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January 2013 posts

Highlights of ASSA (pt. 3): Costly Posturing in China

Jonathan B. Wight

Xi Chen (Yale University) presented a fascinating paper at the recent ASE/ASSA meetings in San Diego (co-author Xiaobo Zhang of the International Food Policy Research Institute and Peking University).

"Costly Posturing: Relative Status, Ceremonies and Early Child Development" explores the relationship between social behaviors and economic and health outcomes. In particular, it examines how public ceremonies such as funerals, weddings, home blessings, and other events negatively affect substantive measures of human well-being -- specifically by caloric intake and malnutrition. People feel intense social pressure to participate in these social rituals even when it detracts from the well-being of their own children.

The authors present evidence that in rural areas of China, poor families spend more on gifts than do the richest families-- creating what the authors call "squeeze effects". The impact of this is statistically observed on children who are in utero at the time of the ceremonies.

This is counter to what one normally thinks, which is that social events tend to be redistributive. For example, in the highlands of Guatemala, ceremonies are paid for disproportionately by wealthier villagers. Such ceremonies serve to redistribute wealth in society according to a cosmic vision of what promotes justice in the circumstances. (See: Blevins, Ramirez, and Wight, "Ethics in the Mayan Marketplace," in Mark D. White, ed., Accepting the Invisible Hand: Market-Based Approaches to Social-Economic Problems(Palgrave Macmillan, 2010, pp. 87-110).

These findings also appear to contradict Confucian beliefs about the duty of a leader to provide for those in a lower hierarchy. It may be that these data can be explained by arguing that poor people have to try harder to make an impression and gain status. Hence, they give larger gifts.

Adam Smith noted that it is not simply the rich who are interested in status. Writing in The Wealth of Nations, Smith noted that:

"By necessaries I understand, not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life…. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in publick without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty, which, it is presumed, nobody can well fall into without extreme bad conduct. (566)"

What is not in the paper is a broader general analysis that would examine whether social affiliations provide important pay-backs over many decades to the wider group. That is, social events during hard times may injure an in-utero baby. But being part of the social group may confer advantages to other siblings in terms of jobs and marriages.

This was a highly stimulating paper and a remarkable attempt to understand the link between status spending and negative health indicators in poor communities.

Call for papers: Association for Social Economics sessions at 2014 ASSA meetings

Mark D. White

As the program chair for the Association for Social Economics sessions at the 2014 Allied Social Science Associations meeting in January 2014, I am pleased to announce the call for papers:

Association for Social Economics

Call for Papers

Allied Social Science Associations Annual Meeting
Philadelphia, PA, January 3-5, 2014

THEME:  Exploring the Relationships between Law and Social Economics

Social economics has long emphasized the inherent social nature of the economy, stressing that the ties that bind people together in the economy have essential effects on economic outcomes (and vice versa). Law is also a social institution that regulates and influences how people relate to each other, including its effects on economic transactions and other related social interactions. In other words, law should be an integral part of social economics, and this conference theme hopes to enhance and highlight this.

In terms of economics, law is best established within the mainstream traditions of law-and-economics. But there is a need for this paradigm, based almost solely on neoclassical economic principles, to be supplanted by a social economics outlook. There are already efforts on the part of legal scholars to question neoclassical law-and-economics (such as the law and socio-economic movement and behavioral law-and-economics) as well as areas stressing the social aspects of law (such as law-and-society). Social economics has an tremendous opportunity to contribute to this reorientation of economic thinking within the law.

For the ASE sessions at the 2014 ASSA meetings we welcome proposals for papers on all aspects of social economics, especially those dealing with the law. Possible law-related topics include:

  • In what ways can social economics offer an improved economic analysis of law?
  • How have social economics addressed legal issues in the past, either directly or indirectly?
  • How can social economists incorporate legal concepts into their work? Many substantive topics of interest to social economists, such as inequality, poverty, and discrimination have important legal components that affect social-economic outcomes.
  • What general topics in legal studies could benefit from a social economics approach? Such as:
    • Contract law (based on promise, consent, efficiency, etc.)
    • Property (individual versus collective orientation, issues of taxation, etc.)
    • Criminal punishment (justified by deterrence, retributivism, rehabilitation, etc.)
    • Judicial decision-making (based on rights, efficiency, social justice, etc.)

To submit a paper or a session, please go to the proposal submission area of the ASE website (under Conferences > ASSA > Proposal submissions). Submission deadline is April 30, 2013.

Individuals whose papers are accepted for presentation must either be or become members of the Association for Social Economics by July 1, 2013, in order for the paper to be included in the program.  Membership information can be found at socialeconomics.org.

All papers presented at the ASSA meetings are eligible for the Warren Samuels Prize, awarded to the best paper that advances the goals of social economics and has widespread appeal. Papers can also be considered for a special issue of the Forum for Social Economics. Details of these opportunities will be sent to authors of accepted papers.

Individual Rights—Answer to All Our Problems?

Jonathan B. Wight

One of the joys of life is being part of an intellectual group that meets once a month to debate controversial issues from diverse viewpoints. We span the spectrum from raging liberals to raging conservatives and middle-of-the-roaders.

One good friend is a libertarian and a devoted follower of Ayn Rand. He recently wrote asking us to consider:

"Imagine if democratic majority rule could never violate inalienable individual rights—just elect our representatives in a Constitutional Republic to defend and uphold our rights." My friend goes on to argue that in such a world there never would have been slavery or a Civil War, women would have always had the vote, Jim Crow laws could not have existed, there would never have been Prohibition or current drug laws, no welfare, no corporate bailouts, and no bans on gay marriage. Charity would be voluntary and thus heartfelt.

Here is my reply. Dear [Friend],

I agree with about 95% of your public policy points. Yet I don't think it is possible to imagine that life would be a nirvana under a scenario of individual rights full stop, without other necessary institutions or regulations.

There is at least this problem: rights are complicated. Examples:

I choose to not show beneficence to another race of people, and refuse to hire them in my business or serve them in my restaurant. That's my right. Their rights have not been abridged, since they have no positive right to food or work. Any law forcing me to serve or hire those I don't want to is a form of coercion against my own rights.

Now--do we really want to go back to that world of open discrimination in public markets? It offends the hell out of me, and yes, I therefore favor laws that would restrict one person's right in order to enhance another's in this case. But it is case by case. Our concept of individual rights has evolved to include treating each other person (gender, race) as worthy of equal respect, but history suggests that this new view is the result of hard struggle and the demand for regulations that enforce the new view. Perhaps eventually enough people will believe in human rights so that regulation against such discrimination is no longer needed. But "human rights" coverage continues to evolve! It now is starting to include gays. In fifty years it might be blue eyed people—a tiny minority of the population by then.

Insisting that everyone should simply profess a belief in inalienable human rights seems naïve? It certainly was not the view of our founding fathers. You noted that you would want your daughter to have the right to an abortion if she is gang raped, but what about the rights of the fetus? Who gives one person the right to say the fetus has no rights? What about the rights of future generations—the yet unborn? Do I have the right to burn up all the world forests because I own them, even if it means the destruction and death of the species?

Life isn't simple, and so we struggle along. Bentham, interested in Utilitarian public policy, said rights were "nonsense on stilts." Personally, I like rights. I think they are a wonderful invention, like money. But I also like public regulations that are appropriate and that change as needed with the times to serve the ends of society. That doesn't make me a socialist or Marxist, or at least I will claim that as loud as I can. And so would Adam Smith, who was a pragmatist, and used rights language as a way of convincing people to do the right thing for the poor—break up the damn monopolies.

[And, by the way, Smith had no problem restricting the rights of those in financial markets who engaged in speculation, hence he supported "party walls" and other regulations that enforced lower risk.]

Bridget Jones and Jane Austen

Jonathan B. Wight

Virginia Pasley has a lovely article in The Atlantic linking Bridget Jones to Jane Austen. Borrowing ideas from earlier writers is a time-honored pastime. Ask Adam Smith—the "invisible hand" and the "pin factory" both have long lineages and were not Smith's inventions. Austin's books are not in copyright, which also provides an incentive to borrow.

Pasley gave this quote from Emma that certainly resounds with Smith's moral sentiments:

Human nature is so well disposed towards those who are in interesting situations that a young person who either marries or dies is sure of being kindly spoken of.

[Virginia Pasley is my talented cousin.]

Highlights of ASSA (pt. 2): Professional Economic Practice

Jonathan B. Wight

Yesterday I noted the highlight of ASE's Plenary Session at the ASSA meetings last week in San Diego. There were a number of other excellent sessions and I won't be able to highlight everything (but see here for the complete list).

A wonderful panel session explored "Ethics and Professional Economic Practice – Next Steps?"

George F. DeMartino, University of Denver, argued for the creation of a new field in economics devoted to professional economic ethics, similar to what exists in law, accounting, and other fields. In an informal survey of business and economics journalists, DeMartino found that despite the crisis of 2008 and the movie Inside Job, journalists and editors were almost totally uninterested in conflicts of interest when researching stories using economists as experts.

David Colander, Middlebury College, argued that ethical lapses in economics were rarely due to money bribes, but rather due to the hubris of economists in pretending to have answers when they really do not: "[E]conomists have a tendency to convey more scientific certainty in their policy positions than the theory and evidence objectively would allow. Too many economists are willing to make seemingly definitive scientific statements about policy based on models, that they know, or should know, are highly imperfect."

David M. Levy, George Mason University, and Sandra J. Peart, University of Richmond, presented a paper on "The Ethics Problem: Solving the Collective Action Problem of Economic Expertise." This explores the collective action problem that arises from economists having non-monetary commitments (such as to particular principles or ideologies). There's an interesting discussion of Ronald Coase's attempt to defend his name after he was accused of bias, and a look at John Rawl's margin notes to Frank Knight's, The Ethics of Competition.

Steven Payson, the Association for Integrity and Responsible Leadership in Economics and Associated Professions (AIRLEAP), was generally critical of the culture of academic economics, in which "contributing to the literature" substitutes for actually making the world a better place. Instead, economist-academics are self-interested to advance their careers and there is a "pretense" of scientific merit.

Much more than this was presented and I am sure each of these authors would be happy to send you their papers.

The Illusion of Mathyness

Mark D. White

KimmoKevin Drum at Mother Jones recently highlighted a new paper by Kimmo Eriksson (Mälardalen University and Stockholm University) published in Judgment and Decision Making titled "The Nonsense Math Effect" (7/6, November 2012). Here's the abstract:

Mathematics is a fundamental tool of research. Although potentially applicable in every discipline, the amount of training in mathematics that students typically receive varies greatly between different disciplines. In those disciplines where most researchers do not master mathematics, the use of mathematics may be held in too much awe. To demonstrate this I conducted an online experiment with 200 participants, all of which had experience of reading research reports and a postgraduate degree (in any subject). Participants were presented with the abstracts from two published papers (one in evolutionary anthropology and one in sociology). Based on these abstracts, participants were asked to judge the quality of the research. Either one or the other of the two abstracts was manipulated through the inclusion of an extra sentence taken from a completely unrelated paper and presenting an equation that made no sense in the context. The abstract that included the meaningless mathematics tended to be judged of higher quality. However, this "nonsense math effect" was not found among participants with degrees in mathematics, science, technology or medicine.

It's a short paper and well worth the quick read (or read Drum's post, which summarizes it well). Eriksson reports that humanities/social science readers tended to be enchanted by the irrelevant equations, with 60-65% rating the adulterated abstract higher, but economists are not broken out of that very broadly defined group (which only includes 84 people as it is). Given some (most?) economists' predilection for mathyness, though, I would not be surprised at some degree of unconscious bias for research that promises greater mathematical sophistication (though I assume any such bias would melt away once the paper was read).

But I think many other economists, especially heterodox economists who are more skeptical about the benefits of mathematical modeling, might go the other way. I know that when I read an interesting abstract and then skim the paper, my eyes glaze over when I hit math--not because it doesn't add anything to support the author's thesis but because I'm afraid it will leave out many things in the interest of abstraction and simplicity, such the very nonquantitative aspects of the model that I found fascinating in the first place! Some things must be left out of a model, of course, but these factors should be omitted because they are relatively unimportant, not because they're don't fit into the modeling framework.

As Eriksson writes in his introduction to the paper,

In areas like sociology or evolutionary anthropology I found mathematics often to be used in ways that from my viewpoint were illegitimate, such as to make a point that would better be made with only simple logic, or to uncritically take properties of a mathematical model to be properties of the real world, or to include mathematics to make a paper look more impressive.

He very well could have included economics in there as well--I'm curious if his exclusion of it was intentional or random. Gee, I'll bet we could model that...

Highlights of ASSA (pt. 1)

Jonathan B. Wight

The Allied Social Science Association meetings wrapped-up on Sunday in San Diego. This is a consortium of many different economics-related organizations that hold their meetings together in the hope that there will be cross-fertilization of ideas and economies of scale. It is also the largest job market for economists.

For those of you unfamiliar with the Association for Social Economics, it is one of the founding 'allied associations' in the 'Allied Social Science Association' – participating continuously in the annual meetings for some 70 years. Founded in 1941, the ASE has a special focus on the intersections between economics, ethics, social justice, and identity – and what they mean for economic research, policy and education. The entire ASE program can be found on the website here.

Several blogs will focus on highlights of ASE's sessions at ASSA:

Paul Zak gave the plenary address, "The Neuroeconomics of Trust: The Moral Molecule." For the last 10 years Zak has been trying to find the biological origins of social instincts, as elucidated in Adam Smith's The Theory of Moral Sentiments (1759). Smith noted the strong biological imperative for human behavior and the powerful role of instincts over reasoning:

Thus self-preservation, and the propagation of the species, are the great ends which Nature seems to have proposed in the formation of all animals…. But though we are in this manner endowed with a very strong desire of those ends, it has not been intrusted to the slow and uncertain determinations of our reason, to find out the proper means of bringing them about. Nature has directed us to the greater part of these by original and immediate instincts (TMS, Liberty Fund edition, 77–78).

But how do these instincts work? Paul Zak, Director of the Center for Neuroeconomics Studies at Claremont Graduate University, has become a leading figure in the movement to understand the instincts that underpin social and ethical behaviors. Zak's book, The Moral Molecule appeared last May. It reveals the economic role of the hormone oxytocin, which Zak helped uncover by drawing copious amounts of blood from human subjects around the world. Indeed, Doctor Zak has become known as the Vampire economist. He's also known as "Doctor Love" for his famous hugs.

Zak's talk was inspiring on several levels, and produced a lot of commentary over the weekend. If you're not reading Paul Zak, you're being left out of a wonderful discussion about human sociability.

James M. Buchanan, R.I.P.

JmbMark D. White

I just received word that Nobel laureate James M. Buchanan has passed away.

I was just talking to David Levy at the ASSA meetings in San Diego about him, and hoped to meet him this summer. The loss to the profession cannot be overestimated, and my thoughts go out to his family, friends, colleagues, and students around the world.

I am sure obituaries and remembrances will proliferate over the next several days, written by people who knew the man and his work far better than I did. But his seminal work in public choice, constitutional political economy, and professional economic ethics will remain influential on me as long as I continue to write. As I sat at my desk to write this post, his books What Should Economists Do? and Moral Science and Moral Order sit in my current reading pile, and his article "The Domain of Constitutional Economics" (from the inaugural issue of Constitutional Political Economy) recently opened my eyes to a new approach to my work.

The man has left us but his scholarship lives on.

Considering MyJihad

Jonathan B. Wight

Public education campaign called MyJihad featured in an advertisement on the side of a Chicago bus. (Courtesy of myjihad.org).

In an op-ed in the Washington Post, attorney Qasim Rashid helps us to understand the true meaning of Jihad:

As a Muslim American, #MyJihad begins every night—get to bed on time so I can wake for pre-dawn prayer and nourish my soul. #MyJihad is not skipping a healthy breakfast—as our Starbucks society is prone to tempt—and thus properly nourish my body. #MyJihad ensures I spend time daily in service to humanity—charity, volunteer work, and mentoring—to nourish my personal moral development. And finally, #MyJihad is to read and learn about ideas that challenge my thinking—to nourish my intellect and foster pluralism.

And all the while, #MyJihad reminds me to treat those who malign, misdirect, and misinform Americans about jihad, with respect and decency—because that is the example prophet Muhammad set for all Muslims. As an American Muslim, #MyJihad is to properly define jihad with my actions of service and love—never hate.

So what is #MyJihad? It is a grassroots public educational and service campaign started by MyJihad.org. The campaign is designed to provide a unifying storm with bus ads, on Twitter, YouTube, Facebook, and news media. It is an inspiring phenomenon, as people of all walks of faith affiliation and non-affiliation—Muslim, Christian, Hindu, Jew, atheist, and more are uniting to share their struggle towards self-improvement and overcoming the odds in their lives.

#MyJihad defines jihad correctly as—not holy war—but struggle…. [O]nce upon returning from battle, Muhammad remarked, "We are returning from the lesser Jihad to engage in the greater Jihad—the Jihad against the self."

Seen in this light, jihad is the virtue ethics of self-control. Mohammed, a merchant, interacted with many people and understood that getting along meant learning to respect differences, especially in religion.

They say cutting wood warms you twice. And so does international trade: it makes you warmer in wealth and potentially warmer in worldview.