A week of links

Links this week:

  1. A good Jared Diamond interview.
  2. The 10,000 hours rule – the best you can do is find the peak of your own ability.
  3. Tinder works because a picture is “worth that fabled thousand words, but your actual words are worth… almost nothing”. (HT: Razib)
  4. Dumb incentives, although economists would be the first to point out a lot of the unintended consequences.
  5. No evidence for the benefits of expertise for fund managers.
  6. Drunks are more utilitarian. And maybe you should do that drinking on an empty stomach.
  7. Are social psychologists biased against Republicans?

Improving behavioural economics

A neat new paper has appeared on SSRN from Owen Jones – Why Behavioral Economics Isn’t Better, and How it Could Be (HT: Emanuel Derman via Dennis Dittrich). My favourite part is below. As I have said many times before, giving a bias a name is not theory.

[S]aying that the endowment effect is caused by Loss Aversion, as a function of Prospect Theory, is like saying that human sexual behavior is caused by Abstinence Aversion, as a function of Lust Theory. The latter provides no intellectual or analytic purchase, none, on why sexual behavior exists. Similarly, Prospect Theory and Loss Aversion – as valuable as they may be in describing the endowment effect phenomena and their interrelationship to one another – provide no intellectual or analytic purchase, none at all, on why the endowment effect exists. …

[Y]ou can’t provide a satisfying causal explanation for a behavior by merely positing that it is caused by some psychological force that operates to cause it. That’s like saying that the orbits of planets around the sun are caused by the “orbit-causing force.” …

[L]oss aversion rests on no theoretical foundation. Nothing in it explains why, when people behave irrationally with respect to exchanges, they would deviate in a pattern, rather than randomly. Nor does it explain why, if any pattern emerges, it should have been loss aversion rather than gain aversion. Were those two outcomes equally likely? If not, why not?

Part of the solution provided by Jones, as reflected in much of his past work, rests in evolutionary theory.

An updated economics and evolutionary biology reading list and a collection of book reviews

I have updated my economics and evolutionary biology reading list, with a few new additions including John Coates’s The Hour Between Dog and Wolf, Gregory Clark’s new book on social mobility and Jonathan Haidt’s The Righteous Mind. As before, I have been selective, adding only the best books (or articles) in the area. That said, I am always open for suggestions or comment.

When updating the list, I realised I have written a lot of book reviews over the last few years. I have collected most of them together on one page, which you can find here. It includes a lot of good books that aren’t on the reading list as they are not on topic. It also contains a few books that are on topic but haven’t made the cut.

A week of links

Links this week:

  1. Cooperation in humans versus apes.
  2. In praise of pilots.
  3. Are women better decision makers? You can ask about some sex differences.
  4. Amazon is doing us a favour. Goodbye book publishers.
  5. The logic of failure.
  6. The Behavioural Insights Team has lunch with Walter Mischel. Mischel’s work is fantastic and his new book is on my reading list, but the mention of brain plasticity and epigenetics (in the same sentence!) has reduced my expectations.
  7. Charles Murray on Ayn Rand. HT: Alex Tabarrok

A week of links

Links this week:

  1. Was the paper proposing that mice can pass their fears onto their offspring and grandchildren via epigenetic mechanisms too good to be true? Neuroskeptic comments (and read the comments to Neuroskeptic’s post).  And my favourite epigenetics statement of the week: “Women too can succeed in business. Because epigenetics.”
  2. What are agent based models?
  3. The Bell Curve 20 years on.
  4. Genetic engineering will create the smartest humans who have ever lived.
  5. Is low fertility really a problem?

Lazy analysis – inequality edition

Over at WSJ Real Time Economics, Josh Zumbrun turns the following chart into a claim that “the SAT is just another area in American life where economic inequality results in much more than just disparate incomes.”

SAT- Student Affluence Test

But what does the chart actually tell us? In a perfect meritocracy, the smartest students will score the highest. But as intelligence is heritable, the smarter kids will tend to have smarter and higher income patterns, giving us the pattern we see in the chart. In an alternative world where parents pay for results, we end up with the same pattern. So that charts tell us nothing. It’s consistent with both worlds.

I’m not exactly Robinson Crusoe in criticising this article. See also Arnold Kling and James Pethokoukis – although the assortative mating Pethokoukis refers to isn’t necessary to get a graph that looks like this, even though it is almost certainly playing a role.

Having picked on this article, the use of a bivariate analysis (a natural result of using a graph) while ignoring other confounding variables is a disappointingly common feature in the increasingly popular “data journalism”.

A week of links

Links this week:

  1. Plenty of press and interesting articles sparked by Peter Thiel’s new book. First, he has a swipe at business schools. And some great one-liners. But is he wrong about the future?
  2. Another tech-billionaire – Elon Musk wants to put people of Mars. But he doesn’t need one million people to get enough genetic diversity.
  3. Eric Crampton has some great posts this week on public health. First, where should the money be going?  Some thoughts on soda taxes and fat taxes. And drinking when pregnant.
  4. Cameron Murray risks walking onto Steven Landsburg’s lawn.
  5. Rajiv Sethi defends agent based models from Chris House. House tends to overreach when he strolls into the unfamiliar and attacks the heterodox rather than his standard (and also not overly convincing) defense of the orthodox.
  6. Put your laptops away kids.
  7. The missing heritability puzzle is slowing being chipped away. But the genetic post-modernists continue their losing battle.
  8. The heritability of educational attainment reflects many genetically influenced traits, not just intelligence. A Science Daily summary. Plus, emotional intelligence is overrated (HT: Stuart Ritchie). Intelligence is important, and to the extent other traits matter, they are heritable too.
  9. Does evolutionary theory need a rethink? No.
  10. Doctor decision fatigue – more unnecessary antibiotics in the afternoon.

A week of links

Links this week:

  1. The workplace is needed to overcome our lack of self control.
  2. Resisting instant gratification – the FT explores Walter Mischel’s the Marshmallow Test.
  3. Most critiques of twin studies recycle the same discredited 40-year-old arguments. Here’s another paper pulling them apart.
  4. The college educated are still getting married, just later. The same can’t be said for everyone else.
  5. A critique of the 10,000 hour rule. But people should not feel obliged to follow every mention of the role of genetics with an apology for war, slavery and genocide (surprised eugenics didn’t get a mention).
  6. People respond to prices on medical procedures. Demand curves still slope down.
  7. Your baby looks like your ex. Slightly disturbing.
  8. A collection of W. Brian Arthur papers on complexity in economics is due out at the end of the month.
  9. Matt Ridley reviews Steven Johnson’s book How We Got To Now.
  10. Neuroskeptic skewers claims that “this will change your brain”.
  11. Young, middle-aged and old men all want women in their 20s. But they’re realistic about what they can get.
  12. Academics writing stinks.
  13. French regulators are mad. Or at least a touch madder than the rest.

Tamed by an influx of women

Perusing through some of my bookmarks in Steven Pinker’s The Better Angels of Our Nature: Why Violence Has Declined, I was reminded of the following passage. It’s worth sharing.

The West was eventually tamed not just by flinty-eyed marshals and hanging judges but by an influx of women. The Hollywood westerns’ “prim pretty schoolteacher[s] arriving in Roaring Gulch” captures a historical reality. Nature abhors a lopsided sex ratio, and women in eastern cities and farms eventually flowed westward along the sexual concentration gradient. Widows, spinsters, and young single women sought their fortunes in the marriage market, encouraged by the lonely men themselves and by municipal and commercial officials who became increasingly exasperated by the degeneracy of their western hellholes. As the women arrived, they used their bargaining position to transform the West into an environment better suited to their interests. They insisted that the men abandon their brawling and boozing for marriage and family life, encouraged the building of schools and churches, and shut down saloons, brothels, gambling dens, and other rivals for the men’s attention. Churches, with their coed membership, Sunday morning discipline, and glorification of norms on temperance, added institutional muscle to the women’s civilizing offensive. Today we guffaw at the Women’s Christian Temperance Union (with its ax-wielding tavern terrorist Carrie Nation) and at the Salvation Army, whose anthem, according to the satire, includes the lines “We never eat cookies ‘cause cookies have yeast / And one little bite turns a man to a beast.” But the early feminists of the temperance movement were responding to the very real catastrophe of alcohol-fueled bloodbaths in male-dominated enclaves.

The idea that young men are civilized by women and marriage may seem as corny as Kansas in August, but it has become a commonplace of modern criminology. A famous study that tracked a thousand low-income Boston teenagers for forty-five years discovered that two factors predicted whether a delinquent would go on to avoid a life of crime: getting a stable job, and marrying a woman he cared about and supporting her and her children. The effect of marriage was substantial: three-quarters of the bachelors, but only a third of the husbands, went on to commit more crimes. This difference alone cannot tell us whether marriage keeps men away from crime or career criminals are less likely to get married, but the sociologists Robert Sampson, John Laub, and Christopher Wimer have shown that marriage really does seem to be a pacifying cause. When they held constant all the factors that typically push men into marriage, they found that actually getting married made a man less likely to commit crimes immediately thereafter. The causal pathway has been pithily explained by Johnny Cash: Because you’re mine, I walk the line.

An appreciation of the Civilizing Process in the American West and rural South helps to make sense of the American political landscape today. Many northern and coastal intellectuals are puzzled by the culture of their red state compatriots, with their embrace of guns, capital punishment, small government, evangelical Christianity, “family values,” and sexual propriety. Their opposite numbers are just as baffled by the blue staters’ timidity toward criminals and foreign enemies, their trust in government, their intellectualized secularism, and their tolerance of licentiousness. This so-called culture war, I suspect, is the product of a history in which white America took two different paths to civilization. The North is an extension of Europe and continued the court- and commerce-driven Civilizing Process that had been gathering momentum since the Middle Ages. The South and West preserved the culture of honor that sprang up in the anarchic parts of the growing country, balanced by their own civilizing forces of churches, families, and temperance.

The genetic basis of social mobility

The Son Also RisesIn 2007’s A Farewell to Alms: A Brief Economic History of the World, Gregory Clark argued that the higher fertility of the rich in pre-industrial England sowed the seeds for the Industrial Revolution. As children resemble their parents, the increased number of prudent, productive people made possible the modern economic era.

Part of the controversy underlying Clark’s argument – made stark by Clark in articles and speeches following A Farewell to Alm’s publication – was that he considered there may be a genetic basis to the transmitted traits. The higher fertility of the rich and changing character of the population was natural selection at work.

Clark’s new book The Son Also Rises: Surnames and the History of Social Mobility, also makes a new and unique argument. And like A Farewell to Alms, there is a genetic underlay.

Clark’s primary argument is that across a range of societies and eras – from pre-Industrial to modern England, from pre- to post-revolution China, and across the centuries in the United States, Sweden and India – social mobility is low. The correlation in social status between one generation and the next is around 0.7 to 0.8, meaning we can find the echoes of high status 10 or more generations later. Status does “regress to the mean”, but it does so slowly.

To put this in context, Norman surnames are overrepresented at Cambridge and Oxford today by around 25 per cent, 950 years after the Norman conquest. The descendants of the samurai, who lost any legal privileges in 1871, are today several times overrepresented in high status occupations in Japan. The eighteenth century elite of egalitarian Sweden are still a privileged group.

What makes Clark’s finding particularly striking is that most studies of intergenerational mobility have found lower numbers – often an intergenerational correlation of around 0.2 to 0.4. A correlation of that order would erase the traces of social status in a few generations.

Clark suggests one reason for his finding of lower social mobility is that previous studies measured noise. Suppose status is a result of two components – a fixed factor transmitted between generations, and a part determined by luck. Measuring across a single generation, the luck disguises the underlying correlation. If measured across multiple generations, bad lack in one generation will typically be followed by reversion to the underlying status the next. Status across multiple generations provides a better measure of the persistence of social status and of the effect of the fixed factor transmitted between them.

Clark directly relates this point to the biological concepts of genotype and phenotype. The underlying base social status is the genotype. If you observe someone’s external characteristics, you observe the phenotype, which reflects genotype plus some degree of noise. While this might be seen as an analogy, Clark argues that a genetic explanation is the best explanation of what he observes.

A second reason for the difference between Clark’s results and the previous studies is that most studies of intergenerational transmission of status focus on a single measure of status such as correlation in income between parents and their children. But people often trade off one type of status for another. A political leader or leading academic typically receives income that would barely scrape them into the top one per cent. People take lower pay for more prestigious or interesting jobs. Looking a single measure of status will overestimate the change in status as it cannot capture the trade-offs across different domains.

So how does Clark avoid this problem? Clark’s trick is to use rare surnames – an idea suggested to him by the former New York Times science writer Nicholas Wade – and treat them as large families. By finding rare surnames with high or low status, Clark and a range of colleagues tracked the average status of these surnames across the generations through measures such as relative representation in legal practitioner and medical rolls or lists of the wealthy.

As a rare surname comprises many people, the noise and trade-offs across different types of status is averaged out across the “family”. Surname families have an underlying status genotype that can be tracked more faithfully that the individual phenotypes observed in typical studies.

The body of research Clark presents through the book is impressive, although it is not always the most exhilarating reading. As he works through one society to the next, looking at various measures of status, the story is usually the same. Status is persistent and surprisingly similar across times, countries and different measures of status. One interesting finding presented by Clark is over-representation of Norman surnames in the military – and this is not a finding that can be explained by persistence in status. Clark suggests that 10 generations after the Norman conquest, the descendants of the Norman conquerors still had a taste and facility for organised violence.

Clark’s results suggest that while 100 years of Swedish social democracy may have created a more economically equal society, it is no more mobile. The Scientific Revolution, Enlightenment and Industrial Revolution did little to change social mobility in England, and the persistence of status has been almost unaffected by massive changes in inheritance tax. China’s Cultural Revolution had little effect. And across all these countries, government interventions from universal education to progressive taxation have failed to budge social mobility. As Clark states:

Events that at the time seem crucial, powerful and critical determinants of the fate of societies leave astonishingly little imprint in the objective records of social mobility rates.

That social mobility is low but still occurring is a combination of some interesting factors. First, Clark argues that low mobility is affected by assortative mating. If people mate with people of similar status, their children will better reflect their status. However, assortative mating is not perfect. People do not precisely assort by status. And even if they did, observed status (phenotype) does not perfectly reflect the underlying genotype. Both of these factors mean that high or low status people will tend to partner with people closer to the mean, meaning that their children will similarly be closer to the mean.

One way to preserve a group’s status is to have marital endogamy – people only marry within the group – preventing mistakes in marrying low status genotypes that had good luck. This is observed is the highest status castes in India. High status individuals within that group will regress to the mean of that group, but it is regression to a higher mean than that of the rest of the population. The corollary of this point is that to maximise social mobility, you would encourage marriage across groups and status levels.

The inability to observe your potential partner’s status perfectly suggests that if you want to achieve high status, you should not look not just at your potential partner but also at their relatives. Since luck may have affected your potential partner’s status, you gain more information from the status of their relatives. However, these relatives will not contribute anything to the success of your child – transfers of wealth do not make status more persistent. But the status of relatives provides evidence of the social status underlying your potential mate. There are high rewards to this choice. Through appropriate choice of mates, a lineage can avoid downward mobility forever.

In addition to marital endogamy, another apparent exception to regression to the mean is through the loss of low or high status members from high or low status groups respectively. In Ireland, high status Catholics are more likely to change to become Protestant than Catholics of low status, and low status Protestants tend to drift the other way. The expected regression to the mean of these groups does not occur, although if you track Irish surnames, there is still the typical low level of social mobility. Gypsies likely maintain their low status through similar dynamics.

One of Clark’s obvious in hindsight findings is that the social mobility he describes works both ways. In the same way that regression to the mean is slow, the path to the top or bottom follows a similar process. Increases in status are largely driven by random shuffling of genes and good luck in marrying people of better genotype than phenotype. Rags to riches stories and vice versa are rare for whole groups of surnames. The super rich tend to be children of moderately rich, and the poorest children are the children of the moderately poor. This does not mean that you can predict which families will rise to the top – but you can predict the long and slow process.

So why does Clark feel that genetics must be involved, and not transmission of resources or other advantages that accrue to those with high status? As a start, the genetic story is consistent with the mountain of twin and adoption studies that demonstrate a strong role for genetics and a limited role for family environment.

One of his more interesting arguments is that genetics is required to explain regression to the mean. In modern societies, high status people typically have lower fertility and are able to make much larger investments in each child. If this transfer to children mattered, status should persist or these groups should move even further above the mean.

A weakness with A Farewell to Alms was that Clark did not seem ready to bite the population genetic bullet. The tools of population genetics could have helped Clark nail his points and put to bed many of the criticisms that were made of his work. Since then Clark has spent a lot more time in the company of geneticists, and this is reflected in his arguments. His use of genetic data in interpreting the social mobility in Ashkenazi Jews helped his argument cut through. He still does not use population genetic tools in the way he could, but it seems he is much more prepared to fight on the genetic front.

So what do Clark’s arguments mean for how we should think about inequality or social mobility? Clark points out that a genetic basis to social mobility means that people do not achieve what they do because of family background. Instead, it is their ability, their propensity to work hard, and their resilience to failure that leads to success. We can predict success based on family background, but family background is not the cause.

Clark suggests (and I agree) that world is actually fairer than we believe if there is a genetic basis to social outcomes. Large investments by the upper class are doomed to failure. Do not worry that you cannot afford that expensive preparatory school for your kids. People still need to struggle and put in effort to succeed. Genetics just suggests which people will be most likely to struggle and invest that effort.

Also on the optimistic front, the lower fertility of high status people means that social mobility in the modern world is predominantly upward. Groups tend to move up to fill the space at the top – which is the opposite of the dynamic that existed in pre-Industrial England. (Although I am not convinced that lower fertility of the rich is either a general or a long-term dynamic)

Having slashed through the idea that government policy might promote social mobility, Clark is still relatively progressive in his policy recommendations. As he states, why do we want to multiply the awards to the genetic lottery winners? He prefers a Nordic model where, even though social mobility is low, the gap between those of high and low status is not as large. Clark argues the persistence of status, despite the range of taxation and other measures people have been subject to, suggests reward is not required to stimulate achievement.

I disagree with Clark on this point. Reward is important, but the reward just happens to be status itself. A world with no difference in economic outcomes as opposed to reduced difference could see marked changes in effort. Clark also spends little time discussing the other trade-offs involved in the Nordic model, such as the effect on overall wealth.

Finally, Clark does not ask whether the Nordic countries have lower underlying (genetic) variation in their status. It may be that the Nordic institutions reflect the characteristics of the population, rather than being the cause.