Scott Sumner makes a good point about the economy and studies of it in this EconLog post. He writes:
I recall a story that scientists are often unable to explain the “tricks” performed by magicians. Scientists tend to be smart, but also rather linear thinkers. They are not used to their test tubes trying to deceive them. Something similar occurs in economics.
The economy operates in very subtle ways, and often when I read academic studies of issues like discrimination, the techniques seem incredibly naive to me. They might put in all the attributes of male and female labor productivity they can think of, and then simply assume than any unexplained residual must be due to “discrimination.” And they do this in cases where there is no obvious reason to assume discrimination. It would be like a scientist assuming that magicians created a white rabbit out of thin air, at the snap of their fingers, because they can’t think of any other explanation of how it got into the black hat!
They forget how easily fooled they were by the magician.
Why is this important? Sumner also makes the point that the economy works in subtle ways which are often just as misleading as the magician’s misdirect. He brings up one example, the vexing problem of why dry cleaning prices are higher for women than men. Perhaps it’s gender price discrimination.
The truth test — as Dan Hill points out in the comments to Sumner’s post — is to ask anyone who makes such a claim to put their money where their mouth is. If discrimination is the reason for the higher prices, not costs of some sort (be they direct or opportunity), wouldn’t you be able to make a lot of money by opening dry cleaners that offer a lower price for women?
I happened to come across a well-said remark from President Harry S. Truman’s radio remarks on election eve in 1948:
I hope that all of you who are entitled to vote will exercise that great privilege. When you vote, you are in control of your Government.
I just finished reading, The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor by William Easterly.
Russ Roberts interviewed Easterly in this EconTalk podcast.
I recommend reading the book and listening to the podcast.
Easterly’s key and powerful point is that the economic and political rights of humans in third world countries are often not considered by experts looking to prove out their prescribed solutions for alleviating poverty and often do so by working with the very leaders of those countries who suppress those rights.
Easterly made the excellent observation that Martin Luther King Jr. didn’t seek to alleviate poverty among African-Americans first. He understood that ensuring that they had economic and political rights came first.
The last half of the book provides a nice description of how the incentives work in a free market (or when people have economic and political rights) to be the most effective pill against poverty. Easterly, though, steers away from using terms that carry baggage in today’s political clime, like markets and capitalism, and keeps the focus on the individuals. Instead of calling it capitalism, he refers it to a people trying to solve other people’s problems.
From the Introduction of the William Easterly’s book, The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor:
The technical problems of the poor (and the absence of technical solutions for those problems) are a symptom of poverty, not a cause of poverty. This book argues that the cause of poverty is the absence of political and economic rights, the absence of a free political and economic system that would find the technical solutions to the poor’s problems. The dictator whom the experts expect will accomplish the technical fixes to the technical problems is not the solution; he is the problem.
Think of technical problems as problems like not having medicine, food or the internet and technical solutions as providing medicine, food and the internet.
I’m looking forward to reading the rest of the book. I heard about it from this EconTalk episode with William Easterly and that discussion is worth a listen.
While I’m no fan of immigration restrictions, Charles Krauthammer asked a good question of those who don’t believe fences work:
If fences don’t work, why is there one around the White House?
Here’s a great post from Matt Ridley on the conventional, but wrong, wisdom of low-fat diets. He writes:
There is a strong possibility that the “diabesity” epidemic has been caused largely by the diet police themselves.
The chief source of the anti-saturated-fat message was a politically astute scientist named Ancel Keys. In 1961 he persuaded the American Heart Association to issue guidelines on saturated fat intake. The main evidence came from his study of heart disease in six countries in Europe plus Japan, from which he concluded that low-fat diets led to less heart disease.
…the fat effect was weak: an order of magnitude less than the effect of cigarettes on cancer, for example.
Ridley’s writing here is based on the work of Nina Tiecholz, which I wrote about here and appears to be nearly identical to the work that Gary Taubes did in his books, who I’ve written about before, as well.
This from Ridley’s post is also interesting:
In the past ten years, study after rigorous study has found that animal fat per se is not harmful, does not cause obesity, does not raise the kinds of cholesterol that predict heart attacks, does not increase death rate and is healthier than carbohydrates. For instance, one two-year trial in Israel found that a fat-and-meat “Atkins” diet lowered weight more than either a low-fat or a Mediterranean diet. As Teicholz puts it in her book: “Every plank in the case against saturated fat has, upon rigorous examination, crumbled away.”
Such findings remain too heretical for most diet experts. Those who make them struggle for years to get published and have to couch their findings in cautious language. Those such as Teicholz and Gary Taubes who write books pointing out that this fat emperor had no clothes are treated as pariahs. If anything, the official committees of the diet police are doubling down, demanding that we eat ever less saturated fat.
If you are at all interested in losing weight, Gary Taubes’ books are worth a read.
The Washington Post reported that the School Nutrition Association “has done an about face” on the First Lady’s school nutrition program because children throw away too much of the healthy stuff, wasting lots of money.
I learned this three years ago when McDonald’s offered a healthier Happy Meal.