Fiction for Christmas

I hacked Christmas this year to get two books I had been hearing about from reviewers and friends: Project Hail Mary and My Struggle by Knausgård. I wrapped the sci-fi one for my husband, because he will like it. I handed the weird one to him and asked him to wrap it for me. I killed many birds with one stone. The people who read econ blogs will appreciate my accomplishment.

Right after Christmas I had a plane trip that provided some reading time for My Struggle. I like it. As a warning to others, I wonder if the reason “everyone” thinks it is so relatable is that the types of people who review books share the author’s burning desire to be a writer.

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Joy on Books 2021

The non-fiction book for adults I recommend this year is Liberty Power by historian Corey Brooks. If you have ever cared about social justice or affecting change, then wouldn’t you be curious to know how the abolitionists really did it around 1850? How, practically speaking, did a handful of people with moral convictions rid the United States of legal slavery? Abolitionists were striving and scheming to use the newly minted American democratic political system to their advantage even though they were in the minority. One of their big decisions was to start a third political party after they grew frustrated with slavery-complicit Northern Whig politicians. I blogged here about the connection with current politics.

I had a huge gap in my knowledge of American history before reading this book. Nothing that happened between George Washington and the Civil War seemed interesting, until this book created a narrative that I cared enough about to follow. History books might not be the perfect gift for everyone, but I bet no one in your family already has it!

Another book I reviewed earlier is Emily Oster’s The Family Firm, which any parent of young children would probably find helpful if they like research.

When I’m not reading for work, I read to my kids. I strongly recommend, for kids aged 6-12, The Voyage of the Dawn Treader. This ties into Liberty Power, because the main characters abolish the slave trade on one of the islands they sail to!

Before reading Dawn Treader, you should certainly start with the book that sets up the world, The Lion The Witch and the Wardrobe. I have a tip for younger kids: start reading this book right at the point where Lucy walks into the wardrobe for the first time. Younger kids won’t miss the first few pages that explain how the 4 children came to be in the old house.

For 4yo and 5yo kids, I recommend Aesop’s fables. These are short and self-contained. There are many versions of fable books for kids with good illustrations.

In addition of my specific plug for the Narnia series, I encourage parents to read fantasy with children. I see a lot of children’s books that promote science or STEM-readiness. My son enjoys learning about dinosaurs and nature, however I am certain that he’s learned the most from the conversations we have had about adventure stories.

Reading to your kids is costly in terms of time. We have limited time, so let me make an argument for dropping some of the other competing activities. I speak as someone who professionally teaches hundreds of college students to program. Those games that try to trick 5-year-olds into “programming” are less valuable than reading and discussing fantasy stories.

Inspire them with the story of a ship sailing to unknown islands. Talk about how a lovable band of flawed characters can escape from a clever magician. What your child will need to be able to do when they are 20 is read and comprehend a textbook that explains a totally new technology that no one alive today understands. Then they will need to think of creative ways to apply that technology to real world problems.

The high cost of day care and demographics

When I moved half-way across the country to take a new job, I had no local support system for my 2-year-old. Putting him in a full-time day care was the plan. I wanted a day care center with a good reputation that is located near work and home. My story, like so many others, includes phone calls and long wait lists. At first, it was hard to understand how I could be willing to pay for a service and it could just not exist.

Opening a large daycare center is risky. Who wants to take that risk? I joked that I’d quit my professor gig and start a daycare in response to the huge demand. Of course, I did not. Fortunately, I don’t live in one of the American counties that lost population over the past ten years.

The WSJ on demographics describes this situation in a shrinking county:

In Lincoln County, Kan., pop. 2,986, about 40 miles west of Salina, Kan., economic development director Kelly Gourley set out to build the county’s first day-care center not run out of someone’s home. A child-care shortage was making it difficult to work and raise children, she saw. The town’s handful of in-home daycares were the only options, and they tended to come and go.

Ms. Gourley estimated it could cost as much as a half-million dollars to build the facility, and she didn’t think it could weather fluctuations in demand. “In a rural community, you lose one kid and you might be in the red all the sudden,” she said. She shelved the plan and instead is working to increase the supply of in-home caretakers.

Allison Johnson, a 32-year-old nursing home speech pathologist, grew up in Lincoln County and hoped one day to have three children. She no longer thinks that is feasible after she had to wait a year to get an in-home daycare spot when her first child was born. Now she and her husband, who owns a residential-construction business, are trying to figure out how they would juggle having a second child.

Her father, a farmer, watches her son, now 2, when her in-home daycare provider isn’t available. But he and her brother are in their busy season, and “they’re not going to be able to do anything but throw him in the tractor.”

There are attractive economies of scale for day-care centers. This economic fact is part of the reason that young people are leaving rural areas, which in turn makes it harder for rural areas to support services for young families.

There has always been a huge amount of value created at home within families that is not fully captured by GDP. As more childcare is moving to the formal market, we are starting to see just how valuable those services are that used to be provided in the family.

Whatever your views on the matter, it’s not surprising that politicians are talking about subsidized day care.

Allowing for flexibility through policy moves like vouchers and de-regulating in-home daycares is important. Some communities can’t support a day-care center facility, like the one in this article. I think the if you build it they will come philosophy, if applied too widely, would be hugely expensive and not efficient. On the other hand, there could be situations in which more day care would be provided if the local government would take on some of the risk currently faced by entrepreneurs.

Markets in Everything for Christmas Decorating

Last year I blogged about a service to create your kid’s school Valentine’s cards.

Now, the temperature in Alabama has dropped to a chilly 71 degrees and the pumpkins are out. It’s time for parents to start worrying about who is going to create holiday magic at home.

You can pay someone to do this. An enterprising local has already posted this in a neighborhood group.

Creating holiday magic is a wonderful thing. There are huge positive externalities to even a simple string of lights around your front door. I love it. Creating the magic is also a lot of work. As someone who is forever swamped at work and has already booked three weekend work trips for Fall 2021, my willingness to pay for this service is positive. (I can’t afford this particular service, nor do I need my Christmas tree to look like the one in her picture.)

The rich have always had extra hands to manage their estates. I have a feeling that the percent of households for which this might be a paid service is expanding. There are women in the comments asking this crew to come over.

Covid, Cars, China, Crypto, Corruption

We generally do long “effort posts” on specific topics here, but today I’m mixing things up with 5 quick updates.

  1. Covid My daughter got sent home with a cough Tuesday, which meant I cancelled classes Wednesday to hang out with her until we get a Covid-negative PCR. Last Thursday my son’s public school was closed for Yom Kippur, and I got so focused on hanging out with him I forgot to post here.
  2. Cars My wife bought a new used car last week. We’ve covered here how car prices have jumped up while inventories fell this summer, and the latest numbers show that used car prices are now falling slightly from very high levels while new car prices continue to rise. While actually buying a car, the low inventories stood out even more than the high prices. Several times we saw a promising car online, only to call or visit the dealer and find out it had sold the day before. The new Nissan Leaf sounds like an excellent value at its sticker price, but none were available in Rhode Island, and no blue ones anywhere in New England.
  3. China Scott covered the collapsing Chinese real estate market on Tuesday. I’ll just pass along the takes I’ve seen from Western economists and China-watchers Michael Pettis and Christopher Balding, which is that this is a big deal that will slow Chinese growth for years but is unlikely to precipitate a 2007-style financial crisis. I find Balding’s argument that financial contagion will be limited to be convincing partly because of his actual arguments about quasi-bailouts, and partly because he almost always argues that “things in China are worse than you think”, so if he says “Evergrande isn’t Lehman Brothers” I listen.
  4. Crypto Tuesday I met the co-founder of a new crypto-based prediction market, Melange, which sounds promising. The prediction market space is growing rapidly with PolyMarket and Kalshi joining the older PredictIt.
  5. Corruption Last week the World Bank announced it is discontinuing the Doing Business report/ranking due to apparent corruption; top Bank officials in the middle of raising money from countries including China pushed to raise the rankings of those countries beyond what the data justified. I hope another organization steps up do continue the good parts of the Doing Business report in a more trustworthy way.

Video Games: Emily Oster, Are the kids alright?

On Monday, China announced that kids under 18 will be limited to only 3 hours per week of online gaming. Those hours are scheduled for the evenings of Fri-Sun with a 9pm cut off. Go to bed, young man!

Last month I reviewed Emily Oster’s new book The Family Firm. In light of China’s ruling over how kids spend their free time, I’ll explain her view of video games.

Interestingly, she does not have a chapter called ‘Video Games: Do we need the CCP to intervene?’ She has one chapter near the end called Entertainment that includes video games and screen time. She writes at the beginning of the chapter that, “Screen time strikes fear in the heart of many a parent.” Most parents, at least among her audience, have their own smart phone and at least one TV in the house. It is such a relief, honestly, to get the kids to sit down and stop making trouble in the 3-D world. In What Women Want I wrote about a wealthy celebrity mom who has a nanny and a cook. She spends quality time with her kids, when she wants to. Most of us can’t afford a weekend nanny, but we might leave our kids with technology when we need a break. (I believe, with no data to back this up, that childhood mortality is down partly due to screens keeping kids off of cliff ledges and out of abandoned mines.)  Then, at the end of the day, we worry that they have spent too much time on screens.

Oster writes, “Screens change your brain, say the headlines. (Spoiler alert: Everything changes your brain.)” Parents like me have come to love Emily Oster’s ability to cut through the noise. Everything changes your brain. Video games are not a completely separate new form of human experience.

Helping a child’s brain develop is a big responsibility. We know that you can mess this up, most obviously in the cases of serious abuse. So, can you put on Sesame Street while you make dinner? Should you allow your son to play video games?  I’ll put the rest under Read More.

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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.

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How to Talk to People (elderly and children)

This is a great Youtube video on how to talk to people with memory loss. It’s for family and caregivers. It’s a helpful free practical resource for an aging population. (40 minutes, but you can get a lot out of the first 20)

Even if you have good intentions, it is surprisingly easy to say something hurtful to another person. Ultimately, these scripts are shortcuts for what I think you would say if you had deep empathy and spent time getting to know the person you are speaking to. To save time, if you can find a good script writer, steal their lines. Economists speak of “money on the sidewalk”. Learning tricks that enable you to express what you actually mean to people seems like free money, speaking as a life-long awkward person.

On the other end of life, there is an Instagram account @biglittlefeelings with good tips for talking to toddlers. Here’s a video with Danny Silk on kids and and how they interpret attempts to control them.

What Women Want

What do women want, if they have kids and no budget constraint? I think a lot of women would choose what this wealthy mom of 3 has, if they could afford it.

The title of a current article from Parents magazine is “‘Grey’s Anatomy’ Star Caterina Scorsone on Raising 3 Daughters of Different Ages and Abilities” The subtitle is “As a mom of three, … Scorsone leans on her own sisters and a community of chosen family to balance work and parenting, spend one-on-one time with each child…”

What is a “community of chosen family”? You pay those people. They are chosen, to be sure. According to the article, along with help from relatives,

The actress also relies on a babysitter, Sam, and a nanny and former restaurateur, Frances, who does much of the cooking. “I would never perpetuate the myth that it’s all easy,” says the actress, who shares custody with her ex. But she’s quick to count blessings, especially for the “ridiculous salary” that comes from playing Dr. Amelia Shepherd … “COVID-19 forced people to acknowledge how hard it is to work and parent. My sister and nanny lend their talents to our family while I lend my skills to the show.”

I’m all for specialization and trade. I think it’s great that she can pay someone else to clean up kid messes. The next part seemed more odd to me.

“She also carves out one-on-one time with each daughter on weekends. “I make sure to check in with each individually,” she says. “Besides, it’s more peaceful. If we spend an entire weekend as one pack, there’s a lot of fighting and crying!”

I better pause to say that I am not judging this woman. I’m not trying to tear her down or label her as out of touch, as so many internet dwellers did to Chrissy Teigen. I’m considering whether a wealthier society of the future would choose to wall off negative social interactions.

If you spend time as a family, there will be “a lot of fighting and crying”. My nuclear family spent the weekend “as one pack”. We took the kids through the Ruby Falls cave tour. Here is a picture of my kids fighting, 300 feet under the surface of the earth! They have also fought at 30,000 feet in the air.

Part of me would like to pay someone else to deal with the fighting (more likely to be a robot than a human domestic helper in the future). Would that ultimately be a good choice? One reason wealthy people live in atomized nuclear families is to shield themselves from humanity’s “fighting and crying.” Generally, the last human interaction we preserve is the highs and lows of our own children. (Lots of people live with a “partner” but people get divorced at a much higher rate than they abandon their children.)

How much fighting would very wealthy people choose? Would they make a good choice? Is there any such thing as a real relationship without fighting?

What if humanity avoids cataclysmic disasters for the next 100 years and they become much richer? What struggles would they choose to keep? Are there hardships that no one would choose, but which ultimately enrich life?

The highly atomized nuclear family is a modern phenomenon. Wealth enables us to live apart from each other, but that can in turn lead to loneliness and frustration. If the future humans are instead poorer than we are today, then there is a good chance that kids will be raised by a tribe once again. Sometimes I wish my kids had more tribe, but I also try not to romanticize the past. A tribe is not “a nanny and former restaurateur.”

When I contemplate the low rate of voluntary vaccination around me, it makes me worry that we are headed for the poorer route. But it’s still worth thinking about what would happen if we get much richer.

Scale and Online Learning

A simplistic view that I have heard about online learning is that it is of worse quality but cheaper than traditional classroom learning.

We should take the cheaper part seriously. Cheaper can mean new opportunities for many people. Delivering a lecture online can mean that, once the fixed cost of creating the video is incurred, the marginal cost of adding a student is nearly zero. The average cost of delivering instruction goes down with every student who joins the course. Economy of scale is a wonderful thing.

Now, let’s assume a family that has a quiet home and reliable internet service. Assume that a mom, m, signed up for a rock/geology class, r, for her school-aged son who cannot read. It’s me. I signed my son up for an online “rock camp”. I thought it would give me 45 minutes of time to get work done while my son was distracted in a Zoom room.

This week I got an email from the online school company about how to get ready for rock camp. I’m instructed to assemble a supply kit of about 30 items so that my kid can do a hands-on science experiment every day of the camp. This is not what I thought I was signing up for, and I no longer think rock camp is going to save me any time.  It gets me thinking about scale and online education for kids.

All the parents of rock campers will have to separately assemble a kit of supplies. The economies of scale would come from having the children in a physical school. Buy the supplies in bulk and hand out a pack to each kid all at the same time. It would be great to have a *classroom* where the students could *go*. Even though many classes do not involve vinegar and magnets, the point can generalize.

We should take scale seriously. I support experimenting with different kinds of education and giving students choices. Personally, I benefitted from getting to pilot an experimental program at my high school that allowed me to take microeconomics for college credit online. I also participate in online education sometimes as an educator.

However, it’s overly simplistic to say that the scale idea always points us in the direction of online education. Even at the university level, some products/services can be cheaper to deliver in a traditional class setting.