Thursday, October 31, 2013

Economics of Halloween

2013 ASET Conference

This year the annual ASET (economics) conference will be held in conjunction with the ACSS conference.

Keynote Address:

Mark SchugDr. Mark C. Schug, Professor Emeritus University of Wisconsin-Milwaukee.

"Common Core in the Social Studies: Who Desegregated Major League Baseball, Jackie Robinson or Adam Smith?"

2013 ACSS Fall Conference

Saturday, Nov. 2nd

Grand Canyon University

"Common Core: Staking a Claim in the 21st Century"

A New Addition This Year - Pre-Conference Workshops!

Economics - Common Core - Geography and many more...

Friday, November 1, 2013

Wednesday, October 30, 2013

Your sweet tooth is displacing impoverished Brazilians, Cambodians and Africans

By 2020, the world will consume 25% more sugar than it does now. Where will it come from? At the moment, the biggest exporters of sugar are Brazil, Thailand, Australia and Guatemala. But that’s changing. Sugar cane uses more land than almost any other major agricultural commodity, which is fueling demand for more land. Of the 31 million hectares—about the size of Italy—currently used to produce sugar, around 15% (pdf, p.4) involves land purchased in 100 major deals inked since 2000, says Oxfam, a non-governmental organization. Often, these land sales are to foreign investors:

Tuesday, October 29, 2013

Fear Itself: The New Deal and the Origins of Our Time

Fear Itself: The New Deal and the Origins of Our Time

By Ira Katznelson. Liveright, 2013, 720 pp. $29.95.

Today, Americans tend to understand the New Deal in a few standard ways. The consensus view is triumphalist: the New Deal was the first step in the United States’ muscular emergence from the Great Depression and the beginning of the country’s rise to become the undisputed “leader of the free world.” Then there are the more ideological interpretations. Liberals see the New Deal as a vindication of Keynesian economics, strong labor unions, and a secure social welfare state. In the liberal view, Roosevelt confronted the fear spawned by the cruel and crushing hardships of unfettered capitalism during the 1920s. Conservatives hold, meanwhile, that the New Deal left a legacy of unrestrained government intrusion into the private sector and quasi-authoritarian limits on liberty and the free market. In the conservative view, Roosevelt is himself the source of fear, standing in for the menace of unbridled executive power.

The New Deal era portrayed in Ira Katznelson’s Fear Itself contrasts sharply with all those conventional accounts.

Many histories of the New Deal cast Roosevelt as a hero, quashing fear and winning the day for democratic principles, remaking the nation’s social contract, and committing his country to the cause of global peace. Katznelson eschews this formula, focusing instead on the southern Democrats in Congress who emerged as the pivotal characters in the New Deal’s transformation of the American state. Katznelson painstakingly details how Roosevelt’s agenda would not have been possible without the endorsement by southern representatives of a massive expansion of federal power at home. “Without the South,” Katznelson asserts, “there could have been no New Deal.”

The South in the 1930s was defined by what the historian C. Vann Woodward has called “the paradoxical combination of white supremacy and progressivism.” The progressivism had its roots in a southern economy that depended on agriculture and, as a result, suffered an unusual degree of penury during the Depression. Those dire circumstances fueled an appetite for generous social welfare policies and large infrastructure projects. Hard times also pushed southerners to accept the sweeping regulation of capitalist industries, especially those associated mostly with the North, such as banking, railroads, and utilities.

But an even more powerful factor in southern politics was the strict racial hierarchy that placed whites above African Americans and that imbued the South with what Katznelson calls “powerful authoritarian tendencies.” Indeed, when it came to white supremacy and Jim Crow, the South’s congressional representatives displayed an unusually fervid and disciplined unanimity. By dint of their sheer numbers and their seniority in Congress, they wielded an effective veto over every major legislative effort of the Roosevelt presidency. Katznelson terms the result a “southern cage,” which resounded with an “obbligato -- the deep and mournful sound of southern political power determined to hold on to a distinctive way of life.”

At each point, Katznelson masterfully documents the extent to which southern Democrats decreed as a nonnegotiable precondition to any legislative action the prevention of African Americans in the South from benefiting from the New Deal in any way. The segregationists supported the Tennessee Valley Authority, but only so long as the cheap electricity it produced flowed only to communities that were strictly segregated. Likewise, African Americans were specifically excluded from New Deal legislation that set minimum wages and secured benefits for farm laborers and domestic servants.

Katznelson plunges much deeper than most historians of the era into the lives and careers of the South’s Jim Crow New Dealers. He profiles well-known figures such as Louisiana’s Senator Huey Long but also reveals the instrumental roles played by others, including Senator Theodore Bilbo of Mississippi, Senator Richard Russell of Georgia, and Hugo Black, who served as a senator from Alabama for ten years before Roosevelt appointed him to the Supreme Court in 1937. Katznelson does not spare the reader the vivid, revolting details of the unreconstructed bigotry of many southern Democrats toward African Americans. (Bilbo, an ardent New Dealer, was also an enthusiastic member of the Ku Klux Klan; while filibustering an anti-lynching bill in the Senate in 1938, Bilbo warned that “one drop of Negro blood placed in the veins of the purest Caucasian destroys the inventive genius of his mind and strikes palsied his creative faculty.”)

But Katznelson also chronicles the acquiescence of well-meaning liberals in the North who were complicit in denying black southerners both the benefits of the New Deal and the prosperity generated by the U.S. victory in World War II. The Roosevelt administration and its northern liberal allies often looked the other way while southern Democrats excised any elements of New Deal legislation that might have benefited southern blacks and thereby threatened the existing racial order. Katznelson calls this Roosevelt’s “strategy of pragmatic forgetfulness.”

Sunday, October 27, 2013

I agree with this review - another reason to follow Five books

In an interview on Foreign Memoirs

Interview Extract:

So what’s your last book?

The Sex Lives of Cannibals. I’m not sure the book legitimises the title and, in any case, it’s such a funny, engaging book that it doesn’t need a title like that. It’s the funniest of all the books I read. It’s about this guy, the author J Maarten Troost, who’s in his early 20s, hasn’t developed a career yet, hasn’t launched into a job after university, and how his girlfriend gets a job with an NGO in this tiny Pacific island nation called Kiribati, on a tiny strip of land called the Tarawa atoll. It’s the middle absolutely nowhere, zillions of miles from civilisation, and it’s this flat, baking strip of land that’s overpopulated, full of trash, people defecating on the sea shore: the worst detritus of modern society. All there is to eat is tuna. And while his girlfriend’s working there, he’s trying to write the great American novel.

Any luck?

Not much, so he writes this book instead. And it’s so great. He writes about the infinite number of uncomfortable things about Kiribati: the baking heat, the shark-infested waters, the people pooping in these shark-infested waters. There’s the hard drinkers and the fights and the tuna…

It’s just a very, very funny read

Saturday, October 26, 2013

The Dynamics of Economic Dynamism

Earlier today, Atlanta Fed President Dennis Lockhart gave a speech at the Creative Leadership Summit of the Louise Blouin Foundation. He posed the questions: Is the economic dynamism of the United States declining? Is America losing its economic mojo? He observed:

“... we see a picture in which fewer firms are expanding, and each expanding firm is adding fewer new jobs on average than in the past. Fewer firms are shrinking, and each is downsizing by less on average. Fewer people are being laid off or are quitting their job, and firms are hiring fewer people. In other words, the employment dynamics of the U.S. economy are slower.

The decline in job creation and destruction was also the theme of this recent macroblog post by Mark Curtis, which featured some pretty nifty dynamic charts of trends in job creation and destruction by industry and geography.

Friday, October 25, 2013

Schumpeter and an analysis of the change in the nature of the US economy

Job Reallocation over Time: Decomposing the Decline

Read this entire post . . . very sobering.

One of the primary ways an economy expands is by quickly reallocating resources to the places where they are most productive. If new and productive firms are able to quickly grow and unproductive firms can quickly shrink, then the economy as a whole will experience faster growth and the many benefits (such as lower unemployment and higher wages) that are associated with that growth. Certain individuals may experience unemployment spells from this reallocation, but economists, starting with Joseph Schumpeter, have found that reallocation is associated with economic growth and wage growth, particularly for young workers.

Recently, a number of prominent economists such as John Haltiwanger have expressed concern that falling reallocation rates in the United States are a major contributor to the slow economic recovery. One simple way to quantify the speed of reallocation is to examine the job creation rate—defined as the number of new jobs in expanding firms divided by the total number of jobs in the economy—and the destruction rate, defined likewise but using the number of jobs lost by contracting firms. Chart 1 plots both the creation and the destruction rates of the U.S. economy starting in 1977. These measures track each other closely with creation rates exceeding destruction rates during periods of economic growth and vice versa during recessions. The most recent recession saw a particularly sharp decline in job creation (you can highlight the creation rate by clicking on the line), but it is clear this decline is part of a larger trend that far predates the current period. A decline in these rates could indicate less innovation or less labor market flexibility, both of which are likely to retard economic growth. Feel free to explore the measures for yourself using the figure’s interactivity.

Thursday, October 24, 2013

Benjamin Powell, The Economics Behind the U.S. Government's Unwinnable War on Drugs | Library of Economics and Liberty

Benjamin Powell, The Economics Behind the U.S. Government's Unwinnable War on Drugs | Library of Economics and Liberty

A very nice application of the economic way of thinking that utilizes elasticity to consider public policy.

The U.S. government's policy of drug prohibition, like alcohol prohibition before it, is a failure—and not one that can be corrected by a mere tweaking of current policy. The economic analysis of fighting a supply-side drug war predicts that the war will enhance drug suppliers' revenues, enabling them to continuously ratchet up their efforts to supply drugs in response to greater enforcement. The result is a drug war that escalates in cost and violence.
Furthermore, the secondary consequences of prohibition are perverse. The drug war causes drugs to be more potent and their quality less predictable than if drugs were legal, leaving the remaining users at greater risk and, in the face of higher prices, more likely to commit crimes to support their habit.
In short, the means—drug prohibition—is incompatible with the ends of improving health and decreasing violence. There are two paths forward: a demand-side drug war or legalization.
A demand-side drug war that places draconian penalties on usage or possession does not necessarily fail a means-ends test. If the goal is simply to end drug usage, implementing a swift death penalty for anyone convicted of possession or use would do the trick. Of course, it would not improve those people's health. Most people, including myself, would consider such a policy even more unjust than the current drug policy.
The alternative, legalization, is a better path forward. It passes a means-ends test while better respecting individual liberty. Consumption may increase but the drugs that are consumed would be safer; and violence would decrease. To the extent that decreasing drug consumption is desirable, moral suasion and education would be more effective—without the nasty side effects—than the current policy of prohibition.

Podcast of the Ideological Migration of the Nobel Laureates

Tuesday, October 22, 2013

A must read - The Ideological Migration of the Economics Laureates

Current issue of Econ Watch.

I just read the analysis of Douglass North and learned a ton.

In this issue:

The Ideological Migration of the Economics Laureates

Although it is rare that someone changes his or her ideological outlook after the age of 25, it happens sometimes. This issue of Econ Journal Watch (download, .pdf) is given over to a special project that considers such changes as may have occurred among the 71 individuals who, through 2012, won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Ideological profiles of all 71 laureates make up the bulk of the issue. The 71 profiles are bundled in a single large document that is equipped with handy links for internal navigation.

Monday, October 21, 2013

A great review of the Economics Nobel winners

The Clash at 20

It was 20 years ago that Samuel Huntington's essay on what he termed "the clash of civilizations" was first published in the journal Foreign Affairs. The essay predicted the next frontier of global conflict would occur along cultural cleavages — most prominently between the Islamic world and the West. Foreign Affairs editor Gideon Rose and Robert Siegel discuss how perceptions of the essay have changed over time.

Sunday, October 20, 2013

The Case Against High-School Sports

The author mentions BASIS schools in Az.

Basis public charter schools, located in Arizona, Texas, and Washington, D.C., are modeled on rigorous international standards. They do not offer tackle football; the founders deemed it too expensive and all-consuming. Still, Basis schools offer other, cheaper sports, including basketball and soccer. Anyone who wants to play can play; no one has to try out. Arizona’s mainstream league is costly to join, so Basis Tucson North belongs to an alternative league that costs less and requires no long-distance travel, meaning students rarely miss class for games. Athletes who want to play at an elite level do so on their own, through club teams—not through school.

Basis teachers channel the enthusiasm usually found on football fields into academic conquests. On the day of Advanced Placement exams, students at Basis Tucson North file into the classroom to “Eye of the Tiger,” the Rocky III theme song. In 2012, 15-year-olds at two Arizona Basis schools took a new test designed to compare individual schools’ performance with that of schools from around the world. The average Basis student not only outperformed the typical American student by nearly three years in reading and science and by four years in math, but outscored the average student in Finland, Korea, and Poland as well. The Basis kid did better even than the average student from Shanghai, China, the region that ranks No. 1 in the world.

“I actually believe that sports are extremely important,” Olga Block, a Basis co-founder, told me. “The problem is that once sports become important to the school, they start colliding with academics.”

Amanda Ripley, an Emerson Fellow at the New America Foundation, is the author of the new book The Smartest Kids in the World—and How They Got That Way.

Friday, October 18, 2013

Interview with Richard Schiller on Oct. 15

Read the whole interview.

Here’s where the efficient markets hypothesis gets you into trouble. The idea that everyone will manage their 401k plan optimally is really not right. What was discovered by some of the behavioral finance research is people are inertial. They don’t do anything. If they have to sign up for the plan, they won’t do it. If they do sign up, they'll put their money in whatever asset seems to be recommended and leave it there the rest of their lives. You would think it’s kind of obvious, that some people aren't that interested in managing their portfolios.

If you press Gene Fama or Lars Hansen on this, I suspect they would give in. They’d have to admit that's what the evidence shows. But it’s not their habit to emphasize it. That’s where we differ, perhaps. It's what do you want to emphasize that divides them from me.

Gene Fama once told me that he is actually sympathetic to behavioral finance and that in fact he is proud to have accepted many of the journal articles or written referee reports accepting publication for articles that are important in the field. And I believe that's true. I think he's an open-minded person.

Popular Culture and Economics

Friday October 18, 2013 from 4:00 PM to 7:00 PM MST

SRP - Tempe

1521 North Project Drive

Tempe, AZ 85251

Join us for a special event, featuring guest speakers Professor Dirk Mateer and Assistant Professor Charity-Joy Acchiardo.

Award-winning instructor Dirk Mateer's use of pop culture is part of his signature teaching style; collecting resources to keep large classes of students engaged, helping effectively teach economics, and having fun in the process.

This event features media highlights from popular culture to make the experience for economics teachers more dynamic. Using clips from popular music such as The Beatles, TV shows such as The Office and The Cosby Show, and movies like Confessions of a Shopaholic and Moneyball, Professor Mateer makes economics relevant and entertaining.

Appetizers and beverages will be provided. Click to register below - and don't forget to bring a guest!

Certificate for 3 hours of Professional Development will be given to all participants. Registration fee is $20.00.

Wednesday, October 16, 2013

Nobel winner Robert Schiller recommends 5 books - beginning with Adam Smith

An interview with... Robert Shiller on Human Traits Essential to Capitalism

Schiller begins his list with The Theory of Moral Sentiments and includes a book I have long recommended to ASET book club:

Your next book is The Passions and The Interests: Political Arguments for Capitalism Before its Triumph, by the great Albert O Hirschman.

This is a great book. It traces the history of an idea – an idea that is central to our whole civilisation today. The idea is that human nature is basically unruly and destructive, or has the potential to become so, but that we’ve designed a society that sets a space for this kind of impulse, where it’s acted out in a civilised manner – and that’s capitalism. So when we reflect on some of the horrors of capitalism, we have to consider that things could have been much worse if we didn’t have this system. Our fights would have been on real battlefields, rather than economic battlefields. That’s a theory, that’s an idea that really led to the adoption of capitalism, or the free enterprise system, around the world.

Tuesday, October 15, 2013

Nobel winners by country

The Washington Post has a fascinating (but somewhat disturbing, see my final comments below) blog post on “The amazing history of the Nobel Prize, told in maps and charts,” here are some highlights:

1. A stunning 83% of all Nobel laureates have come from Western countries (Western Europe, the U.S., Canada, Australia or New Zealand), see map above of the prizes broken down by region – Western Europe and North America take the vast majority of prizes.

2. The United States added three more Nobel laureates to its roster on Monday, all in economics, bringing the national total to an astounding 347 in the prize’s history. That’s the most of any country in the world, by far: next-highest ranked is Britain with 120 laureates, followed by Germany with 104, France with 65, Sweden with 30 and Russia with 27.

3. People outside of Europe and North America don’t win very many Nobels. Africa has had only 16 Nobel laureates, ever. All of Asia, despite being by far the largest and most populous region in the world, can claim only 49 Nobel laureates.

4. Nobel prizes have been awarded to people from 72 different countries. But more than half all Nobel laureates come from only three countries: the United States, Britain and Germany.

5. More than one in every three Nobel laureates is from the United States. Put another way, the United States has 4 percent of the world’s population and 34 percent of its Nobel laureates.

And - from the blog comments at the Mark Perry's blog (referenced above).

And let’s hear it for the Jews!

At least 193 Jews and people of half- or three-quarters-Jewish ancestry have been awarded the Nobel Prize, accounting for 23% of all individual recipients worldwide between 1901 and 2013, and constituting 37% of all US recipients during the same period.

In the research fields of Chemistry, Economics, Physics, and Physiology/Medicine, the corresponding world and US percentages are 27% and 39%, respectively. Among women laureates in the four research fields, the Jewish percentages (world and US) are 38% and 50%, respectively. Of organizations awarded the Nobel Peace Prize, 23% were founded principally by Jews or by people of half-Jewish descent. (Jews currently make up approximately 0.2% of the world’s population and 2% of the US population.)

Daniel Kuehn, Why the Conventional View of Immigration Is Wrong | Library of Economics and Liberty

Daniel Kuehn, Why the Conventional View of Immigration Is Wrong | Library of Economics and Liberty
A market-based immigration policy is practically by definition a liberal immigration policy, but even within the framework of relatively open borders, many pro-immigrant voices insist on differentiating between potential migrants on the basis of education level or legal status. The conventional wisdom holds that well educated immigrants deserve greater access than less educated immigrants and that undocumented immigrants should be assimilated only after immigrants with valid visas or green cards (if at all). Both views can be challenged using the insights of economics. High-skill labor markets, much like other markets, function according to the laws of supply and demand and, therefore, do not need a differential boost from the government. In the case of undocumented immigrants, self-selection mechanisms suggest that a migrant's undocumented status communicates important information about the high value that they derive from living in the United States. If more people thought about these issues as economists tend to, the conventional wisdom would shift towards support for a more broadly welcoming policy that treats immigrants of all backgrounds equally.

Sunday, October 13, 2013

The Mystery of the Mundane


The world is full of marvels, from FaceTime to air travel. But the real action is in the mundane—those everyday things we take for granted. Economics, and the economic way of thinking, are indispensable for learning how to see the mystery of the mundane. And when we do, it’s awe-inspiring.

This is one of the crucial insights in Paul Heyne’s The Economic Way of Thinking, which I’ve relied on for more than 25 years now (and of which, along with David Prychitko, I’ve been coauthor for more than a decade). Along with another rule—don’t overteach the principles—we can show others how economics belongs in everyday life and not just in the classroom.

Don’t Overteach the Principles

Heyne’s first rule was this: “Teach the principles of economics to your students as if it was the last time they will ever take an economics course, and it will be the first of many.”

In other words, there’s no reason to teach basic economics with an emphasis on the tools of economic reasoning, such as mathematical formulas, graphs, and statistical relationships. Instead, you want your audience to be intrigued by the insights that one can gain by persistently and consistently applying the economic way of thinking to the puzzles and problems they confront in their daily lives. We must show our students—or anyone with whom we talk about economics—how the principles of economics make sense out of the buzzing confusion that makes up a modern economy. And we must show how to clarify and correct the daily assertions they read in newspapers and hear from political figures, axe-grinders, and talking heads commenting on economic affairs.

Our job as teachers is to help students cut through the nonsense and begin to understand the world around them. So we have to outfit them with the right lenses. The Mystery of the Mundane

Paul’s second rule was, “Allow yourself and your students to be amazed by the mystery of the mundane.”

As we say on page 1: “When we have long taken something for granted, it’s hard even to see what it is that we’ve grown accustomed to. That’s why we rarely notice the existence of order in society and cannot recognize the processes of social coordination upon which we depend every day.” Don’t focus exclusively on the miracle of exotic or peculiar things, such as how we can FaceTime with family across the country, what forces enable a plane to fly, or why did Miley Cyrus do that. Instead recognize and be astonished at the feats of everyday social cooperation that you engage in and benefit from. Think about the how, what, why of the shoes on your feet, the hat on your head, the car that you drive, the smartphone on which you may be reading these words. Adam Smith, in attempting to get his readers to appreciate the mystery of the mundane, went through the numerous specializations in production, the exchange relationships that must be established, and the mutual adjustments that must continually be made just to provide the common woolen coat to the average citizen.

Read more:

Saturday, October 12, 2013

Insight from Pete Boettke

In part, Boettke writes:

Good economics not only looks at the direct and immediate consequences, but traces out the logic of the indirect and long-run consequences. Good economics is what led Adam Smith to condemn the fiscal irresponsibility of government. "When it becomes necessary for a state to declare itself bankrupt,” Adam Smith wrote in the fifth book of The Wealth of Nations, “in the same manner as when it becomes necessary for an individual to do so, a fair, open, and avowed bankruptcy is always the measure which is both least dishonourable to the debtor, and the least hurtful to the creditor. The honour of a state is surely very poorly provided for, when in order to cover the disgrace of a real bankruptcy, it has recourse to a juggling trick of this kind, so easily seen through, and at the same time so extremely pernicious."

Unfortunately, as Smith points out in the next paragraph, all governments, ancient as well as modern, have resorted to juggling tricks rather than face up to their fiscal irresponsibility. The juggling trick that Smith is referencing is the cycle of deficits, debt, and debasement.

Read more:

Tuesday, October 8, 2013

Potential 2013 Nobel Winners in Economics - Announcement is next week

ECONOMICS Joshua D. Angrist Ford Professor of Economics Massachusetts Institute of Technology Cambridge, MA, USA

David E. Card Class of 1950 Professor of Economics University of California, Berkeley Berkeley, CA, USA -and- Alan B. Krueger Bendheim Professor of Economics Princeton University Princeton, NJ, USA For their advancement of empirical microeconomics -and-

Sir David F. Hendry Professor of Economics University of Oxford Oxford, England, UK -and- M. Hashem Pesaran John Elliot Distinguished Chair in Economics & Professor of Economics, and Emeritus Professor of Economics & Fellow of Trinity College, Cambridge University of Southern California, Los Angeles, CA, USA and University of Cambridge, Cambridge, England, UK -and- Peter C.B. Phillips Sterling Professor of Economics and Professor of Statistics Yale University New Haven, CT, USA For their contributions to economic time-series, including modeling, testing and forecasting -and- Sam Peltzman Ralph and Dorothy Keller Distinguished Service Professor of Economics Emeritus University of Chicago Booth School of Business Chicago, IL, USA -and- Richard A. Posner Judge, United States Seventh Circuit Court of Appeals, and Senior Lecturer University of Chicago Law School Chicago, IL, USA For extending economic theories of regulation

ASET bookclub recommendation

Bill previously recommended -

One of the core premises of Luigi Zingales, A Capitalism for the People (Basic Books, 2012) is that the US economy is becoming more of a connection based system than a contract based economic system. As a young man growing up in Italy, a classic connection based system, Zingales decided to move to the US to puruse opportunities that talent and hard work presented to him. But over the past 20 years, Zingales observes, the US economic system has moved more toward the Italian system of connection and privileges, and thus he fears that the opportunities that individuals can succeed economically through talent and hard work are dwindling.

I would invite such a public discussion provided that the conversation would stress the dynamics of income distribution and the technical economics of wealth distribution as well as political economy considerations. Casey Mulligan's The Redistribution Recession (Oxford, 2012) must be read along side of Joe Stiglitz's The Price of Inequality (Norton, 2013). And, as part of our common knowledge the work of Gordon Tullock on The Economics and Politics of Wealth Redistribution should be included.

One other issue that is essential to keep in mind in these discussions -- and it is raised by the very Zingales thought experiment -- immigration and the case for open borders.

Monday, October 7, 2013

Another book club possibility - Scarcity: Why Having Too Little Means So Much

Another candidate for ASET book club.

Market Place interview with author.

At first blush, there is little in common between a Harvard economics professor who's very busy and a poor person from India, struggling to simply put food on the table. But according to Sendhil Mullainathan, the Harvard economist, what they have in common is an idea: Of scarcity.

"Both of us are touching on the exact same psychology," Mullainathan says. "There is actually something primitive that happens to the human brain when experiencing very little."

In a book he's written, with Eldar Shafir, about this topic, called "Scarcity: Why Having Too Little Means So Much," Mullainathan says that scarcity can focus the mind.

"Everyone has had the experience of two weeks left to do something, and you doddle," he adds. "One day left to do something, wow, you are focused."

He says this same focus applies to people with limited money.

"They become incredibly focused on every little dollar, every little penny," he says.

Mullainathan says, that scarcity doesn't always work to focus the mind sometimes it leaves people thinking about time and money even when they don't want to. He calls this the "bandwidth tax." He gives an example of a person who is procrastinating on work to go to their child's softball game.

From Tim Hartford's review:

Here is a flawed but intriguing book with a compelling thesis: being short of time is fundamentally similar to being short of money, or friends, or food, or indeed being short of space when packing for a trip. In each case, the feeling of scarcity comes to the front of the mind. It makes us focus on the immediate problem, which can make us remarkably effective – but also over-anxious, short-termist or blinkered.

From Publishers Weekly

Starred Review. The struggle for insufficient resources—time, money, food, companionship—concentrates the mind for better and, mostly, worse, according to this revelatory treatise on the psychology of scarcity. Harvard economist Mullainathan and Princeton psychologist Shafir examine how scarcity in many forms, from poverty and scheduling pressures to dieters' food cravings and loneliness—a kind of social scarcity —force the brain to focus on alleviating pressing shortages and thus reduce the mental bandwidth available to address other needs, plan ahead, exert self-control, and solve problems. The result of perpetual scarcity, they contend, is a life fixated on agonizing trade-offs, crises, and preoccupations that impose persistent cognitive deficits—in poor people they lower mental performance as much as going a night without sleep—and reinforce self-defeating actions. The authors support their lucid, accessible argument with a raft of intriguing research in psychology and behavioral economics (sample study: We recruited Princeton undergraduates to play Family Feud in a controlled setting ) and apply it to surprising nudges that remedy everything from hospital overcrowding to financial ignorance. Mullainaithan and Shafir present an insightful, humane alternative to character-based accounts of dysfunctional behavior, one that shifts the spotlight from personal failings to the involuntary psychic disabilities that chronic scarcity inflicts on everyone. 8 illus. Agent: Katinka Matson, Brockman Inc. (Sept.) Review

"The struggle for insufficient resources—time, money, food, companionship—concentrates the mind for better and, mostly, worse, according to this revelatory treatise on the psychology of scarcity . . . The authors support their lucid, accessible argument with a raft of intriguing research . . . and apply it to surprising nudges that remedy everything from hospital overcrowding to financial ignorance . . . Insightful."—Publishers Weekly (starred review)


"Scarcity is a captivating book, overflowing with new ideas, fantastic stories, and simple suggestions that just might change the way you live."—Steven D. Levitt, coauthor of Freakonomics

"Sendhil Mullainathan and Eldar Shafir are stars in their respective disciplines, and the combination is greater than the sum of its parts. Together they manage to merge scientific rigor and a wry view of the human predicament. Their project has a unique feel to it: it is the finest combination of heart and head that I have seen in our field."—Daniel Kahneman, author of Thinking, Fast and Slow

"Sendhil Mullainathan and Eldar Shafir show how the logic of scarcity applies to rich and poor, educated and illiterate, Asian, Western, Hispanic, and African cultures alike. They offer insights that can help us change our individual behavior and that open up an entire new landscape of public policy solutions. A breathtaking achievement!"—Anne-Marie Slaughter, professor emerita, Princeton University, and president and CEO of the New America Foundation

"Here is a winning recipe. Take a behavioral economist and a cognitive psychologist, each a prominent leader in his field, and let their creative minds commingle. What you get is a highly original and easily readable book that is full of intriguing insights. What does a single mom trying to make partner at a major law firm have in common with a peasant who spends half her income on interest payments? The answer is scarcity. Read this book to learn the surprising ways in which scarcity affects us all."—Richard H. Thaler, University of Chicago, coauthor of Nudge

"With a smooth blend of stories and studies, Scarcity reveals how the feeling of having less than we need can narrow our vision and distort our judgment. This is a book with huge implications for both personal development and public policy."—Daniel H. Pink, author of Drive and To Sell Is Human

"Insightful, eloquent, and utterly original, Scarcity is the book you can’t get enough of. It is essential reading for those who don’t have the time for essential reading."—Daniel Gilbert, Edgar Pierce Professor of Psychology, Harvard University, and author of Stumbling on Happiness

Sunday, October 6, 2013

Regulating Aversion - another possible ASET bookclub book

Saw this review over on FiveBooks and immediately thought of The Theory of Moral Sentiments.

The reviewer writes:

In an interview on Toleration

Interview Extract:

Your last book is Regulating Aversion by Wendy Brown. Tell me about it.

Brown thinks there’s a big problem with the language of toleration.

Tolerance is generally regarded as an unqualified achievement of the modern West. Emerging in early modern Europe to defuse violent religious conflict and reduce persecution, tolerance today is hailed as a key to decreasing conflict across a wide range of other dividing lines-- cultural, racial, ethnic, and sexual. But, as political theorist Wendy Brown argues in Regulating Aversion, tolerance also has dark and troubling undercurrents.

Dislike, disapproval, and regulation lurk at the heart of tolerance. To tolerate is not to affirm but to conditionally allow what is unwanted or deviant. And, although presented as an alternative to violence, tolerance can play a part in justifying violence--dramatically so in the war in Iraq and the War on Terror. Wielded, especially since 9/11, as a way of distinguishing a civilized West from a barbaric Islam, tolerance is paradoxically underwriting Western imperialism.

Brown's analysis of the history and contemporary life of tolerance reveals it in a startlingly unfamiliar guise. Heavy with norms and consolidating the dominance of the powerful, tolerance sustains the abjection of the tolerated and equates the intolerant with the barbaric. Examining the operation of tolerance in contexts as different as the War on Terror, campaigns for gay rights, and the Los Angeles Museum of Tolerance, Brown traces the operation of tolerance in contemporary struggles over identity, citizenship, and civilization.


"The triumph of toleration as the central liberal value, and the attendant inability of liberals to see the dark side of their favorite virtue, is the subject of Wendy Brown's insightful and illuminating new book. . . . I find the analysis trenchant and the critique persuasive."--Stanley Fish, Chronicle of Higher Education

"This is a remarkable book . . . made attractive by its passion, the lucidity of its negative critique, and its intelligence."--John Hall, Social Forces

"Wendy Brown has produced a richly textured and timely analysis of some of the darker elements lurking beneath the tolerance discourse of western liberalism."--Vincent Geoghegan, American Review of Politics

"[This is a] bold, erudite, and timely study."--Ely Aharonson, Criminal Law and Philosophy

"Regulating Aversion is a forceful and, in many places, convincing attempt to account for the contemporary relevance and meanings of tolerance within liberalism in the West, and in the United States in particular."--Emily Grabham, Feminist Legal Studies

"The strength of Brown's book is her trenchant deconstructions of the universalizing pretenses of tolerance specifically and liberal discourse more generally. Brown's intervention successfully jars tolerance loose from the hallowed transhistorical ground on which it usually rests."--C. Michael Hurst, Cultural Critique

Table of Contents:

Acknowledgments ix

Chapter 1: Tolerance as a Discourse of Depoliticization 1

Chapter 2: Tolerance as a Discourse of Power 25

Chapter 3: Tolerance as Supplement

The "Jewish Question" and the "Woman Question" 48

Chapter 4: Tolerance as Governmentality

Faltering Universalism, State Legitimacy, and State Violence 78

Chapter 5: Tolerance as Museum Object The Simon Wiesenthal Center Museum of Tolerance 107 Chapter 6: Subjects of Tolerance

Why We Are Civilized and They Are the Barbarians 149

Chapter 7: Tolerance as/in Civilizational Discourse 176

Notes 207

Index 259

Saturday, October 5, 2013

The Great Stagnation in Education

Robert Gordon writes:

For most of American history, parents could expect that their children would, on average, be much better educated than they were. But that is no longer true. This development has serious consequences for the economy.

The epochal achievements of American economic growth have gone hand in hand with rising educational attainment, as the economists Claudia Goldin and Lawrence F. Katz have shown. From 1891 to 2007, real economic output per person grew at an average rate of 2 percent per year — enough to double every 35 years. The average American was twice as well off in 2007 as in 1972, four times as well off as in 1937, and eight times as well off as in 1902. It’s no coincidence that for eight decades, from 1890 to 1970, educational attainment grew swiftly. But since 1990, that improvement has slowed to a crawl.

Our ASET bookclub read The Race Between Education and Technology, an important book that encouraged participants to reconsider the role played by the state in educating its citizens. Our reading of Golden and Katz's book as well as our previous consideration of the arguments made by Adam Smith and FA Hayek suggest that, in fact, our state might reconsider the level of support for education and how that support is implemented. The role of choice and charter is undeniable, I wonder, however, to what extent an ideological commitment to choice, mitigates the benefits of the role of the state in education.

Adam Smith writes, about education, in The Wealth of Nations and asks a very, very important question - Ought the public, therefore, to give no attention, it may be asked, to the education of the people? Or if it ought to give any, what are the different parts of education which it ought to attend to in the different orders of the people? and in what manner ought it to attend to them?:

Were there no public institutions for education, no system, no science would be taught for which there was not some demand, or which the circumstances of the times did not render it either necessary, or convenient, or at least fashionable, to learn. A private teacher could never find his account in teaching either an exploded and antiquated system of a science acknowledged to be useful, or a science universally believed to be a mere useless and pedantic heap of sophistry and nonsense. Such systems, such sciences, can subsist no-where, but in those incorporated societies for education whose prosperity and revenue are in a great measure independent of their reputation and altogether independent of their industry. Were there no public institutions for education, a gentleman, after going through with application and abilities the most complete course of education which the circumstances of the times were supposed to afford, could not come into the world completely ignorant of everything which is the common subject of conversation among gentlemen and men of the world.


There are no public institutions for the education of women, and there is accordingly nothing useless, absurd, or fantastical in the common course of their education. They are taught what their parents or guardians judge it necessary or useful for them to learn, and they are taught nothing else. Every part of their education tends evidently to some useful purpose; either to improve the natural attractions of their person, or to form their mind to reserve, to modesty, to chastity, and to Ĺ“conomy; to render them both likely to become the mistresses of a family, and to behave properly when they have become such. In every part of her life a woman feels some conveniency or advantage from every part of her education. It seldom happens that a man, in any part of his life, derives any conveniency or advantage from some of the most laborious and troublesome parts of his education.


Ought the public, therefore, to give no attention, it may be asked, to the education of the people? Or if it ought to give any, what are the different parts of education which it ought to attend to in the different orders of the people? and in what manner ought it to attend to them?


The education of the common people requires, perhaps, in a civilized and commercial society the attention of the public more than that of people of some rank and fortune. People of some rank and fortune are generally eighteen or nineteen years of age before they enter upon that particular business, profession, or trade, by which they propose to distinguish themselves in the world. They have before that full time to acquire, or at least to fit themselves for afterwards acquiring, every accomplishment which can recommend them to the public esteem, or render them worthy of it. Their parents or guardians are generally sufficiently anxious that they should be so accomplished, and are, in most cases, willing enough to lay out the expence which is necessary for that purpose. If they are not always properly educated, it is seldom from the want of expence laid out upon their education, but from the improper application of that expence. It is seldom from the want of masters, but from the negligence and incapacity of the masters who are to be had, and from the difficulty, or rather from the impossibility, which there is in the present state of things of finding any better. The employments, too, in which people of some rank or fortune spend the greater part of their lives are not, like those of the common people, simple and uniform. They are almost all of them extremely complicated, and such as exercise the head more than the hands. The understandings of those who are engaged in such employments can seldom grow torpid for *135 want of exercise. The employments of people of some rank and fortune, besides, are seldom such as harass them from morning to night. They generally have a good deal of leisure, during which they may perfect themselves in every branch either of useful or ornamental knowledge of which they may have laid the foundation, or for which they may have acquired some taste in the earlier part of life.

V.1.181 It is otherwise with the common people. They have little time to spare for education. Their parents can scarce afford to maintain them even in infancy. As soon as they are able to work they must apply to some trade by which they can earn their subsistence. That trade, too, is generally so simple and uniform as to give little exercise to the understanding, while, at the same time, their labour is both so constant and so severe, that it leaves them little leisure and less inclination to apply to, or even to think of, anything else.


But though the common people cannot, in any civilized society, be so well instructed as people of some rank and fortune, the most essential parts of education, however, to read, write, and account, can be acquired at so early a period of life that the greater part even of those who are to be bred to the lowest occupations have time to acquire them before they can be employed in those occupations. For a very small expence the public can facilitate, can encourage, and can even impose upon almost the whole body of the people the necessity of acquiring those most essential parts of education.


The public can facilitate this acquisition by establishing in every parish or district a little school, where children may be taught for a reward so moderate that even a common labourer may afford it; the master being partly, but not wholly, paid by the public, because, if he was wholly, or even principally, paid by it, he would soon learn to neglect his business.

FA Hayek argues, in The Constitution of Liberty:

What Hayek wants to point out, is not that there is no room for government involvement in personal security, work policy, monetary management, health-care, social insurance, taxation, city planning, environmental protection and education, but that government involvement has historically often been conducted poorly. But the necessity of government involvement in a market economy is never denied, but embraced by Hayek: "A functioning market economy presupposes certain activities on the part of the state" (p. 331). There are activities of the state that are consistent with freedom and there are activities of the state (and private big business) that are inconsistent with freedom. According to Hayek the exaggerated "appeal to the principle of non-interference in the fight against all ill-considered or harmful measures has had the effect of blurring the fundamental distinction between the kinds of measures which are and those which are not compatible with a free system" (p. 331).

Thursday, October 3, 2013

Academically Adrift: Limited Learning on College Campuses

Another possible book club book.

Almost everyone strives to go, but almost no one asks the fundamental question posed by Academically Adrift: are undergraduates really learning anything once they get there? For a large proportion of students, Richard Arum and Josipa Roksa's answer to that question is a definitive "no."

Their extensive research draws on survey responses, transcript data, and, for the first time, the state-of-the-art Collegiate Learning Assessment, a standardized test administered to students in their first semester and then again at the end of their second year. According to their analysis of more than 2,300 undergraduates at twenty-four institutions, forty-five percent of these students demonstrate no significant improvement in a range of skills - including critical thinking, complex reasoning, and writing - during their first two years of college. As troubling as their findings are, Arum and Roksa argue that for many faculty and administrators they will come as no surprise - instead, they are the expected result of a student body distracted by socializing or working and an institutional culture that puts undergraduate learning close to the bottom of the priority list.

Academically Adrift holds sobering lessons for students, faculty, administrators, policy makers, and parents - all of whom are implicated in promoting or at least ignoring contemporary campus culture. Higher education faces crises on a number of fronts, but Arum and Roksa's report that colleges are failing at their most basic mission will demand the attention of us all.