University of Pennsylvania update and correction

“The email sent by Penn SAS Deans last Tuesday needs to be interpreted with some care. In particular, notice the words “school-funded Ph.D. programs.” There is a lot of institutional background that is lost when the email is read from the outside, especially because the Economics Ph.D. program has its own funding structure that differs […]

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The educational culture that is Dutch

Academics should not be forced to squeeze their research into weekends and holidays, according to the Dutch education minister, who admitted that pressure on some researchers had become intolerable and that professional competition had gone “too far.” Ingrid van Engelshoven wants to reduce stress and time pressure in academe by tipping the balance away from […]

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No economics Ph.D admissions for U Penn next year

The School of Arts and Sciences will pause admissions for school-funded Ph.D. programs for the 2021-2022 academic year. SAS Dean Steven J. Fluharty and Associate Dean for Graduate Students Beth Wenger wrote in an email to SAS standing faculty and graduate students on Tuesday that the decision was made as a result of the COVID-19 […]

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Case and Deaton on Deaths of Despair and the Future of Capitalism

In their recent book Deaths of Despair and the Future of Capitalism, Anne Case and Nobel economics prizewinner Angus Deaton, both emeritus economists at Princeton University, show that the death rate for middle-age whites without a college degree bottomed out in 1999 and has risen since. They attribute the increase to drugs, alcohol, and suicide. Their data on deaths are impeccable. They are careful not to attribute the deaths to some of the standard but problematic reasons people might think of, such as increasing inequality, poverty, or a lousy health care system. At the same time, they claim that capitalism, pharmaceutical companies, and expensive health insurance are major contributors to this despair.

The dust jacket of their book states, “Capitalism, which over two centuries lifted countless people out of poverty, is now destroying the lives of blue-collar America.” Fortunately, their argument is much more nuanced than the book jacket. But it is also, at times, contradictory. Their discussion of the health care system is particularly interesting both for its insights and for its confusions. In their last chapter, “What to Do?” the authors suggest various policies but, compared to the empirical rigor with which they established the facts about deaths by despair, their proposals are not well worked out. One particularly badly crafted policy is their proposal on the minimum wage.

This is from “Blame Capitalism?“, my review of The Deaths of Despair and the Future of Capitalism,” in Regulation, Fall 2020.

Another excerpt:

To understand what is behind the increase in the death rate, the authors look at state data and note that death rates increased in all but six states. The largest increases in mortality were in West Virginia, Kentucky, Arkansas, and Mississippi. The only states in which midlife white mortality fell much were California, New York, New Jersey, and Illinois. All four of the latter states, they note, have high levels of formal education. That fact leads them to one of their main “aha!” findings: the huge negative correlation between having a bachelor’s degree and deaths of despair.

To illustrate, they focus on Kentucky, a state with one of the lowest levels of educational attainment. Between the mid-1990s and 2015, Case and Deaton show, for white non-Hispanics age 45–54 who had a four-year college degree, deaths from suicide, drug overdose, or alcoholic liver disease stayed fairly flat at about 25–30 per 100,000. But for that same group but without a college degree, the deaths in the same categories zoomed up from about 40 in the mid-1990s to a whopping 130 by 2015, over four times the rate for those with a college degree.

Why is a college degree so important? One big difference between those with and without a degree is the probability of being employed. In 2017, the U.S. unemployment rate was a low 3.6%. Of those with a bachelor’s degree or more, 84% of Americans age 25–64 were employed. By contrast, only 68% of those in the same age range who had only a high school degree were employed.

That leads to two questions. First, why are those without a college degree so much less likely to have jobs? Second, how does the absence of a degree lead to more suicide and drug and alcohol consumption? On the first question, the authors note that a higher percentage of jobs than in the past require higher skills and ability. Also, they write, “some jobs that were once open to nongraduates are now reserved for those with a college degree.”

I wish they had addressed this educational “rat race” in more detail. My Econlog blogging colleague Bryan Caplan, an economist at George Mason University, argues in his 2018 book The Case Against Education that a huge amount of the value of higher education is for people to signal to potential employers that they can finish a major project and be appropriately docile. To the extent he is right, government subsidies to higher education make many jobs even more off-limits to high school graduates. Yet, Case and Deaton do not cite Caplan’s work. Moreover, in their final chapter on what to do, they go the exact wrong way, writing, “Perhaps it is time to up our game to make college the norm?” That policy would further narrow the range of jobs available to nongraduates, making them even worse off.

On the second question—why absence of a degree leads to more deaths of despair—they cite a Gallup poll asking Americans to rate their lives on a scale from 0 (“the worst possible life you can imagine”) to 10 (“the best possible life you can imagine”). Those with a college degree averaged 7.3, while those with just a high school diploma averaged 6.6. That is not a large difference, a fact they do not note.

And note their novel argument for why improved health care, better entertainment through the internet, and more convenience don’t count in people’s real wages:

So, what are the culprits behind the deaths of those without college degrees? Case and Deaton blame the job market and health insurance. Jobs for those without college degrees do not pay as much and do not generally carry much prestige. And, as noted above, Case and Deaton mistakenly think that real wages for such jobs have fallen. Some economists, by adding nonmonetary benefits provided by employers and by noting the amazing goods we can buy with our wages such as cell phones, conclude that even those without a college degree are doing better. Case and Deaton reject that argument. They do not deny that health care now is better than it was 20 years ago, but they write that a typical worker is doing better now than then “only if the improvements—in healthcare, or in better entertainment through the internet, or in more convenience from ATMs—can be turned into hard cash by buying less of the good affected, or less of something else, a possibility that, however desirable, is usually not available.” They continue, “People may be happier as a result of the innovations, but while it is often disputed whether money buys happiness, we have yet to discover a way of using happiness to buy money.”

That thinking is stunning. Over many decades, economists have been accused, usually unjustly, of saying that only money counts. We have usually responded by saying, “No, what counts is utility, the satisfaction we get out of goods and services and life in general.” But now Case and Deaton dismiss major improvements in the happiness provided by goods and services by noting that happiness cannot be converted to money. That is a big step backward in economic thinking.

 

Read the whole thing.

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Hello Mind, Nice to Meet Ya

Universities at their best are places where reading, writing, speaking, and (hopefully) listening are carried out at the highest level. The core activity here is sharing words with other people. We share words—written, verbal, and non-verbal—to meet other minds, to learn and share experiences for the sake of mutual betterment. So, as teachers and students return to campus, I thought it might be fun to take a moment to reflect on WORDS, with a little inspiration from Vincent Ostrom, F. A. Hayek, and Stephen King.

Vincent Ostrom, maybe more than any other 20th century political economist, emphasized the fact that language is a powerful tool. When we name what we experience by assigning words to objects and relationships, we generate “shared communities of understanding.”(The Meaning of Deocracies and the Sahred Vulnerability of Democracies: A Response To Tocqueville’s Challenge, p. 153) These words and the understanding they enable are how people share what they learn with others, including across generations. Through words, our experiences benefit others. I interpret this as similar to Hayek’s claim from Constitution of Liberty that “civilization begins where the individual can benefit from more knowledge than he can himself acquire, and is able to cope with his ignorance by using knowledge which he does not possess.” Words—along with markets, culture, and law/rules of conduct—form the extended orders that make society possible.

In Stephen King’s On Writing—an intellectual memoir from a true master of words—he equates successful writing with being able to pull off the near-supernatural act of telepathy. Language is a vehicle through which we are able to either send or receive mental images that otherwise would remain electrical impulses with nowhere to go, trapped inside our own minds. He gives the following example of “telepathy in action”:

“Look, here’s a table covered with a red cloth. On it is a cage the size of a small fish aquarium. In the cage is a white rabbit, with a pink nose and pink rimmed eyes. In its front paws is a carrot stub upon which it is contentedly munching. On its back, clearly marked in blue ink, is the numeral eight. Do we see the same thing? We’d have to get together and compare notes to make absolutely sure, but I think we do.”

The quote doesn’t give the chapter full justice, so I definitely recommend reading the whole thing, especially if you have an interest in writing as a craft. He goes on to explain that we might imagine very different details, but nearly everybody comes away with the same understanding about what is important about the description: the blue number eight on the rabbit’s back. This is the puzzle, the unexpected element that makes the information new and unites our attention around an idea. What I take from this is that there’s something about finding the right way to say something—precise but only to the point of usefulness, thorough yet focused, with some understanding of what the reader is bringing to the table—that makes it possible to get a message across in the way it was intended. That makes it possible for two minds to meet.

King’s conclusion is that “You must not come lightly to the blank page.” To write is to transmit ideas to other people’s minds. That’s a serious responsibility that can be carried out well or poorly, put to good use or ill. I can think of no reason why the same admonition should not apply to lectures, conversations, and video presentations.

Vincent Ostrom built on this idea. For Ostrom, language is created through the process of continued communication, and the language that is created then enters back into every aspect of our lives: “The learning, use, and alteration of language articulations is constitutional in character, applicable to the constitutive character of human personality, to patterns of human association, and to the aggregate structure of the conventions of language usage… the way languages are associated with institutions, goods, cultures, and personality, attributes means that we find languages permeating all aspects of human existence” (p. 171-2).

In other words, by embarking on the academic’s quest to use words better, we are all taking on a particularly important constitutive role. Global markets are made up by millions of buyers and sellers scattered around the world. Languages are made up of millions of people talking, reading, writing, listening, and—to borrow King’s analogy—making telepathic connections with each other in an attempt to connect words to better ideas, and better ideas to better lives. It might be an abstract quest but it’s noble one. Getting it right can make the world better, getting it wrong can make the world worse.

There are several dozen morals about the importance of the endeavor, of sticking to one’s principles, of mastering the fundamentals, etc. that can be drawn from this, and I don’t really want to moralize or pontificate more than I already have. So I’ll just end by saying that if you’re still reading, it was nice to meet your mind for a moment. I hope we’ll meet again soon.

 

 

 

Jayme Lemke is a Senior Research Fellow and Associate Director of Academic and Student Programs at the Mercatus Center at George Mason University and a Senior Fellow in the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics.

 


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How to make yourself happier during the pandemic

There is plenty of relevant psychological advice, here is some more narrowly economic advice from my latest Bloomberg column.  Start with this key point: …it is a common result in empirical economics that consumption habits are slow to adjust to changing circumstances, especially unprecedented circumstances. It is not enough for you to develop new spending habits — […]

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Are School Reopening Decisions Related to Union Influence?

Yes, in short.  Here is a new paper from Corey Deangelis and Christos Makridis: The COVID-19 pandemic led to widespread school closures affecting millions of K-12 students in the United States in the spring of 2020. Groups representing teachers have pushed to reopen public schools virtually in the fall because of concerns about the health […]

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Why cancel culture will not take over everything

I was reading this blog post by Arnold Kling, and I thought I should put my own views into a Bloomberg column.  Here is one bit: So what to make of the apparent growing strength of cancel culture and affiliated movements? Here is the fundamental point: With the rise of social media and low-cost communications, […]

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My Conversation with Jason Furman

Yes, the Jason Furman, here is the audio and transcript, please note this was recorded in January.  Here is part of the summary: Jason joined Tyler for a wide-ranging conversation on how monopolies affect investment patterns, his top three recommendations to improve American productivity, why he’s skeptical of place-based development policies, what some pro-immigration arguments […]

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