Day: November 5, 2014

“Directed Technical Change,” D. Acemoglu (2002)

A Fine Theorem

If I increase the supply of something, its price should go down. And if I decrease the supply, its price should rise. Some markets do not seem to follow this pattern, however, with skilled labor in the US since 1970 being a famous example. As the percentage of college-educated workers has risen the U.S., the premium paid to the college educated has also risen. How can this be? One hypothesis is skill-biased technical change: the innovation that has occurred over the past few decades, computers included, has been complementary with the skills of educated workers. When might we expect innovation to complement certain factors?

An old and incorrect answer, previously discussed on this site, is that innovation will replace “expensive” factors of production. If labor is dear, for instance, firms will try to invent machines to replace labor. This intuition is wrong: in competitive markets, all factors are paid…

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Kill the IPCC: After decades and billions spent, the climate body still fails to prove humans behind warming

Financial Post | Opinion

The IPCC is in a state of permanent paradigm paralysis. It is the problem, not the solution

The IPCC has given us a diagnosis of a planetary fever and a prescription for planet Earth. In this article, I provide a diagnosis and prescription for the IPCC: paradigm paralysis, caused by motivated reasoning, oversimplification, and consensus seeking; worsened and made permanent by a vicious positive feedback effect at the climate science-policy interface.

In its latest report released Friday, after several decades and expenditures in the bazillions, the IPCC still has not provided a convincing argument for how much warming in the 20th century has been caused by humans.

[np_storybar title=”IPCC models getting mushy” link=”http://opinion.financialpost.com/2013/09/16/ipcc-models-getting-mushy/”]In the next five years, the global warming paradigm may fall apart if the models prove worthless. Keep reading.
[/np_storybar]

In the 1990’s, the world’s nations embarked on a path to prevent dangerous anthropogenic climate change by…

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Britain is a world leader in exporting creeps » Nick Cohen

The British recruits who have joined Isis are not exceptions. They flourish in a culture in which it is so commonplace to offer support to authoritarian regimes and movements that few bother to condemn it.

Free speech ought to mean the freedom to challenge and criticise in all except the most tightly defined circumstances. Instead in Britain tolerance has become indifference; a lazy desire to live in our comfortable bubbles.

The dominant culture views vigorous criticism as rude or insensitive – or, to use that popular and completely meaningless school-prefect putdown, “inappropriate.” More often that not, criticism is taken down and used as evidence of the critic’s failings, his or her obsessions and phobias.

We cannot be bothered to challenge fanatics. We say we don’t want to ‘force our views on others’ – as if argument were physical coercion. And if those others leave England to enslave Kurdish women, or applaud kleptomaniac dictators, we are not responsible. We never concerned ourselves with their affairs, nor argued with them for a moment.

Many poisonous plants have bloomed in this dank climate.

via Britain is a world leader in exporting creeps » Spectator Blogs.

More on Cunliffe’s Great Leap Backwards

The NZ Classical Liberal

Yesterday I noted that David Cunliffe’s recent speech on the economy contained very little beyond populist twaddle aimed at painting himself as the champion of the ignorant and defender of the bewildered. I did not, however, devote much energy to pointing out specifically where and how Cunliffe was wrong.

Cunliffe seeks to exploit the credulity of those who haven’t the foggiest notion of how an economy actually functions – those dissatisfied by the Labour Party’s refusal to once again advocate for a command economy.   And to fuel their fervour, Cunliffe threw his listeners plenty of juicy post hoc ergo propter hoc fallacies and more than a few straight out factual errors in support of their shared delusion that economic freedom has been bad for the economy.

But if Cunliffe’s case against the economic reforms of Roger Douglas in New Zealand, Margaret Thatcher in the UK and Ronald Reagan in the…

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Bryan Caplan on the pathologies of poverty

Bryan Caplan drew up a nice list of factors that contribute to poverty

  • alcoholism: Alcohol costs money, interferes with your ability to work, and leads to expensive reckless behaviour.
  • drug addiction: Like alcohol, but more expensive, and likely to eventually lead to legal troubles you’re too poor to buy your way out of.
  • single parenthood: Raising a child takes a lot of effort and a lot of money.  One poor person rarely has enough resources to comfortably provide this combination of effort and money.
  • unprotected sex: Unprotected sex quickly leads to single parenthood.  See above.
  • dropping out of high school: High school drop-outs earn much lower wages than graduates.  Kids from rich families may be able to afford this sacrifice, but kids from poor families can’t.
  • being single: Getting married lets couples avoid a lot of wasteful duplication of household expenses.  These savings may not mean much to the rich, but they make a huge difference for the poor.
  • non-remunerative crime: Drunk driving and bar fights don’t pay.  In fact, they have high expected medical and legal expenses.  The rich might be able to afford these costs.  The poor can’t.

Caplan argues that there is an undeserving poor if they fail to follow the following reasonable steps to avoid poverty and hardship:

  1. Work full-time, even if the best job you can get isn’t fun.
  2. Spend your money on food and shelter before getting cigarettes and cable t.v.
  3. Use contraception if you can’t afford a child

The Feed the Kids Bill still leaves their parents to go hungry!

The Feed the Kids Bill that has been reintroduced into the new New Zealand Parliament still contains no provision to feed the parents who are too poor to make their children breakfast.

Why are these hungry parents not invited for breakfast as well? No parent would have breakfast if their children was to go hungry. Both the parent and child must have gone hungry that morning, perhaps morning after morning. There is no other charitable explanation.

The Bill aims to set up government funded breakfast and lunch programmes in all decile 1-2 schools. The cost is $100 million a year – including food, staffing, administration, monitoring and evaluation.

Lindsay Mitchell was on the money when she wrote:

Even parents reliant on a benefit are paid enough to provide some fruit and modest sandwiches daily.

An inability to do so is a symptom of a greater problem requiring scrutiny – for the sake of their child.

“The ‘income management’ regime provides a response to genuinely hungry children.

It may interest you that even Labour advocated for extended income management in its election manifesto.

Their 2014 ‘Social Development’ policy paper proposed, “…allow[ing] income management to be used as a tool by social agencies where there are known child protection issues and it is considered in the best interests of the child, especially where there are gambling, drug and alcohol issues involved.”

Hungry children is a child protection issue. Parents who fail to feed their children should come to the attention of the child protection authorities. Those on the benefit should be subject to income management  because they clearly are spending their money elsewhere.

On the Left, there is a refusal to discuss the role of addiction and incompetent parenting in child poverty. The 2014 election manifesto of the Labour Party is a welcome departure from that tradition of denial.

Air Conditioning, Cable TV, and an Xbox: What is Poverty in the United States Today?

An American Point of View

heritagePublished on July 18, 2011 by Robert RectorandRachel Sheffield Backgrounder #2575

Abstract: For decades, the U.S. Census Bureau has reported that over 30 million Americans were living in “poverty,” but the bureau’s definition of poverty differs widely from that held by most Americans. In fact, other government surveys show that most of the persons whom the government defines as “in poverty” are not poor in any ordinary sense of the term. The overwhelming majority of the poor have air conditioning, cable TV, and a host of other modern amenities. They are well housed, have an adequate and reasonably steady supply of food, and have met their other basic needs, including medical care. Some poor Americans do experience significant hardships, including temporary food shortages or inadequate housing, but these individuals are a minority within the overall poverty population. Poverty remains an issue of serious social concern, but accurate information…

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Down and Out in America: only 82% of households below the poverty line have air conditioning!

line chart:air conditioning in U.S.

  • Air conditioning equipment is more common in single family homes (89%) than in housing units in apartment buildings (82%). 
  • 18 percent of households below the poverty line do not have any air conditioning equipment at all.
  • About a third of households below the poverty line use room air conditioning compared to 15% of households with an income above $100,000.
  • In contrast, about 75% of households with incomes above $100,000 use central air conditioning compared to just 44% of households below the poverty line. 

via Residential Energy Consumption Survey (RECS) – Analysis & Projections – U.S. Energy Information Administration (EIA).

The reversing gender gap: why women choose not to be scientists, engineers and IT professionals

Concerns about the lack of women undertaking careers in science and engineering are based on one simple false premise: that science and engineering are the most prestigious choices available to women with great ability in maths and science at high school.

If relatively more prestigious career options are open to women who also happen to qualify for science and engineering, women will be underrepresented in science and engineering simply because they have better career options than the men who become scientists and engineers.

In New Zealand, just as many women as men qualify for science and engineering and the IT degrees. Not as many women who have qualified take up this option simply because they also qualify for medicine and law in greater numbers than the men who happen to qualify for science, engineering and IT degrees.

In the United States, the Association for Psychological Science found that:

Women may be less likely to pursue careers in science and math because they have more career choices, not because they have less ability, according to a new study published in Psychological Science.

Although the gender gap in mathematics has narrowed in recent decades, with more females enrolling and performing well in math classes, females are still less likely to pursue careers in science, technology, engineering, and mathematics (STEM) than their male peers.

Researchers tend to agree that differences in math ability can’t account for the underrepresentation of women in STEM fields. So what does?

Developmental psychologist Ming-Te Wang and his colleagues at the University of Pittsburgh and University of Michigan wondered whether differences in overall patterns of math and verbal ability might play a role.

The researchers examined data from 1490 college-bound US students drawn from a national longitudinal study. The students were surveyed in 12th grade and again when they were 33 years old. The survey included data on several factors, including participants’ SAT scores, various aspects of their motivational beliefs and values, and their occupations at age 33.

Looking at students who showed high math abilities, Wang and colleagues found that those students who also had high verbal abilities — a group that contained more women than men — were less likely to have chosen a STEM occupation than those who had moderate verbal abilities.

This outcome is no surprise for those familiar with the gap between men and women in verbal and reading abilities – a gap that is strongly in favour of women

The OECD PISA tests at the age of 15 find that teenage boys have a slight advantage in maths  – a few percentage points – teenage girls have a serious advantage in reading.

The OECD PISA tests at the age of 15 find that this superior verbal and reading abilities of teenage girls the equivalent of six months extra schooling. One half year’s education goes a long way towards explaining many wage gaps by gender,ethnicity in race. This six-month edge in schooling is a serious advantage when qualifying for university.

Young women choose to not pursue science, engineering and IT careers because there are other career options that allow them to use their superior verbal and reading abilities – other careers is that allow them to be more successful in life than being a scientist, an engineer or an IT geek. As the Association for Psychological Science explains in the same press release cited above:

Our study shows that it’s not lack of ability or differences in ability that orients females to pursue non-STEM careers, it’s the greater likelihood that females with high math ability also have high verbal ability,” notes Wang. “Because they’re good at both, they can consider a wide range of occupations.

To put it bluntly, science, engineering and IT degrees are for young people who lack the verbal and reading abilities to get into medicine and law. Science, engineering and IT good degrees are for those who can’t get into medicine and law. They could have been contenders if they were more articulate and well-read.

There is a gender disparity in science, engineering and IT because teenage girls find these degrees to be inferior choices – inferior choices given the set of abilities they have when considering their career options.

HT: Mark J. Perry