Topic: General

Who’s Freaking Out?

In Friday’s New York Times, Charles R. Morris concludes his op-ed, “Freakoutonomics,” with the following thought:

If one counts only the size of houses and cars, and the numbers of electronic gadgets stuffed into rec rooms, Americans are probably better off than ever before. But as the 1870’s suggest, economic well-being doesn’t come just from piling up toys. An economy has psychological or, if you will, spiritual, dimensions. A conviction of fairness, a feeling of not being totally on one’s own, a sense of reasonable stability and predictability are all essential components of good economic performance. When they were missing in the 1870’s, in the midst of a boom, the populace was brought to the brink of revolt.

Well, all right. How about if we count lifespan? Number of people suffering from near-constant bacterial infections? Portion of the population with adequate nutrition? Average height? This is all of a piece with big cars, big houses, and shiny geegaws in the rec rooms. Yeah, if one counts all this stuff—all the women that didn’t die in childbirth, all the people not crippled from polio, etc.—we’re probably better off. Just maybe.

Morris is right that there is a psychological or spiritual dimension to the economy. But its rather absurd to imply that the populace is now a slow-burning fuse ready to explode if we don’t suddenly veer toward Morris’s politics.

Pundits seizing upon the happiness data often make try to make hay of the fact that average happiness hasn’t risen with income over the last half-century. The trend in average happiness is flat as Kansas. But then the point cuts both ways: judging from that data, we’re exactly as happy as our grandparents in the communitarian, “Leave It to Beaver,” bowling league, 1950s Golden Age.

Earlier in his column, Morris writes that in the days of the rapacious “Robber Barons,” “the yawning gap between the very rich and everybody else fanned resentments.” Morris then mentions that our present gap is just about as yawning, and so, it is implied, we had better brace ourselves for the inevitable resentment, and a populace “at the brink of revolt.” The proletariat may yet rise!

It’s a thought, isn’t it? Maybe someone has even tried to find out whether it is true!

In their fascinating paper, “Inequality and Happiness: Are Americans and Europeans Different?” Alberto Alesina and Rafael Di Tella of Harvard and Robert McCulloch of Imperial College London measured the effect of income inequality on average self-reported happiness. (Here is the downloadable full paper [pdf].) Does inequality breed ill-feelings? It depends. It turns out that inequality has no significant effect on average reported happiness in the U.S., but it does in Europe. Why?

First, Americans believe that our system affords a high degree of income mobility, so people at the bottom see themselves as having the chance to rise. Therefore income gaps, even yawning ones, breed little resentment. (Indeed, a bigger gap implies a bigger payoff for making it big time.) In Europe, on the other hand, folks see it as harder to move up and down the income ladder, so inequality chafes among the poor. Additionally, ideology matters. The authors write, “There is evidence of inequality generated unhappiness in the US only for a sub-group of rich leftists.” That’s it: rich leftists.

Now, I have no idea whether Charles Morris is a “rich leftist,” or what, but Alesina, Di Tella, and Maculloch’s finding is wonderfully illuminating. NYT editorials generally are not written by people at the bottom of the income distribution, but by people ranging from the middle to the top. Rich leftists, aggravated for ideological reasons by inequality, might assume that the aggravation can only be so much worse for those deprived of condos with a Park view. However, they’d be wrong; there is no detectable aggravation further down the distribution. Whatever you think the opiate of the proletariat is, well, it’s working. So the idea that inequality is breeding widespread discontent–driving Americans toward the brink of revolt, even–is probably little more than a grossly fallacious generalization from an unrepresentative sample.

Freakoutonomics, indeed.

Topics:

When Going Gets Tough, Public Schools Get Private

School choice opponents love to declare that “unlike private schools, public schools have to teach everyone.” Well it turns out that that’s not really true. As Dan Keating and V. Dion Haynes expose in today’s Washington Post, when kids’ disabilities get too tough, the D.C. Public Schools turn to private institutions, where disabled students can finally get the specialized attention they need.

This doesn’t just happen in Washington, though. According to the National Association of Private Special Education Centers, almost every state in the union has disabled children attending private institutions at public expense. Unfortunately, at least in the nation’s capital, the public schools tend to greatly understate what they are doing, either as a result of bureaucratic dysfunction, as Keating and Haynes suggest, or simply because no one likes getting caught in a lie.

Whatever the reason, for public schools the truth hurts.

New at Cato Unbound: Richard Florida on the Future of Work

Today, in the hot-off-the-WordPress new edition of Cato Unbound, Richard Florida writes about “The Future of the American Workforce in the Global Creative Economy.”

Bestselling author of Rise of the Creative Class, Florida argues that the old industrial era has given way to a new creative era. Science and technology, art and design, and culture and entertainment have superceded natural resources and industrial infrastructure as the key to economic success. Talent is now the key factor of production and winners in global economic competition will be those who can best deploy and attract it. However, the creative economy is a source of increasing inequality both within and between nations. Florida argues that the key to bridging the gap between the creative and service sectors is to harness the creativity of service sector workers to make their jobs both higher-paying and more satisfying.

Florida’s essay is just the beginning of what promises to be an eye-opening conversation about “The Future of Work.” Big-thinkers Robin Hanson, Ed Leamer, and Frank Levy will reply in the days to come. As always, bloggers are encouraged to join the fray and respond to Cato Unbound essayists on their home turf; we’ll excerpt and reprint some of the best of the blogosphere.

The FDA and Your Dinner Plate

Two years ago, Time asked me to write one half of a short point-counterpoint on the obesity debate for a special issue of the magazine entirely devoted to how government should intervene to prevent the fattening of America.

My job was to defend the notion of personal responsibility (my meager 350 words were the only such defense the entire issue). I remember squabbling with one of the magazine’s editors over one contention I made in the article – that it was only a matter of time before public health activists and the federal government would attempt to regulate the portion sizes of food served in restaurants. Seemed like a logical prediction of where things were headed. The editor accused me of hyperbole, and nixed the prediction from the piece.

Last week, this story hit the wires:

Those heaping portions at restaurants – and doggie bags for the leftovers – may be a thing of the past, if health officials get their way.

The government is trying to enlist the nation’s eateries in the fight against obesity.

The report, funded by the Food and Drug Administration, lays out ways to help people manage their intake of calories from the growing number of meals prepared away from home, including at the nation’s nearly 900,000 restaurants and other establishments that serve food. One of the first things on the list: cutting portion sizes.

“We must take a serious look at the impact these foods are having on our waistlines,” said Penelope Royall, director of the health promotion office at the Department of Health and Human Services.

The recommendations are voluntary.

For now.

More Temperance Tomfoolery

This morning on the radio, I heard the Washington Post’s Richard Morin express alarm at the latest study from the Center on Addiction and Substance Abuse regarding underage drinking. This year’s study — like previous studies from CASA — declares underage drinking a monumental problem, and concludes that the alcohol industry is not only to blame, but that the industry’s bottom line is dependent on continued consumption by minors.

Morin is an ideas guy. He should know better than to buy into what a baldly neoprohibitionist group like CASA puts in its press release without a bit of skepticism. Unfortunately, he’s not alone — this short NY Times piece bites on the study, too.

CASA has an unfortunate history of fudging data in pursuit of an anti-alcohol agenda. The group had to apologize and retract a 2002 study just hours after its release when critics pointed out massive errors in methodology.

The invaluable Statistical Assessment Service at George Mason University (STATS) takes a crack at this year’s study and, once again, finds it lacking:

Here are a few numbers that don’t make sense: according to their estimate, over 20 billion drinks are consumed by underage drinkers. STATS was unable to reconstruct this number. According to their own analysis, 47.1 percent of kids age 12-20 are “drinkers”, that is, they consume at least one drink per month. According to the 2000 U.S. Census, there are 35.8 million people in the United States in this age range; of these, just under 17 million drank in the past month. The average number of drinks/month, according to the data given in this article, is 35.2 per person per month– or about 422 per year. This amounts to about 422 times 17 million, or just under 7.2 billion drinks per year, far from the 20 billion reported in their table, and used for their analysis. For these same kids to consume 20 billion drinks, each teen would have to consume over 1,000 drinks per year, or almost three drinks a day!

STATS runs through CASA’s other hysterical claims, debunks them, then concludes:

The upshot of all this: the number of drinks consumed by youth under 21 is overestimated, the cost per drink is overestimated, the amount of drink attributed to abuse and dependence is overestimated, and the benefit to the industry of youth drinking and alcohol abuse and dependence is overestimated.

Alcohol industry giant Diageo has started a blog to debunk neoprohibition nonsense. Regarding the CASA study, Diageo also points out that nearly all statistical data indicate a sharp decline in underage drinking over the last 15 years, as well as sharp declines in the social problems one might associate with alcohol abuse — drunk driving fatalities, for example. (While Diageo is an alcohol manufacturer, the data it cites come from the federal government.)

Two other points to consider in all of this:

  • This type of data manipulation is alarmingly common among anti-alcohol activists. Just a couple of months ago, the American Medical Association (which has adopted an odd, militant temperance philosophy of late) was caught passing off an Internet poll on spring break and alcohol consumption as scientific, complete with a made-up margin of error. That story was all over the media before any reporter or editor thought to look at its methodology. And it’s unlikely that the millions who saw the original story on the Today Show or read about it in USA Today saw the handful of follow-up stories showing the poll to be little more than anti-alcohol propaganda.
  • There’s no question that underage drinking is common, and much of it is unhealthy (though I don’t buy into the notion that each time a glass of alcohol touches a 19-year-old’s lips qualifies as an incident of “abuse”). But it’s not nearly as widespread as the neoprohibition crowd would have you believe.  Nor is putting bans or severe limitations on alcohol marketing the proper way to address it.   

Unfortunately, neither CASA and its comrades in temperance nor the alcohol industry will consider what I think is a far more sensible approach: Abolish the federal drinking age and, at the state level, adopt a more realistic minimum age — 18 or 19 for purchase, with no minimum for consumption under parental supervision.

Prohibitions on intoxicants have never worked, and never will. They encourage binging and “underground” consumption.

Smeared by Krugman

Well, Paul Krugman sure smeared me in his May 29 column (sub. req’d.) where he accused me of “fraud pure and simple” in congressional testimony eight (!) years ago.

Krugman’s screed was just another salvo in the current global warming charm offensive, coinciding with Al Gore’s screeching movie, demonstrations against Max Mayfield, director of the National Hurricane Center, because he had the audacity to NOT blame last year’s Hurricane Katrina on global warming (which would have been “fraud pure and simple”), and multiple smearings of any climate scientist who dares to speak out against the current hysteria.

Krugman was incensed with my July 27, 1998 testimony before the House Committee on Small Business.  In it, my purpose was to demonstrate that commonly held assumptions about climate change can be violated in a very few short years.

One of those is that greenhouse gas concentrations, mainly carbon dioxide, would continue on a constant exponential growth curve.  NASA scientist James Hansen had a model that did just this, published in 1988, and referred to in his June 23, 1988 Senate testimony as a “Business as Usual” (BAU) scenario.

BAU generally assumes no significant legislation and no major technological changes.  It’s pretty safe to say that this was what happened in the succeeding ten years.

He had two other scenarios that were different, one that gradually reduced emissions, and one that stopped the growth of atmospheric carbon dioxide in 2000.  But those weren’t germane to my discussion. Somehow, Krugman labelled my not referring to them as “fraud.”

The BAU scenario produced a whopping surface temperature rise of 0.45 degrees Celsius in the short period from 1988 through 1997, the last year for which there was annual data published by the United Nations’ Intergovernmental Panel on Climate Change at the time of my testimony. The observed rise was 0.11 degrees.

I cited the reasons for this.  In fact, the rate of carbon dioxide increase in the atmosphere was quite constant–rather than itself increasing like compound interest–during the period.  Ten years later, Hansen published a paper in which he hypothesized that “apparently the rate of uptake by carbon dioxide sinks, either the ocean, or more likely the forests and soils, has increased.”  This was not assumed in any of his scenarios. In fact, the general hypothesis has been that, as the planet warms, the ocean takes up carbon dioxide at a slower rate.

Then, contrary to everyone’s expectation, the second most-important global warming emission, methane, simply stopped increasing.  Some years have shown an actual drop in its atmospheric concentration. To this day, no one knows why.

There’s also the nagging possibility that we haven’t yet figured out the true “sensitivity” of surface temperature to changes in carbon dioxide.  Scientifically, that’s a chilling possibility.

On May 30, Roger Pielke, Jr., a highly esteemed researcher at University of Colorado’s Center for Science and Technology Policy Research, examined Hansen’s scenarios.  Of the two “lower” ones, he concluded, “Neither is particularly accurate or realistic. Any conclusion that Hansen’s 1988 prediction got things right, necessarily must conclude that it got things right for the wrong reason.” (italics in original)

That’s precisely the keynote of my testimony eight years ago:  in climate science, what you think is obviously true can literally change overnight, like the assumption of continued exponential growth of carbon dioxide, or how the earth responds.

Cost-Shifting in Health Care?

Today’s New York Times reports on a new study that claims that low payments from Medicare and Medicaid lead providers to shift costs to private payers.

Sounds plausible, but economists are skeptical.  Michael Morrissey argues that cost-shifting can only occur under limited circumstances (usually, when government has restricted competition among providers), and that what’s actually happening is that providers are price discriminating. 

It may sound like an unimportant difference, but here’s the rub.  If Morrissey is right, then increasing Medicare and Medicaid payments should increase the prices that providers charge private payers. 

Is that what the Blues want?