Awarding winning journalism, terrible social science

I avoid using this blog for commentary on ephemeral current events, but sometimes they lend themselves well to big picture issues. Case in point: Pulitzer winner dug beyond politics to explore impact of food stamps on American families. Reading this interview, we can look at some important themes.

1. The interview is bad, really bad, awful social science. This is not surprising given that Saslow is a reporter and not a social scientist, but the accolades given to his work make this a relevant fact, and high-level theory does have real effects. Specifically, Saslow appears to take as exogenous things that are actually endogenous. It’s true that many people rely on food stamps* in the US. However, this behavior is not predetermined. If no government food assistance programs had ever been created, nobody would rely on them. Yes, some people would be worse off, but the knowledge that soup kitchens, churches, and food banks were the only institutional help available would be a motivating factor in peoples’ work, spending, and saving decisions. [In the long run, it would also likely lead people to create still other means of assistance.] By changing the set of options available to people, you can change their behavior. That people behave in some ways with a given opportunity set does not mean they will behave in the same ways with a different opportunity set.

One of the classic examples in the economics of risk that we can use to illustrate this point is the idea that seat belts allow people to drive more recklessly than they would if every car had a sharp spike pointing out of the steering wheel. In the latter scenario, driving behavior would be very different than it is today.

This does not necessarily entail cutting off all assistance programs. It is not a political point. It does mean treating recipients like us—like rational human beings—who can and do adjust behaviors in different opportunity sets.**

2. Seen and unseen! It’s true that food stamps are a major revenue source for some locations and businesses. That is seen. It’s also true that the same revenues are by definition not spent in other ways. That is unseen. It isn’t as if the government simply creates wealth to give out; what it has was taken from others who no longer have it. This point does not rule out transfer payments entirely, but it does mean that it’s bad social science to focus only on the places/firms that benefit now and ignore the places/firms that are worse off now relative to alternative arrangements.

3. Coming closer to the contingent world, it’s lamentable how quickly new political conditions are seen as timeless. As Friedman put it, “Nothing is so permanent as a temporary government program.” Though Saslow admits “it’s a program that’s grown four times in size in the last 10 years,” there’s no reflection on the fact that 11 years ago there wasn’t the social problem of a massive die-off by people who would qualify for assistance under the new guidelines.

I can already hear the objection: but there was a huge recession within the last ten years and many people were worse off than they had been previously! Setting aside peoples’ endogenous reaction to their worsening conditions, this still demonstrates my point. What is the expiration date for the expansions? If they were made necessary by a lot of genuine hardship in the Great Recession, at what point will they be made unnecessary by the return of good times? (I expect few people who supported these expansions when they were made to argue for contractions in the next few years.)

The final point is how readily people will read this as a political post with an axe to grind rather than a plea for better social science thinking. Value-free social science and political partisanship are not the same, and you do yourself and the intellectual climate you operate in a great disservice to confound the two.

* I know there are more official terms for this, but this is the term the interview uses and the term is more widely used and understood than a more neutral term like SNAP.
** There is a very small percentage of people with mental illnesses for whom a separate set of policies would be more appropriate, though even most of them are not completely random thinkers who can’t adjust their behavior at all.

Quotation of the Day: the Hayekian worldview

“If we are to understand how society works, we must attempt to define the general nature and range of our ignorance concerning it. … The misleading effect of the usual approach stands out clearly if we examine the significance of the assertion that man has created his civilization and that he therefore can also change its institutions as he pleases. … In a sense it is true, of course, that man has made his civilization. It is the product of his actions or, rather, of the action of a few hundred generations. This does not mean, however, that civilization is the product of human design, or even that man knows what its functioning or continued existence depends upon. … If we are to advance, we must leave room for a continuous revision of our present conceptions and ideals which will be necessitated by further experience. We are as little able to conceive what civilizations will be, or can be, five hundred or even fifty years hence as our medieval forefathers or even our grandparents were able to foresee our manner of life today.” (F. A. Hayek, The Constitution of Liberty [The Definitive Edition edited by Ronald Hamowy], Chicago, IL, University of Chicago Press, 2011, p. 74)

International “anarchy”

In academic discussions about anarchy, the condition of having no government, one often hears comparisons drawn to the international situation that currently obtains in the world. Internationally, there is no authority that controls states. True, the United Nations and other organizations do some of these functions, but their enforcement powers are limited and they do not really qualify as governments.

This comparison has always made me uneasy. States do not behave like people. A state’s decision-making process involves many people with conflicting purposes fighting and bargaining for some kind of consensus position that represents what the state “decides”. Not only do states not have information analogous to what an individual decision-maker has when weighing potential choices, but the people responsible for the decisions do not bear the costs of choosing A over B. Taxpayers, businesses, soldiers, invaded populations, etc. bear the costs of state decisions.

I usually get the sense, too, that this is meant as an argument against anarchy. After all, when the United States government decides to invade a non-threatening country, i.e. when individual decision-makers who form part of the United States government decide, there’s really nothing to stop them. This could be a good thing in some situations, but it’s generally thought of as a bad thing (including by me). By analogy, anarchy among individuals would result in the strongest person doing whatever he wants and the weakest just having to deal with it.

But, as I’ve said, this analogy is not very useful. When George W. Bush or Vladimir Putin decide to invade a country, they personally don’t bear any costs. If you’re paying, they’ll have the filet mignon. In the standard denotation of anarchy, individuals reap the benefits and bear the costs of their actions. Comparing the actions of individuals with the actions of groups of people who make decisions for others obfuscates more than it clarifies.

Trade, Romanitas, and the Völkerwanderung

One big question to which I’d like to know some good answers but which I hardly have the time or training to pursue in any great depth concerns the Germanic migration period (“Völkerwanderung”) in the post-Roman world. Though there are multiple facets to it, perhaps it’s best expressed as the question of why Germanic languages and cultures were lost in most places as the new military rulers were absorbed into local populations except in Britain, where the composite Anglo-Saxon-Jute culture and language(s) replaced local cultures and languages.

The answer previously given was very succinct: the invaders replaced local populations, so it’s no surprise that their language(s) and customs prevailed. Germanic invaders in other places were absorbed and their cultures disappeared because they were a small percentage of local populations and did not replace them. The problem is that scholars generally no longer believe that this Anglo-Saxon replacement happened. Archaeological and genetic studies paint the picture of a fairly small Germanic population transfer and admixture into a stable population base that continued throughout the period, as in other former Roman territories.

The economist in me wants to connect it to trade networks. The Franks, Goths, Vandals, Burgundians, Langobards, etc. that took over various patches of continental Europe and Africa were numerically inferior to the populations they oversaw just as the Anglo-Saxons were. But they were well exposed to Roman culture and to a large degree were part of it. As their remaining legal texts demonstrate, their law was much less developed than Roman law. As a consequence, for most things they simply continued the use of Roman law. This Roman law evolved to deal with the complex society and economy of the Romans, including in large part economic phenomena; land ownership, trade, etc. were very common topics in Roman law. The Franks, for example, took over military jurisdiction in northern Gaul but had no system even remotely comparable to the trade and production already happening there and knew the goose that laid the golden eggs when they saw it. The material culture they merged into was far more advanced than theirs and they naturally wanted to be a part of it. Markets existed that connected one town to the next, to the next, to the next, all the way to Rome, Constantinople, Antioch, and Alexandria. It was a simple thing to keep using Roman roads and waterways.

The post-Roman Britons were already on the fringe, and it seems that they were not particularly thoroughly Romanized outside of the elites. When Roman forces withdrew in 410 trade no doubt continued, but being on the fringe and losing this direct connection with the continent, their trade must have suffered. One of the classic examples used when discussing post-Roman Britain is that they had a thriving brick industry that steadily declined, and when it finally died no native brick industry replaced it until centuries later. Another example is that they used pottery wheels when connected to Rome, but this practice too fell into disuse. Capital deepening allows for greater productivity, but is not necessary when this productivity goes to waste. As the division of labor is limited by the extent of the market, we can reasonably infer from these observed phenomena that their markets shrank. It’s possible that native Britons were not the brickmakers and potters in Britain, but the fact that these practices faded away after the Roman withdrawal rather than stopping cold makes that implausible.

Britain was also at the fringe in terms of Church influence. While the Church was not yet the centralized structure that we see in the High Middle Ages and beyond, there were centralizing forces at play, the influence of the Roman government first and foremost. And viewing the church in its social aspect and not its theological aspect, this also puts Britain on the fringe of European culture of which church and market were components. Trade is certainly possible in these circumstances, but it less likely than it would have been for Gaul, Hispania, etc.

As an aside, implicit in what I’ve said so far is a general acceptance of Henri Pirenne’s thesis that “classical” Roman civilization ended in the eighth century when the Mediterranean was lost to Muslim cultures, destroying the trade networks that had sustained Romanitas for so long. As the extent of the market shrank incredibly, it’s no wonder that the cascading effects would greatly reduce material prosperity for the average European and consequently shrink things that benefit from material prosperity like higher learning, literature, art, and the other “finer things in life”. This process may have been started by the division of the empire into distinct legal jurisdictions under Germanic rulers, but the loss of the Mediterranean was a crushing blow (for the Europeans, that is; the newly-Muslim lands prospered).

Back to the matter at hand, this diminution of cultural contact and especially of trade with the Continent would have made the Britons much more susceptible to cultural takeover by the Anglo-Saxons. If, as we now believe, the Anglo-Saxons who went to Britain were not entire nations but only a small number of settlers, it’s likely that they would have maintained trade connections with the rest of the Angles, Saxons, and Jutes back in their ancestral homelands. The way to reestablish more extensive market connections and regain material prosperity would have been to go along with the Anglo-Saxons rather than cling to their fading Romanitas. And we know for certain that the Britons did go along with the Anglo-Saxons. Add to this the fair presumption that the Anglo-Saxons were rather more united militarily than the Britons, which would have made it easier to make their political elites focal for the island, and we may just have ourselves a decent explanation.

While this all seems reasonable to me and fits with my base of economic theory, there are, of course, a million and one other factors that could have been and probably were important. As most historians whose sources I have access to are not economically-inclined, they never consider the issue this way, or if they do I haven’t discovered them.

My final note is about taxes and tariffs. I know that the Romans had trade restrictions of some kind on some outsiders—many of the treaties with the Goths included removing or reducing trade restrictions, for example—so it’s possible that the post-Roman Britons suffered from a lack of free trade with the Romans after the Roman departure, making the Anglo-Saxons doubly appealing. But given that it had been part of the empire, it’s also possible that trade restrictions would not have been implemented against British goods after the withdrawal. This I have no idea about, and again, no time and training to find out about.

Coffee shop economics

One of the things I like about economics is how it can explain so many things in the world around us. For example, I’m writing this in a coffee shop on a major street by a large university. (It’s not actually a great place to do work. Too much commotion. Students are coming in and out, as are people having brief meetings in a focal location.) Like most coffee shops nowadays it has free wifi, and as expected my two nearest neighbors are also wearing headphones and typing away. But unlike most coffee shops that I’m used to—residents of New York and San Francisco might have different expectations—they charge for refills. $0.54 is not a lot, but it’s a bit of a hassle. Why would they do this?

As I mentioned, it’s a high-traffic area. While they want people to come in, they don’t necessarily want them to stay all day drinking coffee. At my undergraduate university I had a coffee shop I hung out in all the time, and I definitely stayed for hours between classes, but it was different by not being nearly so busy. Thus they didn’t need their customers to be in and out quite so fast. As this coffee shop they’d quickly reach their capacity if lingering had too low of a cost. A small change in the cost, 54 cents a refill, apparently makes all the difference. It’s fairly full at the moment, but not so full that newcomers can’t find a spot. Coffee refills are not what they’re mainly charging for. They’re charging for time in seats.

They could offer free refills, but it appears they’d lose money doing so. It costs money to run a coffee shop, and with the small refill fee they’ve struck a balance between being hospitable enough that people want to come but not so hospitable that they block other people from coming.

P.S. It was the first thing I noticed, but I forgot to add that they also don’t seem to have electrical outlets accessible to laptop users, presumably for the same reasons as above. Other locations owned by the same people do, and also don’t charge for refills.

On Fischer on libertarianism, or, How errors compound

I’ve seen a lot of attacks against libertarianism in highbrow media outlets in the last few years. I take this as a good sign overall, even if the attacks rarely if ever have anything convincing in them. I’m not just being partisan; I’d welcome a good critique. But so far I’ve been disappointed. My goal on this blog is not to defend libertarianism per se. I am a libertarian, and I think you should be too, but it’s really not my purpose here. I keep this blog as a sort of scratch pad for economics-related thinking.

However, I couldn’t resist commenting on Claude Fischer’s odd hit piece “Libertarianism is Very Strange”. Not so much for the misunderstanding of libertarianism, which is part of it, but for the strange lack of consistency and the economic error(s). The latter first. Fischer writes on the historically odd emphasis libertarians place on individualism:

For most of history, including Philadelphia, 1776, more humans were effectively property than free. Children, youth, women, slaves, and servants belonged to patriarchs; many patriarchs were themselves serfs to chiefs and lords. And selling oneself into slavery was routine for the poor in many societies. Most world cultures have treated the individual as a limb of the household, lineage, or tribe. We moderns abhor the idea of punishing the brother or child of a wrongdoer, but in many cultures collective punishment makes perfect sense, for each person is just part of the whole. [emphasis added]

That’s one way to look at the rationale behind collective punishment, but not a very good one. Why else might other, mainly earlier societies use collective punishment?

This is a law & economics question. The answer is not that “each person is just part of the whole” but that when resources for law enforcement are very limited, it is a more efficient way to get people to modify their behaviors than punishing only the lawbreaker. By making my family liable for the crimes I might commit, the costs of monitoring me shift from the authorities to my family, i.e. from the high-cost observer to the low-cost observer. With greater knowledge of what I’m doing, they’re more likely to nip my criminal impulses in the bud than some distant, near-sighted authority. You’ll notice that collective punishment tends to disappear as societies become wealthier and can thereby support more capable law enforcement, as well as allowing them to rely less and less on their families, clans, or communities and more and more on the impersonal economy.

In general, this is a problem throughout the piece. Sociological analysis is one way to understand the world, and through this lens the best explanation might seem to be in how the members of society conceive of themselves. Economic analysis is another, and its evolutionary logic does a much better job of explaining this phenomenon without having to read minds. And it doesn’t rely on society being logically prior to individuals, which is good because there is no singular entity that is society. Society is a collection of individuals. Connected and interdependent in many complicated ways though they may be, only they think, choose, act, etc.

Later in the piece, Fischer makes another claim:

Americans’ life expectancy, health, physical security, and living standards soared in the 20th century—not, however, because of the march of libertarianism, as Domenech insinuates, but in great measure because of the welfare state and of regulation of food, medicine, water, work safety, pollution, and so on. Personal liberty itself has also improved in the last century, with civil rights for minorities and women and broader guarantees of civil liberties. These advances, too, largely developed not against government but with it.

A lot of people believe this in full or in part, including economists. But there are so many other factors involved that this claim is misleading in its oversimplification. Why didn’t the regulatory era happen much sooner? Put differently, why didn’t it happen until social product and tax revenues were high enough to sustain it? If some European monarch had tried to implement a modern-looking regulatory system in the late Middle Ages, how would it have gone?

The field of public choice is full of case studies in which government intervention into the economy or society more broadly have negative social benefits, and they almost always have some high-sounding purpose. It may be the case that some of these interventions were socially beneficial, sure. But it also may be the case that technological progress would have taken us even further than it has if it were not for governments intervening on behalf of powerful interests. Showing a blithe disregard for a century and more of incredible technological progress is easier than wading in to separate the helpful from the unhelpful and seeing what the balance is. You don’t have to be a libertarian to see that such a gross oversimplification is irresponsible at best.

My broader takeaway is Fischer’s inconsistency. Libertarianism is silly because it’s ahistorical—a factual claim I would dispute in a longer post, but will let slide here—but somehow this doesn’t apply to, say, all other political philosophy ever? Rawls does not suggest that the original position behind the veil of ignorance is realistic. Hobbes does not suggest that we agreed to an absolute monarch to protect us from each other. What Fischer criticizes Nozick for is what political philosophers have been doing for quite a while, including political philosophers Fischer probably likes.

Moreover, isn’t it good to have goals? The past was awful in a million ways. Isn’t it good to envision a society that is awful in as few of them as possible? And shouldn’t we incorporate economics into it so that we can be sure our means can accomplish our ends and our best intentions don’t run off the rails?

Most of the attacks against libertarianism that I mentioned above have been poorly done hit pieces that we’ll look back on one day and laugh at. Fischer is no hack, but he doesn’t do much better. In attacking libertarianism he makes other errors, and these undermine his case more than his political priors.

Marijuana licensing is mostly a non-issue

The three most sensational recent measures to legalize the possession and consumption of marijuana, those of Uruguay and the US states of Colorado and Washington, also include provisions for its cultivation, distribution, etc., or at least provisions for future provisions, not just for its use. Many advocates of the former phenomena are not advocates of the latter. In fact, FEE just posted this Facebook status update about the licensing scheme in Colorado:

Some libertarians oppose marriage licenses for same-sex couples because they don’t want the state in the marriage business. (One argument like this was made in our first Arena.)

Are the licensed marijuana shops in Colorado a step in the right direction, or a step back because the state shouldn’t license businesses period?

As a libertarian, I see the logic. I don’t think the moral or efficiency arguments are convincing for licensing business in general. But I don’t consider it especially important when analyzing the policies. The real value of these legal changes is not in how they affect the cultivation and distribution of marijuana. The real value is that law enforcement agencies at the relevant level of jurisdiction will no longer be able to arrest people for possession! If this seems silly or obvious, my response is: don’t overthink it. The ability of law enforcement agencies to arrest people and ruin their lives—and the rule of law—based on actions that are not (very) socially destructive is an incredibly antisocial force. In practice, this is a cure incalculably more harmful than the disease it aims to counteract.

As we already know, legal marijuana outlets are not where most marijuana purchases are made. I don’t expect these new systems to change that fact. In fact, I fully expect the federal government of the US to try to clamp down on state-licensed outlets in Colorado and Washington. Socially speaking, this is a small price to pay for the ability of the common man to possess a plant that is comparable to alcohol without risking jail time for it. It can hardly be the case that people found in possession of marijuana will be made to produce documentation showing that they purchased it through state-approved channels. The licensing issue is really a distant second place.


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