Tuesday, March 31, 2015

"The amnesty numbers game" published in National Review

In the spring of 2013, the Social Security Administration declared that the Schumer-Rubio amnesty bill would have a positive effect on its budget. Supporters of amnesty immediately seized on the report as further evidence that immigration is a win-win-win proposition.

But it was deeply frustrating for immigration skeptics. SSA would not say how it did its calculations. We were simply given a table of projections and asked to accept them. What assumptions did SSA make about the lifetime earnings of immigrants? We don't know. How about immigrant skill levels? We don't know. What would happen beyond the 10-year budget window? We don't know.

The amnesty debate is filled with authoritative-sounding numbers, but just a bit of unpacking often reveals that the emperor has no clothes. That's the point of my new essay for National Review that came out this week. A sample:
[T]rade-offs rarely make for good political messaging. So when the Obama administration began its push for amnesty for illegal immigrants — first through the legislative process and then more recently through “executive action” — it needed a slew of ready-made talking points to counter every objection. The result was a politicization of statistics on a grand scale and, inevitably, a degradation in the quality of debate. Numbers from seemingly authoritative sources have been stripped of context and presented as argument-stoppers, with little attention to the actual data or methodology involved. 
Consider a congressional hearing held March 17 by the House Oversight and Government Reform Committee...
Read the whole thing here.

Thursday, March 19, 2015

Men dominate the ranks of elite Jeopardy players

Ever heard a contestant give a ridiculously bad answer on Jeopardy? Here are three recent favorites:
Category: Of the Game
Yakutsk and Irkutsk are two territories to conquer and control in this game of attrition.
Contestant: "What is Clue?"
Category: "A"cademy Award Nominees (correct response must start with "A")
11 nominations, 1984; it won 8 Oscars, including Costume Design
Contestant: "What is Titanic?"
Category: It's at the Smithsonian
Logically, one of these weapons from Star Trek
Contestant 1: What is a stun gun?
Contestant 2: What is a lightsaber?
One reason these are humorous is that Jeopardy contestants aren't random people off the street. They are all trivia geniuses. I'm pretty good with trivia myself, but I've repeatedly failed the show's entrance exam. There's really no shame in that. Think about it: There are roughly 245 million American adults, but only 350 or so get to play on Jeopardy each year. They are the crème de la crème.

The three finalists from Jeopardy's Battle of the Decades tournament.

Which provides another opportunity to look into the gender imbalance in elite intellectual pursuits. Should we expect men to perform better than women on Jeopardy? On average, men have superior visual-spatial skill, but Jeopardy requires little of that. More relevant would be mean sex differences on general information tests (male advantage) and verbal fluency (often a female advantage).

But here I'm interested less in means than in variances. The ability distributions for men generally have "fatter tails," meaning men outnumber women among both the worst of the worst and the best of the best, even when the averages are the same. If this is the case with trivia, we should see men disproportionately represented among Jeopardy contestants, and we should see greater disproportions as we look at more exclusive groups of contestants. That's exactly what we do see.
Percentage of women among...

Jeopardy contestants:          40 %

Jeopardy winners:              30 %

tournament winners:            12 %

“best of the best" winners:     0 %
The first two percentages are courtesy of a Slate article from last year. I calculated the last two percentages based on the winners of the annual Tournament of Champions and the five "best of the best" tournaments, respectively. (I did not look at lesser tournaments for teens, teachers, college students, etc.) Only three women -- Rachael Schwartz, Robin Carroll, and Celeste DiNucci -- have won a Tournament of Champions. When it comes to the "best of the best" tournaments, which bring together the strongest players in the show's history, just one woman has even made the finals. That was Leslie Frates, who finished third in the Tenth Anniversary Tournament back in 1993.

Robin Carroll is an interesting story. After winning her Tournament of Champions in 2000, she was the American representative in a special international tournament (not included in my best-of-the-best calculations), which she won handily. However, she had a significant advantage as a native speaker in an English-language competition. She has since competed in three best-of-the-best tournaments and failed to advance beyond the quarterfinals in any of them.

In my estimation, Pam Mueller is the best female Jeopardy player of all time. In the "Battle of the Decades," Jeopardy's most recent best-of-the-best tournament, she was the only woman among the nine semi-finalists. She did not make the final round.

So what's with this right-tail domination by men? I'm speculating here, but obsessiveness seems to be more common in males. People who immerse themselves in a passion, who devote their lives to it, who become almost Rain Man-like in their knowledge of it, are more often men. And the odder the passion, the more male the obsessives seem to be. Even the world's leading experts on My Little Ponies are men! A weird obsession with trivia is probably what it takes to be successful in a game like Jeopardy.

Friday, March 13, 2015

Single payer, many costs

Reihan Salam wrote recently for NR about how containing costs through price controls -- a  supposed selling point of single-payer systems like Medicare -- can severely distort the way doctors and hospitals treat their patients. It seems obvious that below-market reimbursement rates will adversely affect treatment in one way or another, but the trade-off is not often acknowledged by Medicare’s boosters.

What’s always puzzled me is that the same people who use the cost-control argument in favor of single-payer healthcare would be horrified to see it applied to other types of government monopolies. Take public education. There is essentially a “single payer” for education within school districts. But public-school advocates would never argue that the system should be used to push teacher salaries down below market levels. In fact, raising teacher pay to be on par with the salaries of other college graduates is a perennial goal of progressives. What happened to monopoly cost control?

Imagine Republicans proposing to reduce school spending -- just as Obamacare reduced Medicare’s budget -- but insisting that it’s not a cut to services, it’s merely “savings” generated by squeezing education providers a little more. Democrats would cry foul, but that’s exactly how they sold cuts to Medicare.

The prevailing view on the Left seems to be that underpaying teachers is bad, but underpaying doctors is good. I understand that a wealthy doctor may be less sympathetic in the public mind than a school teacher, but they both respond to financial incentives. Underpaying either one is going to have consequences.

I first made this point in an op-ed for Forbes.

Tuesday, January 6, 2015

Influencing the fair-value debate

Two well-written pieces on fair-value accounting (FVA) appeared this week, and both were directly influenced by the work that Jason Delisle and I have been doing on the issue.

First, Matt Yglesias of Vox writes about "the obscure rule that could make student loans more expensive." He cites the National Affairs article written by Jason D. and myself, and he also links to our Politico piece to point out Elizabeth Warren's hypocrisy on FVA.

Yglesias describes the FVA debate accurately, but his setup is better than his conclusion. Echoing our major challenge to FVA opponents, Yglesias wonders why, if government loans are so profitable, we don't simply buy up most private-sector loans to book even higher profits. Unfortunately, he never really answers the question. He falls back on the government-is-special argument, which the CBO has refuted numerous times.

Second, Michael Grunwald has an excellent feature article in Politico about federal loans. Most interesting was this passage:
Still, it’s worth noting that the head of Obama’s Council of Economic Advisers, Jason Furman, once wrote an influential paper for the liberal Center on Budget and Policy Priorities [CBPP] that used fair-value accounting to attack Social Security privatization; the center has disavowed the politically inconvenient section of the paper, and Furman now says his budget analysis was wrong.
It's not mentioned by Grunwald, but this whole recantation was compelled by Jason D. and myself after we noted the CBPP's inconsistency in our National Affairs article.

Both the Yglesias and Grunwald articles are thoughtful contributions, and it's good to see that my work on FVA is having some impact on the discussion.

Thursday, December 18, 2014

How to read the history of social interventions

From my latest for National Review:
All newcomers to social policy should receive a mandatory inoculation against easy answers and outsized expectations. Reading through decade after decade of disappointing results from randomized experiments — probably while attached to one of those torture devices that holds the eyelids open — is the best way to do it.

National Review doesn't usually allow illustrations, but the image above is what I had in mind. Read the whole piece there.

Friday, November 21, 2014

New Politico op-ed: "What happened to Warren the watchdog?"

Jason Delisle and I have an op-ed in Politico's magazine that expands on some of the themes we developed in our National Affairs article back in September. This time we contrast Elizabeth Warren’s former role as government watchdog—in which she pointed out that TARP imposed costly market risk on taxpayers—with her current role as evangelist for federal student loans, in which she ignores the cost of market risk. 

Here's a sample:
...[B]efore joining Congress, Elizabeth Warren was a tenacious government watchdog. She charged that the Troubled Asset Relief Program, created in the wake of the 2008 recession, was exposing taxpayers to risky investments and thereby imposing costs that the feds were low-balling. She wrote letters, published reports, testified before Congress and demanded answers from tight-lipped administration officials. It was an admirable performance.

But then she became a politician, herself. In advocating for enhancing the federal student loan program, the now-senator from Massachusetts has taken the other side of her own argument, completely disregarding the cost of market risk. And she’s not alone in her inconsistency. Government accounting has become a political tool with politicians selectively hiding or exposing costs, depending on whether they support the program in question.
Read the whole thing there. I also referenced the op-ed in a recent blog post for National Review.

A couple of days after our op-ed was posted, Jared Bernstein wrote a response piece titled, "Don't pick on Elizabeth Warren." At first he seems to mount a defense of her inconsistency by saying that she was merely following the law, which requires that TARP receive a different accounting treatment than student loans. But then he concedes that this defense really isn't valid, since Warren has been enthusiastic about her advocacy in both cases. His remaining points are standard critiques of fair-value accounting that we addressed in our National Affairs article.

There is room for some agreement, however. Bernstein writes: "Yes, we fight about some weird stuff in D.C." I'll second that one.

Wednesday, November 19, 2014

The value of a college major... in the American Community Survey

Administrators of the enormously useful Integrated Public Use Microdata Series (IPUMS) web site sent an email this week warning of changes to the American Community Survey (ACS), which is a mini-Census conducted each year. Specifically, the Census Bureau is proposing to eliminate ACS questions dealing with marital history and college majors. IPUMs administrators, who streamline the ACS (and other datasets) for easy use by researchers, are concerned about the loss of those questions.

It's not my place to declare what the Bureau should do with its limited budget. I obviously haven't performed the cost-benefit analyses needed to determine which ACS questions should stay and which should go.

But, cost aside, the ACS question about college majors is valuable to researchers. Labor economists in particular are forever looking for a robust measure of human capital. Knowing whether a person graduated from college is useful, but it's even more useful to know the field the person studied. After all, workers with engineering diplomas are likely to possess more valuable skills (in terms of both knowledge and raw ability) than workers who studied, say, nineteenth-century French poetry.

Without a strong measure of human capital, it's difficult to investigate questions about the returns to education. It's also difficult to match workers with similar skills. When Andrew Biggs and I analyzed the wages of public- versus private-sector workers, we did our best to generate an apples-to-apples comparison by controlling for human capital differences. We discovered that controlling for college major -- as opposed to controlling only for college graduation -- made a significant difference in our results.

The table above comes from our analysis of Gov. Scott Walker's public-sector reforms in Wisconsin. It shows the wage premium (a positive value) or wage penalty (a negative value) associated with working for the Wisconsin state government relative to the private sector. The premium/penalty varies depending on the dataset and the skills controlled for. But notice the difference between the last two rows. The premium is 1.0 percent when using the standard controls along with PUMAs (geographic areas). But the premium goes up to 5.6 percent when degree fields are included.

Apparently, Wisconsin state workers tend to hold college degrees in fields that are less valuable than the degrees held by college grads in the private sector, with obvious implications for a pay comparison. That's the kind of result that we would not be able to observe in future years if the ACS changes go through.