Few of us in the profession have the power to effect change. Almost no one reads our papers, even when they're good. Every now and then, the profession stumbles upon something genuinely useful, but few policymakers really listen. As Fed Chairman, Bernanke will influence the course of human events. This, in itself, is an attraction.

The profession, though, takes a dim view of usefulness. It seeks to purge Bernanke-like ambitions from the minds of its younger members. Rarely have I observed the profession fawning over economists who get things done. The typical criticism: If you're so smart, why aren't you writing articles that only 6 people read? When a candidate with a new Ph.D. goes on the job market, his advisors generally want him to get a job at a research university. A job allows him to make policy or to interact with the "real world" in any way is considered second-best, especially if it pays a lot more money.

By the aesthetics of the profession, then, this is a clear step down for Ben Bernanke.

I, however, celebrate Bernanke's move, not least because the alternative was so much worse: There are two ways to become famous as an economist these days. One is to waste one's talents by pretending to be a writer and spouting prejudice and overwrought prose for the New York Times. The second is to become Chairman of the Fed.

If fame was what he wanted, Bernanke appears to have chosen the high road. We here at Ask Edgeworth are mightily thankful for that.

-P.S.Babcock

Diversity and Drivel at the Washington Post

When discussing one topic in particular, journalists, academics, political figures and self-described enlightened persons have tended of late to become babbling halfwits.

That topic is diversity.

Here's a case in point, as reported by MSN's Jack Shafer. It seems that Washingtonian national editor Harry Jaffe wrote a peripheral comment about Post-writer turned New Yorker writer Jeffrey Goldberg:

Goldberg was up for a full-time job, he says, when an editor took him aside and said, "We would like to hire you, but we have to hire a Hispanic for that slot." He went on to report from the Middle East, but when he returned, editor Milton Coleman said the Post had no jobs.

OK, so Goldberg says the Post was pushing for diversity. There's not enough information here to tell whether he actually lost out on a slot because of that. (Who knows? Maybe he's just bitter and grumpy.) But that's irrelevant in some sense. The comment is hardly an attack against the Post, either way. Some employees from non-targeted groups will definitely lose out if a given business is truly trying to promote diversity, whether Goldberg was one of them or not. Hiring more members of group B implies hiring fewer members of group A. If you are proud of your efforts to promote diversity, then you do not recoil from this.

Conversely, if you're just hiring the best people who walk in the door, you can't be pushing for diversity. Imagine being ignorant of a person's race or gender. You couldn't very well hire blindly and then claim you were making great efforts to promote diversity.

You can't have it both ways. Either you are color blind or you are actively pushing for (or perhaps against) diversity. This is a logical necessity.

But listen to the response from the Post's managing editor Philip Bennett:

The Goldberg comment is appalling, offensive, idiotic. His own search for a diversity-free workplace may have succeeded. That's not where we live, or want to live, or intend to live. Diversity is a cardinal value of The Post and the communities we cover. Period.

The comment is offensive? Appalling? If diversity were truly a cardinal value, the comment is, in fact, a compliment. Goldberg would simply have alleged that the Post had the courage of its convictions. The comment would have indicated Post was working hard to make its workforce diverse, even to the point of sacrificing persons it might otherwise have promoted. My dictionary defines cardinal as "of foremost importance." What better evidence could there be that diversity is "of foremost importance" to the newspaper than that it made sacrifices to accomplish that goal?

Clearly, though, the Post does not have the courage of its convictions, or lacks conviction, or is simply too addled by the diversity topic to put together a coherent sentence. Its managing editor is "offended" by something that, if true, only demonstrates that he is not a liar.   

Additional comments by the executive editor seem to indicate that the Post wants to have it both ways. They want to claim they never hire anyone but the best applicant and yet they actively "seek" diversity:

...I want to make clear that improving diversity in the newsroom and in our coverage has never been in conflict with hiring the best journalists and producing the best journalism.

So the Post hires only the best journalists, but diversity is a "cardinal value." The question is then: Would they never take a marginally less qualified employee over a marginally more qualified employee to promote diversity? It sounds as though the idea that they might have done such a thing was what offended Bennet to the marrow of his bones.

So let's get this straight: Bennet was profoundly offended by the notion that the Post might actually have been vigorously pursuing its own stated goal.

This is just silly. But it is everywhere, this empty and hopelessly nonsensical rhetoric. There are benefits to diversity. How best to balance the specific benefits and costs associated with making workforces more diverse is worth discussing. Splendid! Let's do that! But many arguments don't make sense at all, any way you look at them. Bennet's is among them.

Interestingly, Jack Shafer's column is almost as muddled as Bennet's rant. Shafer does not criticize the Post's editor for his absurd poses. Nope. Shafer's major claim is that Goldberg never used the turn of phrase "doomed by diversity" to describe his predicament.

Shafer misses the whole point, of course. The phrase is flowery, melodramatic, and overwritten, but does not alter any of the arguments above. Even if Goldberg had used that specific phrase, there would have been little reason for a diversity-minded editor to be offended by the notion that he or his paper had promoted diversity. Neither Goldberg's comment, nor the flowery phrase wrongly attributed to him, merit being labeled "offensive," "idiotic," or "appalling."

(Bennet's own self-righteous diatribe, however, fits the bill nicely.)

-p.s. babcock

Price-gouging or hypocrisy-gouging?

Like most of us, I have been glued to the television--moved by images from hurricane Katrina. In the aftermath of a devastating hurricane, it is particularly important to avoid the silly moral posturing that so often characterizes news analysis of economic issues.

Every time gas prices at the pump rise quickly, there are calls for investigations of alleged price-gouging by "the oil companies." Why does this seem a bit silly to me? Lots of reasons:

1) Price-gouging investigations have occurred dozens of times in the past. Oil companies have been cleared of the charge, repeatedly.

2) Price-gouging investigations, and the accompanying congressional grandstanding, are as predictable as the summer solstice. The revenue gains from a brief period of opportunistic price-raising would hardly outweigh a negative outcome in one of these investigations.

3) Oil company profits are not particularly high compared to other industries--and do not (to my knowledge) appear to rise and fall with hurricanes.

4) Long-run prices are determined more by supply decisions of Saudi Arabia and OPEC (and demand shocks from emerging Asian economies) than by strategies of "big oil companies."

These arguments notwithstanding, media figures have been berating "big oil companies" for their selfishness. Fox's Bill O'Reilly has been particularly comical in this regard. In what looked like either a heart attack, a sexual climax, or a fit of righteous rage, he accused oil companies of making excess profits and challenged them to give 20% of their excess profits to the disaster relief effort.

Hard to argue with challenging someone to give to the relief effort. Hell, let's challenge KFC to do the same. (Full disclosure: I donated to the Red Cross, as many others have, and I think it's fine for media personalities to encourage people to donate.) It's the linkage between oil companies and the disaster that's a bit of a stretch.

The linkage assumes the existence of large "excess" profits due to the hurricane. Let's watch to see if oil companies end up earning more about 7.5% by the end of the year, or if the inevitable investigation turns up any evidence of wrongdoing. Lots of important assets have been destroyed in the gulf coast--a major oil-producing region. Pipelines, refineries, infrastructure, etc. These all have to be rebuilt.

The linkage also assumes that if prices rose at gas stations these gains went to "the oil companies." Individual merchants have enormous autonomy in times of disaster. If you possess a desired commodity, you may sell it for what you choose. It may be difficult for anyone, oil company executives included, to usurp that authority. And the linkage denies the possibility of secondary markets. (If you gave gasoline away, a secondary market might well arise in which people who received it sold the gasoline to people who valued it more.)

Also, implicit in the analysis is the idea that price increases in a needed commodity are "bad." In a post about Hurricane Charley, I wrote:

What happens when we decide that price increases are "immoral"? Goods don't get there. So fewer people end up with ice, generators, gas, or food. It's true, of course, that the few that end up with the goods pay less for them, but this only benefits the lucky and connected few at the expense of the unlucky many.

And this is MORAL?

To be sure, you could argue that increased prices may not have led to greater flow of gasoline to the region this time, because of insurmountable transportation problems. But even so, high prices lead to conservation. Gasoline is used only for essential tasks and only by those who value it most.

Inescapably, gas will be rationed. If not by price, then by other mechanisms: long lines and hours of waiting. Is this somehow an intrinsically better allocation?

But by far, the most bizarre aspect of O'Reilly's comment is its hypocrisy. He offered no evidence at all that oil companies profits rise dramatically when disasters occur. (It would seem particularly unlikely that profits would rise when the destruction centered on a major oil-producing and refining area.) But it does seem clear that the cable news media do profit from disaster.

The first Gulf War put CNN on the map and established it as a force to be reckoned with. Ratings rise dramatically when tragedy strikes. No one profits more from this terrible tragedy--or any other tragedy (e.g., an abduction of a girl in Aruba)--than Fox.

I want to emphasize that I do not condemn cable news for their increased ratings and revenues during crisis times. On the contrary, this illustrates a main point. Because there is such fierce competition for these ratings and revenues, cable news outlets are able to perform an incredibly important service. 

It looked to me as though news people were often first on the scene. They appeared to communicate vital information before the authorities and the relief agencies were aware of the scope of the problem. There may be reasons to criticize FEMA and others for a slow response. The flip side, though, is that we should be impressed the amazing speed and scope of the media presence.

Compassion probably played a part in this response; but so, undoubtedly, did the quest for higher ratings. This, I would argue, was a very good thing. If we were to demonize the media for "profiting from disaster," if we were to limit the higher revenues that followed from the higher ratings gained from tragedy, then we would likely have slower and less thorough coverage.

And more deaths.

(A high price to pay for indulging in moral sanctimony and getting back at anyone who makes profits).

Lastly, the state of Texas appears to have shown a great deal of compassion for the victims of the hurricane. Texas appears to have sheltered and fed huge numbers. Houston--headquarters for the oil industry in the U.S.--appears to be leading the way. Not sure exactly what this means, but it seems an interesting irony.

I am not an apologist for the oil industry. Just an occasional defender of the glibly demonized. (And a critic of the dubious moral "calculus" practiced by many who don't know how to take a moral derivative.)

P.S.Babcock

Update: What We Don't Know

A brief update to the previous post on the state of the economics discipline with respect to understanding the determinants of growth in the developing world: In The Journal of Economic Literature, James Rauch has a review of A.K. Dixit's "Lawlessness and Economics: Alternative Modes of Governance." 

The article opens:

A consensus is building within the economics profession that good institutions are the key to long-run economic growth.

The reviewer quotes a number of very influential papers in the recent literature that argue this. Dixit's conclusion is as follows:

...neither empirical or theoretical research has yet advanced to the point of offering clear or confident policy recommendations for the process of institution-building or reform.

He's not alone. It's a bit of the mystery in the profession, economic growth. It cuts across ideologies and political orientations. The market-oriented recommendations called the "Washington Consensus" don't seem to have worked well, nor have other more interventionist approaches. Read the literature and you will see the same thing over and over again: We have learned a lot about what does not work. Isolated successes do not appear to generalize very well. The loose and fairly uncontroversial consensus that emerges: It is a mystery.

This does not lead to a recommendation of "doing nothing." Far from it. But neither does it warrant misrepresenting the current state of knowledge and morally browbeating those who debunk outlandish and unsupported claims.

You don't solve difficult problems by pounding your chest and pretending you already know the answers.

And when the public at large starts believing that we do know how to "fix poverty in Africa" if only developed nations had the will to do it, if only some demonized set of selfish policy-makers weren't so lazy and obstructionist--when a position that is "wishful thinking" at best becomes a club with which to pound away, without evidence or logic, at supposed opponents of inferior moral fiber--then maybe, just maybe, public attitudes impede the search for good and effective policy.

But enough on this silly movie. Next post will be on the Hurricane and its tragic aftermath.

P.S. Babcock

All it Takes is the Willful Blindness: The Boob in the Cafe, Part 2

“All it takes is the will” to end poverty. Or so they say. An HBO movie has picked up on this idea and run with it.

Ok, so here’s what happens in “The Girl in the Café”: A pathetic, wrinkled repressed, burnt-out diplomat meets a young, pretty airhead in a café. He takes her to a big summit meeting in Iceland, where she single-handedly shames a hoard of cynical diplomats into doing what they all knew was the right thing to do: Ending poverty in Africa. See, they all knew how to do it—the part about ending poverty in Africa. Hell, the diplomats knew how to do that in their sleep. But they weren’t going to do it, see, because they were playing politics, nasty politics, selfish politics, pandering politics. But then they change their minds because an incredibly dim and spectacularly obnoxious girl, the sum total of whose knowledge of economic development is zip—nothing, nada, zilch (no, less than zero, negative infinity maybe)—interrupts the proceedings and inspires them all by hurling plattitudes at them in hissy fits of snotty self-righteousness.

It’s as if “Bill and Ted’s Great Adventure” had been rewritten and played straight, with the actors and writers blissfully unaware that Bill and Ted are morons.

Ok, it’s shallow, but it’s just a silly movie. It’s fiction. Should we even care?

Yes. Because the movie captures poses, postures, and turns of speech that have become the latest fashion among enlightened persons who don’t know much economics but pass judgment on those who do. Rock stars, celebrities, humanistic studies professors, Bobos with big hearts and bigger egos. And powerful political figures. This is an important issue of the day.

We can solve Africa’s problems, or so goes the meme. “All it takes is the political will.” This phrase is popping up everywhere. And not just in the mouths of the uneducated airheads in cafes. Jared Diamond parroted the phrase recently (as I describe here.) “All it takes is the will” (and 150 billion dollars a year) and presto, poverty is gone. Economist Jeffrey Sachs talks this way, but Sachs has become a salesman. That’s fine. The world needs salesmen. We just shouldn’t believe everything they say.

The bottom line: There is no evidence at all that throwing 150 billion dollars a year at Africa will solve Africa’s problems. And there are many reasons to be skeptical. Sachs’ argument goes something like this: True, nothing we’ve done in the past has made a dent in the continent’s woes. But that just means we need to think bigger. Throw huge sums of money at the problem. That’ll do it.

My position: There may well be incremental changes and policies—carefully planned and more carefully evaluated and modified at the ground level—that will benefit Africa greatly. Splendid. By all means, let’s do that. But that’s exactly the type of change that is least likely to happen through some, huge, centrally organized, ego-powered money pump. Listen to economist William Easterly on the subject in his letter to the NYT:

For the poor, Professor Sachs and the United Nations Millennium Project propose everything from nitrogen-fixing leguminous trees to replenish the soil, to rainwater harvesting, to battery-charging stations, for, by my count, 449 interventions. Poor Africans have no market or democratic mechanisms to let planners in New York know which of the 449 interventions they need, whether they are satisfied with the results, or whether the goods ever arrived at all.

Take the nitrogen-fixing leguminous trees that cure exhausted soils. As one study pointed out, the trees don't grow well in shade, they can proliferate as weeds and they can wind up competing for soil nutrients, especially in arid areas. It's easy to decree a solution at the top, but it will never work without the detailed local knowledge at the bottom -- which planners in New York cannot possibly process.

How do we get corrupt or non-representative governments to create the institutions and policies necessary for sustained growth? This is NOT an easy question. In his NYT magazine interview Sachs bristled when the interviewer brought up the disastrous outcome of Sachs’ advice and assistance to Russia during that country’s transition to free markets. As everyone knows, it was a debacle. According to the article, though, Sachs claimed that it wasn’t his fault because the Russian authorities hadn’t done what he had asked them to do.

Duh.

So why will it be different in Africa? Why will it be different in a setting in which institutions are arguably in worse shape than they were in Russia? Why will non-representative governments cooperate with grandiose aid and development plans (that could empower local populations and cause them, perhaps, to resent the graft and corruption that sustains their leaders), when in marginally representative Russia they did not?

“All it takes is the will.”

This is a very dangerous phrase. It trivializes difficult problems and demonizes more balanced thinkers. The War on Povery was supposed to end poverty in the U.S. Strangely enough, it hasn’t. Poverty in disadvantaged communities has been virtually immune to the most well-intentioned policies. And Africa is different?

“All it takes is the will.”

If you have little or no evidence to support your position, how do you go about making an argument? By attributing all disagreement on the subject to the moral shortcomings of others. Bypass the debate. Assume that everything has been decided.

Your opponent disagrees? Then it is not because he thinks it is a bad policy, that it is likely to fail and end up harming millions, empowering dictators, and wasting resources that could be allocated more effectively in other ways. No, it is because he “lacks the will” to do the right thing. It is a moral shortcoming, and he needs to be lectured by an airhead in a cafe who knows almost nothing and understands even less.

(Here’s an idea: I propose that you give ME 150 billion dollars a year. I’ll buy a new car and then I’ll fix poverty. You don’t want to do that? Ah. Clearly, you lack the will to solve Africa’s problems. Shame on you!)

The second way to win an argument with no substance is this: Promote egomania instead of compassion.  There’s much talk in the movie (and elsewhere) about being “great.” This is the first generation that had it in its power to wipe out poverty, says the movie (and the meme.) Let’s be great!! We’ll be the greatest generation ever. We’re fantastic. We’ll be so damned great we won’t be able to stand it.

After all, this whole business of helping the poor is really about finding ways to be great, ways to pump ourselves up. It’s about how we feel about ourselves. Facts are ugly and inconvenient, and they have a strange way of forcing humility on us. They get in the way of our being great and feeling great, and, as such, they must be avoided at all costs.

One of the amusing and completely unintentional ironies in the movie is its closing quote from Nelson Mandela (about how sometimes a generation has the opportunity to “be great.”) The irony is that Mandela, himself, favored the opposite of what Sachs and the Millennium Project propose (a massive infusion of money from abroad). He favored economic sanctions against his country. He favored damaging the economic well-being of his people in order to take power away from an unjust and non-representative government, rather than funneling money from abroad through that government.

By favoring trade sanctions against South Africa, did Mandela “lack the will” to reduce poverty in his nation? Or did he simply believe there were large negative consequences of funneling large sums of money through (or in cooperation with) a bad government? 

Of course, if you mention bad governance and bad institutions, Sachs and others accuse you of blaming Africa’s problems on Africans. This is beyond infantile. The first instinct of a three-year-old is to point a finger in blame, but even a three-year-old knows not to blame a large group or an abstraction. No critic of Sachs is trying to blame poor people in Africa for the powerful leaders that oppress them (whether the oppressors happen to be Africans, Europeans, or Martians.) Sometimes a small group of powerful people screws things up for their countrymen and makes it very hard for outsiders to come in and fix things. Does it matter what nationality that group is? Is that the issue here? Of course not. The relevant question is rather: What are they doing and how does it influence our capacity to intervene?

 

Economics is a field in its infancy. We are like the medical doctors of century ago. We’re still at the phase where we use leeches, blood-letting, and enemas. We are constantly surprised by the unintended consequences of the policies we recommend. Reality humbles us and our theories, incessantly. It is a field that cries out for guarded predictions and intellectual humility. We know a few simple things, but the likely outcome of 447 centrally planned interventions in Africa is not among them.

Those of us skeptical of the methods and approaches of the Millennium Project desperately hope that effective ways to assist the poor in Africa will emerge and be implemented in coming years. We are instinctively humble about the prospects for fast, lasting, large-scale change through huge infusions of money from abroad. We know how little we know, how little economists know. This project, in its evidence-defying rhetoric and willful blindness, has all the earmarks of a grandiose and counterproductive boondoggle.

Do we lack the will to end poverty? No.

All we lack is the megalomania to worsen it.

P.S. Babcock

The Boob in the Café, Part 1

A brief announcement for my readers (you brave few):  The time has come to remove this blog from your “economics graduate student blogs” folder. New Ph.D. in hand, I have assumed my tenure-track position at University of California, Riverside.

Dr. Edgeworth Boks tells me that the tone of this blog must change. I am now an emissary for the profession, says Edgie. I must cultivate a diplomatic evasiveness. I must avoid writing anything that might offend my seniors in the profession. I must dull my satirical impulses and write with artful discretion.

Not!

To wit, I give you this new post called the Boob in the Café. There is a new film out. HBO. Have you seen it? The Girl in the Café. It is another entry the parade of Hollywood movies focusing on economic issues. Though they often strike high-brow poses, there is a rigid formula to these kinds of movies—as precise as that for any action movie, romantic comedy, or third-rate buddy movie.

1. A good character believes that the public sector should take action to accomplish a laudable economic goal (e.g., create jobs, end poverty, help Africa, reduce pollution, protect a park or building).

2. An evil, selfish, money-grubbing, or apathetic character opposes the intervention.

3. The good characters describe the good that could be accomplished by the intervention, quite eloquently.

4. The bad characters talk about money.

5. The desire to help others is equated with favoring the intervention; sloth, selfishness,  and apathy are equated with opposing the intervention.

6. Characters are good precisely if they believe the intervention will work.

7. There is little serious debate about whether the intervention would actually work.

8. Almost always, there is substantial evidence in the economics literature that the intervention would not work at all or would have trivial effects. 

I’ll give 3 examples:

A. I’ll never forget the movie “Dave” in which Kevin Kline plays an evil president and his look-alike, who takes over when the bad president dies. The difference between the old, dead, evil president and the new, humble, decent president is that the new president favors a “jobs” bill that the evil president did not. Goodness consists of wanting to solve unemployment and make the economy better by massive expansion of the public sector.

I’m not saying that creating jobs in the public sector is intrinsically misguided. Government spending is one way to stimulate the economy in the short-run. But recessions have been very short in the past several decades and most short-run effects of interventions don’t really kick in until after recessions have ended. And there is no evidence that expansion of the public sector is a cure for problems of poverty and unemployment in the long-run. In any event, it’s not the kind of issue that should be used to distinguish a good person from a bad person.

Anyone who mentions this in a movie, however, is a bad guy, with a secret stash of stock-options in some Enron-like company.

B. The issue in the American President, as I recall, hinges on the length of time allocated before internal combustion engines must be phased out (or emissions reduced, I can’t remember.) The good president briefly considers a longer phase-out process (which is to say, he flirts with the forces of evil), but then comes to his senses and pushes through the faster phase-out. Once again, there’s no consideration of transition costs or negative consequences associated with this decision, no consideration of real-world costs and benefits. Believing that an action will help people is equated, in the moral lexicon of this movie, with helping people.

C. The newest entry is The Girl in the Café. This movie is so self-righteous and it strives so hard to sound informed and intellectual, that I shall have to devote an entire post to it soon (“The Boob in the Café, Part 2”).

In the meantime, I propose a new Hollywood movie. A group of people are shipwrecked on an island. They begin to starve. There’s no way off the island. A good character, call him Ben, has an idea. Ben says they should start collecting sea-gull feathers. They should all hike to the top of a cliff overlooking the ocean. There, they should use tree sap to glue the feathers to their arms. Finally, they should all leap off the cliff and flap their arms. If they do that, Ben says, they’ll be able to fly home. A nasty character—let’s call him Milton—says that if they jump off the cliff they’ll fall into the ocean and die. Ben points at little Charlie—6 years old and starving—Look at poor Charlie, don’t you want to save Charlie? No one debates Milton’s claim that the jump-off-the-cliff-and-flap policy is flawed. Instead, they all focus on how wonderful it would be to save Charlie. It turns out, Milton only espoused the “we-can’t-fly” position so he could get back at Ben for stealing his girlfriend, Jennifer, 20 years ago. After much drama and some partial nudity, the gang sides with Ben. They all paste feathers to their arms and leap into the sky, flapping their arms. This being a Hollywood movie, they fly home, saving little Charlie in the nick of time.

Heart-warming, yes? I don’t know about you, but my eyes misted up there at the end.

I invite my readers to submit other instances of economic naivete and in the plots of Hollywood movies.

(And watch for The Boob in the Café, Part 2.)

- Mr. Dr. Philip Babcock

In Praise of Krugman's Capital

It is common knowledge among economists that the greater one’s reputation, the worse one’s presentation. Once you write something clever, no one can get away with calling you stupid. This gives you the right to say incredibly foolish things and everyone will nod and rub their chins and attribute all manner of hidden wisdom to you. Oh, what a glorious profession!

This immunity to the charge of buffoonery is your sacred right. It is a form of capital that you have worked hard to acquire. I shall call it “Big-Shot” capital—or B.S capital, for short. I, Dr. Edgeworth Boks, have more than a little of it, myself, I am proud to say. But no one does a better job of putting his B.S. capital to use than Paul Krugman. I kneel before him in awe—a lowly soldier from Athens genuflecting before a Greek god.

My misguided research assistant, P.S. Babcock (only days away from completing his doctorate and becoming an economist in his own right—heaven help us—what have I wrought?) misses the point when he criticizes the blessed Krugman. True, the venerable Krugman dispenses misleading statistics and shallow, one-sided diatribes that a first-year grad student would be beaten to pulp over in an economics seminar. But in this he displays his true brilliance! To understand P.K., one must come to understand the subtler implications of tournament theory. I, Dr. Edgeworth Boks, a game theorist of some renown, will explain some of these to the uninitiated.

Academics are not well compensated. Many people in the private sector (some of whom even have egos as big as that of an academic, if such a thing is humanly possible) earn more money. This is a great thorn in the side of academic economists. If we’re so smart, why don’t we make more money than those uneducated M.B.A.’s? Why aren’t we more famous? And most important, how do we incentivize young economists so that they will continue building castles in the sky, venerating us and our academic work, instead of accepting the higher pay that the private sector offers? How do we induce them to work very hard on pointless technicalities and formalism while surrendering forever their common sense?

We employ game theory, that’s how. We allow only a few to ascend to the highest ranks. Then we make life cushy for the winners. Formal game theoretic models that capture this intuition are called “tournament” models. In order to induce hard work in junior faculty, we create enormous rewards for the few that win promotions. Tenure, of course, is the first of these. But not all of the incentives are financial. Other incentives include immunity from being called a buffoon, even when you act like one. Junior faculty work feverishly, night and day, to acquire the Big-Shot capital that accompanies victory in tournament-like competitions for publication.

Here is the main point: If we ever denied the winners their rewards (i.e., their B.S. capital), as Babcock suggests we should, then the whole glorious system might come tumbling down in ruins. This would seem a high price to pay for a goal so trifling as integrity.

Very few careful, evenhanded economists ever have worshipers (at least, not when they are alive.)  This is because most people like to choose sides in a public debate—and, alas, no major political party has a monopoly of economic idiocy. An evenhanded economist will thus routinely disappoint people of all persuasions. In short, he will piss off everyone. Such an economist will never attain rock-star levels of celebrity.

Babcock’s attachment to notions of intellectual integrity is quaint and old-fashioned, but has no place in today’s marketplace of ideas. I defend P.K. as my colleagues do. Yes, yes, his columns are flimsy and misleading. Off the record, almost no economist, Democrat or Republican, will contest this. But when speaking off the record, my colleagues offer the following impeccable defense of P.K’s punditry:

1) If he were careful and fair-minded, no one would read him. Thus, it would be irrational of him to write honest and balanced columns.

2) He’s no worse than most other pundits in the depth and profundity of his bias, but he has a greater capacity to mislead. Again, it would be crazy not to use this advantage. (Due to P.K.’s reputation, the layperson mistakenly assumes his analysis of current events derives from his expertise in economics rather than from a passionate emotional pre-commitment to one team.)

3) He paid his dues and wrote down some very nice theoretical models of international trade, many years ago. His B.S. capital makes him untouchable.

4) Economists don’t really know much. If we spoke carefully in the public sector, people would find out how little we know. Then they would stop listening altogether.

And, finally, if the economist in question is a passionate Democrat, he or she may offer:

5) The Bush administration is so vile that it must be taken down by any means necessary—truthfulness is a luxury.

This last justification is the Guantonimo Bay excuse: P.K. is torturing the truth out there, but we must turn a blind eye to it because the stakes are so high.

Do other economists utilize their B.S. capital? Indeed. One could venerate, Greg Mankiw, say, for the intellectual twists and contortions he goes through to defend Bush Administration policies. But everyone knows that Mankiw’s employer is calling the shots. And Mankiw never really gets worked up about anything. He never seems passionately committed to an intellectual fraud the way Krugman does. At best, he seems vaguely embarrassed by some of the silly things he must say. He simply doesn’t know how to use his B.S. capital effectively. He needs to learn to froth at the mouth. He must learn to engage in character assassination of more balanced thinkers, as Krugman does. Alas, he is but a novice.

In any event, I have delivered my defense of Krugman, as we here at Ask Edgeworth promised a month ago. I would have posted earlier but I am a tenured academic and have completely forgotten how to perform certain mundane and inconsequential tasks—such as using a computer keyboard, answering email, writing a coherent sentence, or completing a task on time.

Ever yours in blissful pedagogy,

Edgie

What's Left of Academia?

This week, we here at Ask Edgeworth proudly uphold our tradition of commenting on the news several months late. Too many blogs are quick and topical. Anyone can be up-to-date. We're "the slow blog"—and proud of it.

Anyway, Lichter, Rothman, and Nevitte's analysis of political viewpoints among university faculty comes as no surprise to anyone who has wandered within 50 miles of a college campus, any campus, in the last decade or so. To anyone who hasn't, here's the news: viewpoints tilt left of the median voter. There's been some noise about this in the blogosphere.

Full disclosure: Fiscal conservative, social moderate. Sort of. No place for me in either party these days. I like markets, but acknowledge the existence of market failures and a role for government when they occur. I vote for candidates from both major parties on a case-by-case basis.

What puzzles me is that people on the right get upset about bias in academia and people on the left often seem to think it's no problem at all. This is backwards! The problem is not that conservatives--or even centrists Democrats who are only two standard deviations left of the median voter instead of three--may be denied opportunities in some parts of academia. Some definitely are. But there are other places to make a career. Creative thinkers find a way to produce good work.

No, the real problem is that discourse in universities is stifled. The lunacy at Harvard over Lawrence Summers' comments illustrates this beautifully. Universities have become havens of faith-like ideology on many issues. A narrow, stifling intellectual environment does more damage to those inside the community--to academics, themselves--than to anyone on the outside.

A centrist of either party easily notices the tilt. I sat in on graduate course in mathematical sociology that took place during the California recall vote. During a lecture, the professor said “I assume we’re all voting for Gray Davis?” It was a casual inquiry, conveying his calm, clear-eyed perception that it would be inconceivable for a student in a graduate sociology course to vote for the centrist, pro-choice Republican that the rest of a heavily Democratic state went on to vote for.

In another graduate sociology course I sat in on, it was clear there were things you could not talk about, positions you were not allowed to hold. People went crazy if you stepped beyond the bounds of what was "proper." It was out of bounds, for example, to say something positive about markets, or to take unapproved positions on the causes of urban poverty (i.e., that that the primary cause was probably not a Machiavellian majority imposing its will on a powerless minority.)

It’s not so bad in economics departments. Economists tend to enjoy saying outrageous things and striking a contrarian pose. Thus, there’s a good deal of intellectual freedom in an economics department--along some dimensions. In an International Trade course, an undergraduate student approached the professor to say thank you. Why? Apparently, it was the first course she had ever taken in which anyone had dared say a positive word about global trade. She had studied globalization in many courses. In courses outside the economics department, however, all she had ever heard were negatives.

It would be tedious to catalog incidents. Fortunately, I don’t have to. There’s lots of systematic evidence that shows a lack of ideological diversity. And there’s the Summers flap at Harvard to demonstrate that unpopular speech is often not allowed.

The main point, really--and one that seems to have been missed in a lot of the commentary--is that academics tend to hold far-left positions on fiscal and economic issues, issues that are not “moral values” lightning rods. What I find most startling about the Lichter study is that 65 percent of college faculty think the government should ensure full employment. Arguably, the government could do this through some kind of massive expansion of the public sector. I cannot recall in the last several election cycles any presidential candidate in either party taking a stance so interventionist or distortionary. This is a position far to the left of the debate in mainstream politics—and one that is not favored, as far as I have observed, by most economists.

Much of the discussion has focused on social issues. No one will mistake academia for the religious right, but distaste for the religious right does not and cannot explain a sociology professor who can’t imagine anyone in a sociology course voting for a popular social moderate. Nor does it explain a pervasive belief that government should ensure full employment. Nor does it explain a near-Luddite mistrust of global trade in some departments.

Who is damaged by this? The political right? Centrists? Moderates? Libertarians? Red-State Voters? No. As academia loses credibility, professional academics suffer the consequences. When academics deny evidence--or seek to prohibit discussion, as in the Summers case--people begin to ignore them. It is the political left that is most damaged by insularity at universities. Ideas that go unchallenged do not evolve or improve, and lose their attractiveness to those outside the temple's inner sanctum.

Instead of worrying about the lack of ideological diversity on college campuses, academics too often offer the Delong excuse. It goes something like this: “Of course academia is filled with left-leaning thinkers. Academics have to be smart. Anyone right of center is an idiot. Q.E.D.” I’m poking fun at Brad Delong here by exaggerating. But I don’t think it’s too much of a stretch, based on this astonishingly silly post.

Delong focuses on caricatures. He never addresses the truly disturbing findings from formal studies (obvious through casual empiricism to anyone who’s visited a campus in the last decade.) Academics tend to hold views to the left of the Democratic party platform, and certainly far left of what could be called the Clintonian middle ground. There is a profound economic naivete in this posture, as bad or worse than anything one would ever hear from a supply-side demagogue. This is what should concern academic economists of any party or ideology.

I’m a little disappointed in Delong here, as he has always seemed to me to be the thinking man’s Paul Krugman. Where Krugman (as pundit) has become more of an entertainer and raving polemicist, Delong has exhibited more nuance. Alas, there is no sign of nuance or fair-mindedness in this particular post.

In any event, there’s more to come next week: Dr. Edgeworth Boks will rebut my post and offer up a passionate defense of Delong.

(We here at Ask Edgeworth, unlike--say--Harvard, approve of intellectual diversity and open debate.)

-P.S.Babcock

Library Pseudoscience

Since before dinosaurs roamed the world, coffee has been prohibited in university libraries. I learned during a job interview last month at UC Merced that coffee will be allowed in their new library. They will, in fact, SELL coffee in the library. Will miracles never cease? This is revolutionary!

But should it be? Why don't all university libraries allow and sell coffee?

Most students or faculty, when they study, sip from tea cups or coffee mugs. Nothing could be more conducive to creative thought. If university libraries truly served their clientele, they would have allowed these beverages on the premises ages ago. Go to any Starbucks or Barnes and Noble near a university. What do you find? College students toiling away at their studies. It is more pleasant to study in a cafe than in the campus library. Why? Because the university libraries institute policies that alienate students and faculty. My first year at UCSD, I remember library workers asking to see my travel coffee mug to make sure I had not smuggled any of the forbidden libation into the library sanctuary. Is there a more effective way to drive students away?

Where is it written that libraries must be austere and uninviting? The explanation commonly proferred for the beverage ban is that coffee could damage the books and other library materials. Oh, really? What does a library do? It allows you to check out books. So instead of drinking coffee while you sit in the library, you check out the books, lug them over to Starbucks or Barnes and Noble, and then you read them and spill your coffee on them there.  How exactly does this policy protect the books?

Absurdity reigns.

There is another excuse that library officials put forth: It would be more expensive to clean the library if people routinely drank coffee in the library. True enough. But it would also increase the value of the service the library provided. The willingness to pay of the average consumer may be inferred by the price students commonly fork over to study in off-campus cafes. If the library sold coffee, it could easily use the revenues to pay for extra cleaning crews, if needed. The "cleaning cost" explanation smells like an excuse, anyway. Coffee is allowed in seminar rooms in departments all across campus. How is it any more difficult to keep a seminar room clean than it is to keep a library clean?

More absurdity.

Recently, after many years of resistance, my university, UCSD, began allowing coffee into the library. Hurray! Sanity has prevailed. Or not. This was done begrudgingly, and in a very slimy way. Yes, you may bring coffee into the library now. But you may do so only if you carry it in an "official university mug." They advertise the tacky plastic mug as virtually spill-proof. Baloney! It leaks like a sieve. Put coffee in it, hold it upside, and watch your shoes turn brown. I own a Brookstone mug and a Starbucks mug. Both are spill-proof. You can hold them upside down, shake them, pound them, spin them like batons, and you won't ever spill a drop. Both are superior in every way to the butt-ugly university mug. These, of course, are prohibited.

Imagine if academic departments functioned in the same way. "Yes, Dr. Akerlof, you may bring coffee to the economics colloquium today, but only if you carry it in our official 'economics department' mug. Otherwise, we'll throw you out on your ass." It sounds ridiculous. Petty. Offensive. Orwellian, even. But this is precisely what our library does.

Imagine a private enterprise denying its customers a valued service. Starbucks, say. Imagine they refused to allow you to drink coffee in their stores because you might spill it. Imagine that after years and years, they finally let you drink coffee in the store, but only if you stood over the trash can in case you were too sloppy. What would happen if Starbucks behaved in this manner? They would cease to exist, that's what. They would go under faster than you can say "Coffee Bean and Tea Leaf."

University libraries, of course, don't go under. (Which explains a lot).

In any event, kudos to UC Merced for thinking outside the stacks. They discarded a meaningless tradition in favor of consumer needs and preferences. Common sense prevailed

(But isn't that forbidden on a university campus...?)

P.S. Babcock

Elephants in Tutus

The first casualty of the Iraqi elections was the phrase "cultural imperialism." Will institutions develop capable of supporting the Iraqi people's demonstrated desire for self-governance? It is not clear. People of good faith may disagree about whether the war in Iraq was wise. But immoral in its very purpose? An exercise in cultural imperialism? Anyone who watched the election footage, who had empathy, who had any inkling of the common yearnings that make us human, would find it hard to believe that the Iraqi people wanted no voice in determining their affairs. Was democracy "imposed" in Iraq? Was there some indigenous "culture," inimical to democracy--(a culture of enslavement?)--that sensitive persons in the West should have sought to preserve?

Not.

A second (and rather minor) casualty was the economics of voting. Economists argue that voting is irrational. The benefit to the individual of voting is almost zero. The chance that one's own vote will be decisive in a national election is so small as to be meaningless. But the costs are nonzero. In the hour or so it takes you to get to your polling place and punch holes in a ballot, you could do all kinds of things. You could make a ham sandwich! Forgoing the ham sandwich and deciding to vote makes you worse off. How, then, do we explain voters in Iraq and Afghanistan? In addition to giving up a potential ham sandwich, they appear to have risked their lives.

I was chatting with a group of economists about this a couple of weeks ago. Chief among their proposed answers was that the voters may have felt a social pressure to conform. Informal reputational effects within their communities induced them to vote. Something like that. I suggested that maybe the voters wanted to be a part of something larger than themselves. Maybe the thought of helping create a better world, for their children and their fellow citizens, gave them hope and joy. (More utility than a ham sandwich, even.)

Long silence from the economists. I wouldn't go that far, said one, at last.

You'd have thought I proposed that pink elephants in tutus were dancing around the room.

Most of the profession seems to believe that moral passion is a kind of insanity. The willingness to risk everything to create a better life for other people is something to be explained away or belittled. We have the intellectual freedom to look down on moral courage because someone, somewhere--or a great many someones--risked a great deal to create the institutions that make our smugness and condescension possible. Ironic, that. When we economists write down a general equilibrium model, we make assumptions about laws, structures, institutions. Voluntary exchange. Rights. In real life, the structures were not assumed into existence. People risked their lives to make these structures work. If human beings were what economists think we are, we would not vote, our institutions would not work, intellectual freedom would be minimal, and there would probably be no economics. Economists exist, then, because of the existence of mechanisms they deny, impugn, and belittle.

We are because we are wrong.

-P.S.Babcock

Betraying the Profession: Boks Takes on Summers

(Yesterdays NY Times article on Larry Summers has lured Dr. Edgeworth Boks from his tenure-induced opiate-haze. The following are Dr. Boks' comments on the Summers controversy.)

Harvard President Larry Summers' remark about a possible relationship between gender and math/science aptitude--the casual mention of a hypothesis for which there is modest evidence but which has neither been proven nor refuted--would not be inappropriate at an institution of higher learning.

It was inappropriate, however, at Harvard.

(And Princeton, Yale, and MIT, according the the presidents of these institutions.)

Summers should be roundly criticized for his remarks. There are things one simply doesn't say. Any deviation from what enlightened persons wish to believe--any attempt to base intellectual inquiry on evidence or to open one's mind to unpopular possibilities--must be avoided if one is to maintain one's reputation among the right kinds of people. One's primary purpose as president of a major university is to indulge intellectual prejudice wherever one finds it, to stroke the egos of wildly impassioned ideologues who care not a fig for evidence, and to be polite to academics. Truth, evidence, honest inquiry, the search for answers--these are far, far, far less important than politeness. The finest universities have a duty to place politeness above intellectual inquiry.

A major university, properly viewed, is a charm school.

The New York Times mentions that Summers has repented, as it were, for his inappropriate candor and intellectual honesty. He has been seeking advice on damage control from Bill Clinton and David Gergen, among others. Gergen compares Summers to Socrates and quips that Socrates was executed. Are we to believe, then, that what Socrates truly needed was a David Gergen--a spin doctor? Exactly that! Socrates chose to die, rather than to disavow his views. True, he became an example to millions, inspired generations to come, was venerated for his courage, his wisdom, his virtue. And yes, his philosophy would have seemed hypocritical had he capitulated. Still, if he had had a David Gergen, a Karl Rove, a Bill Clinton, to wean him from his vile addiction to intellectual honesty, he would have accomplished so much more! The powers that be in Greece would have felt placated. Everyone would have gone home with a warm feeling in his tummy--ignorant, bigoted, and blissfully unchallenged. And Socrates would have lived.

Economic models depict rational agents who act in their own self-interest. Summers failed to do this by mentioning an idea that challenged and disturbed others. Shame on him! As an economist, he more than anyone else, should know to resist the superstition of pointless integrity. He should know to calibrate his opinions so as to maximize the gain he receives from those hearing them. A passion to learn the truth--to engage the evidence, to pursue knowledge--does not enter as a component of utility in any model I have seen. It is thus a superstition. It is particularly misguided when it interferes with the quest for the wise and truly acceptable lifetime goals: the maximization of status and wealth. Shame on you, Larry.

P.S. Babcock, my misguided research assistant, believes that the role of universities is to challenge orthodoxies and to explore provocative ideas, based on evidence. He finds it appalling that Summers is now seeking advice from acknowledged masters of doublespeak and spin. Babcock believes that if the choice is between truth and politeness, an academic with integrity must choose to speak a cold truth over some warm and oily falsehood. What an ignoramus Babcock is! (How could he have studied with me, Dr. Edgeworth Boks, all these years--knowing my high reputation and the number of times I have been published in Econometrica--and still have remained so clueless and principled? I must be a very poor teacher, indeed.)

Take it from me, dear readers: Intellectual honesty is the scourge of academia. It is a dangerous virus carried by rats--very rude and insensitive rats--who must be crushed whenever they raise their ugly heads.

Fortunately, my comrade in economics, Larry Summers, appears to have learned his lesson.

Yours in warmest condescension,

Edgie