One Year of EWED Blogging

We would like to thank the readers and subscribers who have joined us since we started blogging in August of 2020. This has been a great experience. Special thanks to people who have linked to us. Most of our web traffic comes from the United States, but I am pleased to report that we receive visitors from almost every nation in the world.

We believe that the world is better when people keep learning. Reading and writing blogs is a good way to learn. All of the EWED writers have benefitted from reading other blogs. We want to put new facts and analysis into the pool.

Our three most-viewed posts so far for the year 2021 are

  1. Academic Publishing: How I think we got here by Mike Makowsky
  2. Coase and COVID by Jeremy Horpedahl
  3. GDP Growth in 2020 by Jeremy Horpedahl

Looking back to 2020, the most-viewed post was my Complacency and American Girl Dolls.

In winter of 2021 we got some new graphics, like the one below. The importance of the shipping container cannot be understated, for economic growth and trade. Every blog post individually is like one box, not very important on its own, a piece of the essential human discourse.

I see blogging as a complement to both research articles and Twitter. Blogs get published much faster than journal articles and they allow more depth than tweets. By writing a new post every day we stay accountable both to ourselves and to our readers.

The various EWED writers represent a range of opinions, but we all agree that blogging is a way to make “small steps toward a much better world”.

Go urban, young man

The U.S. Census Bureau is gradually releasing data gathered in the 2020 decennial. Their release of a map showing which US counties have lost population caused a small Twitter furor.

Visually speaking, it’s a lot of brown. People are leaving rural counties in favor of urban areas with jobs and amenities.

The main facts from Home for a Millennial were: 1) although millennials were slower to buy homes, they are trying to buy them now and bidding up housing prices in desirable metros 2) millennials were more likely to live with parents than previous generations, so that’s part of the answer to where they were prior to the home buying scramble 3) the previously-not-house-buying phenomenon is not associated with chronic unemployment

Buying a home in the desirable areas is going to be expensive, unless there has been a lot of building. Texas, the leader in building, added more than 1.5 million housing units in the last decade. The map above illuminates what “moving to Texas” means. At the county level, some people are leaving Texas. However, the booming cities of Texas are really booming.

Being the largest generation, millennials are going to be a factor in the general move from rural to urban areas. I have about two peer friends who, after graduate school, moved to a rural place. They are garden influencers, using hashtags like #AllTheNature. The novelty of growing their own vegetables has earned them a minor celebrity status among my internet circles. How trad of them. The exception proves the rule. Most millennials don’t want to farm or even dabble in raising goats. If I grew up in farm country, my social media experience would be very different, so I don’t want to conclude too much from my bubble. The Census data confirms it. Many young Americans are gathering into the cities and leaving the rural areas.

I have a (white) Boomer relative who has 4 siblings. He was born in Iowa. I remember him telling me that his large family would drive 2 hours to visit another large family, for fun. He said the only thing to do for entertainment was visit each other’s kids. Those 5 siblings “escaped” cold Iowa in favor of the more desirable metro areas, and they did not go on to have large families of their own.

The move to cities and the shortage of housing therein connects with the delay on forming families (relative to past generations). Expensive housing could be delaying desired children, or millennials who don’t want children could be moving to places that are more fun than the farm.

Aside from rural America losing population, the other big result from the Census was the increase in racial diversity, which is also driven by young people.

The Two or More Races population (also referred to as the Multiracial population) has changed considerably since 2010. The Multiracial population was measured at 9 million people in 2010 and is now 33.8 million people in 2020, a 276% increase.

Has anyone offered a simple narrative that relates the increasing racial diversity with the urban land grab?

The War of Ideas Isn’t Over

I have spent some of the last week educating myself about Afghanistan. You might ask where I was back when the US had a strategic advantage. I now regret the time spent at the paint store squinting at 200 different shades of white. Here’s an idea: America gets only 20 paint colors until we achieve our foreign policy objectives. 40? All I know is that we are past the optimal number of shades of white, considering what just happened.

A lot of the “takes” in the past week have been on the subject of blame. Despite the fact that American lives are still at risk in Afghanistan, this has not been a unifying event, like 9/11 was.

Are we picking our battles in such a way that helps vulnerable people? Any energy spent fighting your enemy B is a resource you cannot use to fight enemy C. Incidentally, that is one of the points that President Biden made in his speech on August 16th. There is an opportunity cost to mean tweets.

I reached out to a veteran friend of mine for insight last week. This is part of what he told me:

Biggest mistake is looking at Afghanistan as a single cohesive entity. It isn’t. There is no national identity. The Kyrgyz, Uzbeks, and Kazaks of the north … Karzai was a Pashtun and always ensured the main leadership roles were Pashtun.

He said that there are sub-units of Afghan people opposed to the Taliban who are upset by the advance we all witnessed to Kabul. Divided people lose, and then they don’t have the capacity to help others.

There was a time when the Taliban were few in numbers and hanging on the fringes. One advantage they had is that they went with the “legalize it, tax it” drug policy. Farmers under their jurisdiction can grow opium poppy and pay the Taliban a fee. In the American sphere of influence, we were fighting against the laws of supply and demand. The American public is not the only destination market for illicit opioids, but it’s a big one. It’s pretty self-defeating to ask our security forces to fight against drugs when most Americans can’t be bothered about them.

Consider the movie Little Miss Sunshine, a beloved American comedy. Consider the grandpa. He’s not a perfect man. He has his little vices, like dropping F-bombs in front of his young granddaughter. And, he snorts heroin. It’s easy to imagine what a great rapport he has with his dealer. No one would report his behavior to the police.* The drug habit is not portrayed as a virtuous thing, but overall he’s a sympathetic figure.

There is a lot of muddled thinking in our society when it comes to drugs. The bill comes due.

Humans are very creative. The good news is that we could have more discussions about drugs and experiment with new policies. It’s not inevitable that laws regarding drugs will be the same next year, but there is a lot of inertia that needs to be overcome. A society where celebrities joke openly about doing illegal drugs is not going to also be a society that can effectively “reshape the world in its image”, to quote Tyler.  

Tyler’s point is that this unfavorable outcome was not inevitable. From responses I read, many people offering opinions on Tyler’s article did not read past the headline. Nuance can’t be conveyed in a headline or a tweet. Tweet culture is a handicap right now, at a time when good complete ideas are badly needed. What happened in Afghanistan was complex. A tweet might be long enough to say what you would like to see happen, but it’s not long enough to help anyone.

The same Americans who tweet that they want refugees to live somewhere safe won’t go to a city council meeting and argue in favor of building high-density housing in their neighborhood. The same Americans who have tweeted that they hope the Taliban will build an “inclusive” society…

If you take the view that the failure in Afghanistan was inevitable, then Matt Y ’s explainer is ungated and helpful. There is also a lone voice saying that 20 years of “jail” had value.

If indeed this is a major crisis, then we are showing a lack of awareness when it comes to media. Some Americans alive today might not know about the role of media in fighting Nazis. Here is a fun read about that. In addition to WWII-era Brits, the Taliban are also strategic with media.

Considering that this is partly a war of ideas, I don’t know if taking Kabul so fast will look strategic in hindsight. There is much still to be determined. Had the Taliban consolidated power more incrementally, they would have been able to control the images that got out.

Here’s one image I won’t forget:

On the assumption that 20 times more people saw the image than liked it, this picture has been seen by well over 2 million people. Imagine how those girls’ lives have changed. “they are now with the Marines.” The entire world is breathlessly watching the airlift, and any abuses by the Taliban are headline news.

The media you choose to consume shapes the world around you. Every click is a vote for the kind of world you want. The war of ideas continues.

James Bailey here on information consumption (not on Afghanistan)

*It’s nothing glamorous or entertaining, but this is one approach to opioid use. As more parents lose children to fentanyl overdoses, more civic action is happening which generates publicity. Deaths from opioids increased rapidly after 2010. Little Miss Sunshine came out in 2006, so perhaps if it were made today they wouldn’t have taken such a cavalier approach to heroin.

Right now

When we make drugs illegal but continue to buy them in huge amounts, we make the world unstable. That’s only a small part of what is going on right now, but it’s worth saying.

Home for a Millennial

We read a children’s book called Home for a Bunny. In springtime, a bunny wants to find “a home of his own. A home for a bunny.” The bunny goes around talking to other forest creatures and considers crashing with them. It keeps not working out. Finally, the bunny finds another bunny to pair off with and they live happily ever after in a hole. (The implication is that the interloper is male and he finds a woman who already has her own place.)

Judging by the current housing market, the country’s currently largest generation has decided it’s time to find a home.

According to Jerusalem Demsas on the Macro Musings podcast last month, part of the reason houses are selling so fast today is that many millennials want to buy their first home now. They are competing against each other, especially for starter homes near growing cities.

The problem with making blanket statements about millennials is that we are a diverse group. For example, we are majority-white like Boomers, but only 56% are white. We went to college at higher rates than previous generations, but still less than half of American millennials graduated from college.

Millennials who could afford to consume wanted experiences, not stuff. I never saw peers brag about owning a pricey watch, but I have seen many photos posted of soul-searching adventure trips to Thailand. As I said, one should not generalize because it’s only the wealthiest millennials who could afford such things. But the wealthiest millennials are the ones who could have become homeowners. Instead they sought out the next avocado toast served with a view of a hip city core. Covid restrictions forced a set of people who had always been on the run to evaluate their home lives, or lack thereof.

Where had the largest generation been living prior to summer 2021?

Here’s a link to an SNL skit “The Millennials Skit” that sums up the complaints I was hearing about my own generation when I was in my early 20’s. If you can believe this, I did something stupid in my early 20’s. With so much hyperbole surrounding us, many don’t have a good sense of the facts.

In 2000, most millennials were in their parents’ houses, right where everyone expected them to be. The US population overall grew substantially since 2000. Many local zoning restrictions didn’t allow for concurrent rapid growth in the housing stock in the places with job growth.*

As millennials aged into adulthood, they were not buying houses or forming families at the rate previous generations had. PEW reports, based on Census data, that millennials are more likely to live with their parents than previous generations.

The group of millennials who were most likely to be living with their parents were men without a college degree. Most millennials were not living in their childhood bedrooms pre-Covid. Once again, it’s hard to generalize. Almost half already owned a home. Many were renting along with a friend or romantic partner. Whereas a majority of Boomers were married as young adults, less than half of millennials currently are. College-educated millennials are more likely to be married.

Millennials have kids later, so that would normally be associated with not buying houses before the age of 30. Some of the causality runs from the high cost of housing to the decision to put off having children. There is a long-running debate over whether millennials are different because they have different preferences from Boomers or because they are relatively economically disadvantaged. The combination of low wages for some and high home prices for many is an economic explanation for the initial hesitancy to purchase a house. Despite what the SNL skit said about us, most millennials are working now. Slower household formation is not due to chronic unemployment.

The highest rates of living-with-parents were in expensive cities like New York and Miami. If you can live close to a good jobs hub without having to pay the high rent, then you can save money. With that personal savings, now that we are older, many millennials would like to jump into home ownership. 

This week I went into a local restaurant that is patronized by adults like me. On the chalk board was a poll “Backstreet Boys or NSYNC?” People were gleefully making chalk tick marks to vote for their preferred band. That’s just one of the subtle signs I have seen in the past year that millennials are in charge of the places I visit.

*Read Jeremy on zoning and the Horpedahl Zone of Affordability. Also see The Complacent Class on how America didn’t make it easy for a diverse set of millennials to thrive.

Reading The Family Firm

Emily Oster’s newest book on parenting dropped to my Kindle this week. I recommend it to parents if your oldest child is between 2 and 8 years old.*

Her first book in this genre (she invented this genre) was Expecting Better. In that book, pregnant women could get clear answers. Oster could put a precise estimate on the risk of, for example, eating sushi while pregnant. Then it was fairly easy to decide, for yourself, if you would eat sushi.

Right now, I have decisions like this: My 6-year-old says sushi is “yucky”. If I force him to eat it, will he get into a better college? Should I send him to bed without any food if he won’t eat the sushi I made for family dinner?

These are the questions that us, the original Expecting Better crew, now have. The answers are usually vague. That might bother you, if you’d like exact instructions for parenting. Still, I found this book helpful for thinking about parenting. Oster is not going to give you an absolute yes or no on video games for kids. She will summarize all of the relevant studies. Then you have help to set your own boundaries for your own kids based on your Big Picture family goals.

Continue reading

Preferences for Equality and Efficiency

Most people would consider both equality and efficiency to be good. They are “goods” in the sense that more of them makes us happier.  However, in some situations, there is a trade-off between having more equality and getting more efficiency. Extreme income redistribution makes people less productive and therefore lowers overall economic output.

Examining the preferences people have for efficiency and equality is hard to do because the world is complicated. For example, a lot of baggage comes along with real world policy proposals to raise(lower) taxes to do more(less) income redistribution. A voter’s preference for a particular policy could be confounded by their personal feelings toward a particular politician who might have just had a personal scandal.

With Gavin Roberts, I ran an experiment to test whether people would rather get efficiency or equality (paper on SSRN). Something neat that we can do in a controlled lab setting is systematically vary the prices of the goods (see my earlier related post on why it’s neat to do this kind of thing in the lab).

One wants to immediately know, “Which is it? Do people want equality or efficiency?”. If forced to give a short answer, I would say that the evidence points to equality. But overly simplifying the answer is not helpful for making policy. The demand curve for equality slopes down. If the price of equality is too high, then people will not choose it. In our experiment, that price could be in terms of either own income or in group efficiency. We titled our paper “Other People’s Money” because more equality is purchased when the cost comes in terms of other players’ money.

The main task for subjects in our experiment is to choose either an unequal distribution of income between 3 players or to pick a more equal distribution. Given what I said above that people like equality, you might expect that everyone will choose the more equal distribution. However, choosing a more equal distribution comes at a cost. Either subjects will give up some of their own earnings from the experiment or they will lower the total group earnings. As is true in policy, some schemes to reduce inequality are higher cost than others. When the cost is low, we observe many subjects (about half) paying to get more equality. However, when the cost is high, very few subjects choose to buy equality.

This bar graph from our working paper shows some of the average behavior in the experiment, but it does not show the important results about price-sensitivity.

Continue reading

Knowledge for 1990 Children

We picked up a yard sale book: People and Places: A Random House Tell Me About Book.* When I saw that the U.S.S.R. was a huge swath across the northern hemisphere (drawn as a Mercator projection), I checked the publication date. It was published in New York in 1991 by Random House.**

This content would have been considered uncontroversial knowledge for children. It was written by Boomers for Millennials, one year before The End of History came out.***

The first fact discussed is that the earth had about 5 billion people and they saw no end to population growth. The book states that the world could be up to 15 billion people within 60 years (which would be 2050). Today, it is predicted that world population will peak soon and then decline. Fertility rates in most rich countries are currently below replacement and birth rates are falling everywhere. I guess the authors didn’t see that coming.

On the next page is a matter-of-fact explanation that A.D. stands for Anno Domini. If there was a new edition printed today, they would likely follow the academic trend of using BCE/CE, to avoid referencing religion.

Much of the book is about culture, with illustrations. In today’s terminology, this might be considered an attempt at color-blindness. All of the major world religions are presented next to each other with a neutral/positive spin on each. Racial and gender representation is carefully balanced, like the stock images I grew up with in American public school.

Considering how many students were forced to learn remotely this year, I liked the section on the Australian School of the Air. Remote farm children talked to a teacher by radio and sent written work by mail.

At the end is the answer to, “How will we live in the future?” Jeff Bezos might be happy to know that they predict space travel will be more common and people will live in space colonies. The stated reason for space colonization was the predicted unrelenting population growth. There wasn’t a hint of pessimism about, for example, global warming.

Their diagram of a futuristic house has a “Main computer” prominently featured. They predicted that computerized machines would do more work for humans, which has already happened in the past 30 years. The idea of mobile computers and internet services was probably not considered. They imagined house-bound clunky robots that could follow simple instructions.

*Currently still available on Amazon

** Lithuania declared independence from the Soviet Union in 1990. I suppose the publishers couldn’t be bothered to stop the presses.

*** In 1991, Gen X may have been too old to be the target audience of a children’s’ book.

Self interest and self care

“Self care” is all the rage. It’s heralded as a novel and progressive notion.

The stance one takes on Simone Biles is largely colored by one’s theory of self care.

So, as Biles occupies the headlines for days, why isn’t more credit going to Adam Smith and his intellectual descendants? “Self interest” was condemned, yet here we are in 2021 with “self care”!

James had a similar post yesterday! He went back in history much further than Adam Smith.