Tag Archives: economics

Get your dependency ratio off my lawn

Old people work more than they used to. This is important if you’re worried about what an aging population means for the economy.

When they taught me demography, I learned about the dependency ratio, which was the number of people presumed to be dependents (those ages 0-14 and 65+) relative to those presumed to be working (those ages 15-64). It’s a traditional measure, and a little archaic now that people spend much more time in school. But it’s nice because it sort of assumes that those “working age” adults are being productive whether they have jobs or not – it’s not just counting employed people – so it has an unstated recognition of (mostly women’s) unpaid labor.

In some economic work (see my paper here for an old review) people assume that non-employed women are being productive. But we don’t usually assume that about old people. That is, non-employed younger adults are assumed to be doing unpaid work, while non-employed old people are assumed to be really retired. I’m sure people are looking at the unpaid work of old people (I just haven’t yet). But their paid work profile has changed a lot, too – especially women’s.

This means the catastrophic view of productivity effects of again needs to be tempered by a better understanding of how much old people work. Here’s what I mean.

First, what the World Bank calls “Dependency Ratio, old,” which is the number of people age 65 and older as a percentage of the population ages 15-64. This is supposed to reflect the burden of age on the the young(er).* Here is it for the USA and the world (click to enlarge):

dependency ratio old

That’s the Baby Boom generation hitting older ages there at the end of the USA trend. As a result, the dependency ratio (old) has increased 30% in the USA since 1980, and the world is following.

But old people work more (or, we don’t label people “old” as early, you might say). Here’s the average annual hours of paid work for people in the USA ages 65 and older. Note this includes all those working no hours in the average, which is what you need to do if you’re interested in the total economic benefit/burden ratio (click to enlarge).

dependency ratio old

Since 1980, women ages 65-74 have increased their hourly employment hours by 138%, and men’s have gone up 44%. For the 75-plus community, the relative increases are even greater: 172% for women and 55% for men.

Now, if you add up those hours, you can calculate how much of a burden old people are relieving from the young by their employment hours. In this figure I calculate the total hours worked for each age-gender group and divide it by the total number of people ages 65 and older. Looking at the bottom blue area, for example, this shows that in 2015, the total population of men ages 65-74 did 166 hours of paid work for each person age 65 and older. Regardless of the size of the old population, then, there is that much less supporting of them to do (click to enlarge).

hours worked per person 65 and older

The per-person contribution of paid work hours from people 65 and older has increased 72% since 1980, from 206 to 354 hours per year. Most of the increase is from women’s employment, and it’s just starting. The oldest Baby Boom women, the women who led the increase in women’s employment over their careers, are still only 69 in 2015. Further, this measurement of paid hours may be an indicator of the unpaid productivity of these groups as well, as their health and activity levels improve.

It may be useful to track the population age composition over time (as in the World Bank data above), but it’s not reasonable to assume a constant level of dependency associated with people of different ages.

*Note: Of course, I use terms like “burden” in the classical demographic sense and tongue-in-cheek. I actually want more old people to live longer and work less, because that burden is what life is all about. But there is the issue of making sure everyone has their needs met.

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Is the New York Times trapped in an economics echo chamber?

Ask a stupid question.

When Justin Wolfers wrote about the dominance of economists in the pages of the New York Times, he concluded, “our popularity reflects the discerning tastes of our audience in the marketplace of ideas.” I discussed the evidence for that in this post, which focused on the particular organizational features of the NYT. At the time it didn’t occur to me that his data — relying on uses of “economist” in the paper — would be corrupted by false attributions. So this is a small data story and a larger point.

The small data story comes from a personal reflection by Dionne Searcey, who wrote about work-family conflict in her new post as West Africa Bureau Chief for the NYT. It was a perfectly reasonable piece, except for one thing:

Much has been written about work-life balance, about women getting ahead in their careers and trying to have it all. I often find that if you scratch beneath the surface of many successful working moms, they have husbands who work from home or have flexible schedules and possibly a trust fund. Or in many cases, you find a mom who does more than her fair share at home — or at least feels as if she does. Economists have a name for it, “the second shift.”

Wait, “economists”? The Second Shift is a classic work of sociology by Arlie Hochschild and Anne Machung first published in 1989 and revised twice. Why “economists”? The (very good) article that Searcey linked to was called, “The Second Shift: Men Do More at Home, but Not as Much as They Think,” written by journalist Claire Cain Miller, focusing principally on the research of several sociologists, led by Jill Yavorsky (a sociology PhD candidate at Ohio State with whom I have collaborated). There are no economists cited or quoted in the story.

The small data story is that this mention of economists will go into Wolfers’ count of the influence of economists in the marketplace of ideas, but it’s a false positive — it’s the influence of sociologists being falsely attributed to economists.

But why would Searcey say “economists”? The answer lies in the organizational culture of the NYT. Here’s why.

Here are my two tweets on the piece:

Considerately, Searcey replied:

How odd. When I pointed out again that the story she linked to was about sociologists talking about the second shift, she didn’t reply.

I recently wrote that economists don’t cite sociologists’ work as much as sociologists cite economists even when the two groups are working on the same questions with obvious implications for both. What about the second shift? A JSTOR search reveals 473 cases of “second shift” and “housework” in journals identified as sociology by the database. The same search in the realm of economics produces just 35 mentions (no fewer than 6 of which were written by sociologists).

So, why did Searcey think she “was referring to how economists talk about the second shift”? My only explanation is that it’s because the piece was published in the NYT section The Upshot. As I wrote in my Contexts post, Upshot

is edited by David Leonhardt, who was an economics columnist before he was promoted to Washington bureau chief in 2011. That promotion was a dramatic move, elevating an economics writer who hadn’t been a Washington political reporter. Upshot is a “data journalism” hub, which often (but not always) implies an economic focus. (On the opinion pages, economist Paul Krugman writes a column twice a week, and Joseph Stiglitz moderated a long series on inequality.) This can’t be the whole story, but in broad strokes it’s fair to say the paper as an organization moved in the direction of business and economics.

Upshot is, of course, where Wolfers was writing in praise of the idea-market power of economists. Is this just the free market of ideas allowing the most persuasive to rise to the top? Searcey’s errors suggests that it is not. Rather, the organizational status of economics has corrupted her perceptions so that if something appears there she simply believes it reflects economics (and no editor notices).

Incidentally David Leonhardt (whom I’ve written about several times) has been promoted to Op-Ed page columnist and associate editorial page editor.

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Sociology: “I love you.” Economics: “I know.”

Sour grapes, by Sy Clark. https://flic.kr/p/yFT3a

Sour grapes, by Sy Clark. https://flic.kr/p/yFT3a

A sociologist who knows how to use python or something could do this right, but here’s a pilot study (N=4) on the oft-repeated claim that economists don’t cite sociology while sociologists cite economics.

I previously wrote about the many sociologists citing economist Gary Becker (thousands), compared with, for example, the 0 economists citing the most prominent article on the gender division of housework by a sociologist (Julie Brines). Here’s a little more.

It’s hard to frame the general question in terms of numerators and denominators — which articles should cite which, and what is the universe? To simplify it I took four highly-cited papers that all address the gender gap in earnings: one economics and one sociology paper from the early 1990s, and one of each from the early 2000s. These are all among the most-cited papers with “gender” and “earnings OR wages” in the title from journals listed as sociology or economics by Web of Science.

From the early 1990s:

  • O’Neill, J., and S. Polachek. 1993. “Why the Gender-gap in Wages Narrowed in the 1980s.” Journal of Labor Economics 11 (1): 205–28. doi:10.1086/298323. Total cites: 168.
  • Petersen, T., and L.A. Morgan. 1995. “Separate and Unequal: Occupation Establishment Sex Segregation and the Gender Wage Gap.” American Journal of Sociology 101 (2): 329–65. doi:10.1086/230727. Total cites: 196.

From the early 2000s:

  • O’Neill, J. 2003. “The Gender Gap in Wages, circa 2000.” American Economic Review 93 (2): 309–14. doi:10.1257/000282803321947254. Total cites: 52.
  • Tomaskovic-Devey, D., and S. Skaggs. 2002. “Sex Segregation, Labor Process Organization, and Gender Earnings Inequality.” American Journal of Sociology 108 (1): 102–28. Total cites: 81.

A smart way to do it would be to look at the degrees or appointments of the citing authors, but that’s a lot more work than just looking at the journal titles. So I just counted journals as sociology or economics according to my own knowledge or the titles.* I excluded interdisciplinary journals unless I know they are strongly associated with sociology, and I excluded management and labor relations journals. In both of these types of cases you could look at the people writing the articles for more fidelity. In the meantime, you may choose to take my word for it that excluding these journals didn’t change the basic outcome much. For example, although there are some economists writing in the excluded management and labor relations journals (like Industrial Labor Relations), there are a lot of sociologists writing in the interdisciplinary journals (like Demography and Social Science Quarterly), and also in the ILR journals.

Results

Citations to the economics articles from sociology journals:

  • O’Neill and Polachek (1993): 37 / 168 = 22%
  • O’Neill (2003): 4 / 52 = 8%

Citations to the sociology articles from economics journals:

  • Petersen and Morgan (1995): 6 / 196: 3%
  • Tomaskovic-Devey and Skaggs (2002): 0 / 81: 0%

So, there are 41 sociology papers citing the economics papers, and 6 economics papers citing the sociology papers.

Worth noting also that the sociology journals citing these economics papers are the most prominent and visible in the discipline: American Sociological Review, American Journal of Sociology, Annual Review of Sociology, Social Forces, Sociology of Education, and others. On the other hand, there are no citations to the sociology articles in top economics journals, with the exception of an article in Journal of Economic Perspectives that cited Peterson and Morgan — but it was written by sociologists Barbara Reskin and Denise Bielby. Another, in Feminist Economics, was written by sociologist Harriet Presser. (I included these in the count of economics journals citing the sociology papers.)

These four articles are core work in the study of labor market gender inequality, they all use similar data, and they are all highly cited. Some of the sociology cites of these economics articles are critical, surely, but there’s (almost) no such thing as bad publicity in this business. Also, the pattern does not reflect a simple theoretical difference, with sociologists focused more on occupational segregation (although that is part of the story), as the economics articles use occupational segregation as one of the explanatory factors in the gender gap story (though they interpret it differently).

Anyways.

Previous sour-grapes stuff about economics and sociology:

Note:

* The Web of Science categories are much too imprecise with, for example, Work & Occupations — almost entirely a sociology journal –classified as both sociology and economics.

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I overspoke myself on Twitter

Possibly not the only time.

A blog called Random Critical Analysis (RCA) has posted, “On Philip Cohen’s knee-jerk response to Chetty’s “causal mobility” data and its association with single-motherhood.” I now must admit that I overspoke myself on Twitter.

But I think the blog post I wrote holds up OK. I complained in the post that the now-famous Chetty et al. analysis of intergenerational mobility had mishandled race, leading to people like David Leonhardt (and rightward from there) to conclude that the big story of hampered social mobility is family structure. It’s part of the overall pattern of polite society embracing the issue of economic inequality but also using that as a foil to avoid the issue of race inequality.

Brad Wilcox has seized on the Chetty analysis, repeating ad nauseum the quote that single parenthood is the “single strongest correlate of upward mobility.” My beef was, and is, that the analysis that was based on — which used the rate of single parenthood at the labor market level to predict intergenerational mobility — did not control for the racial composition of the labor market. That’s an obvious problem when your map of mobility looks like this:

mobilitymap

When your analysis is ecological, that is, based only on aggregate characteristics, you have to be very cautious about drawing conclusions. It’s especially dicey in the Chetty case because the basic data, from tax, returns, includes family structure (because of parents’ marital status) but not race (which doesn’t go on your tax form). And that’s even more dicey because we know that at the individual level single parenthood is definitely not the “single strongest correlate of upward mobility.” I’ve been writing about this for years (follow the single-mother tag), but this figure from 2012 sums it up nicely (details in the old post):

You just have to keep that in perspective when you jump to an aggregate-level analysis. The difference between averages in Atlanta versus Salt Lake City — important as it is — is never going to be as big as the difference between a rich family and a poor family. Social parents’ class matters much more for determining children’s social class than does family structure.

Anyway, RCA is reworking my very simple analysis showing the effect of single motherhood rates was reduced by two-thirds when a single control for racial composition (percent Black) was added. That’s making the obvious point that, because single parenthood and percent Black in the local area are so strongly correlated, if you don’t take percent Black into account it looks like single parenthood has a huge, independent effect — which incorporates the effects of racism or other community factors associated with historical race composition. The new RCA post goes much further in the analysis, and concludes:

It ought to be pretty clear by now single-motherhood is capturing something quite powerful and that, contrary to Cohen’s strong assertions, it is not well explained by race.  If anything, single-motherhood mediates the black association much better than the reverse.

I’m not persuaded by the conclusion; you can evaluate it yourself. But the premise of the RCA post is actually not my blog post, but my tweets. As time went by I apparently became frustrated at the continued repetitions of the single mother thing by people who were ignoring my very clever post, and with the carelessness that distance allows I overstated my own claim, so I tweeted this,

The table and the highlighting are mine. What I should have paid attention to was my own next sentence after the underlined part: “That’s not an analysis, it’s just an argument for keeping percent Black in the more complex models.” I didn’t do a serious analysis — I just did enough to prove the point that racial composition should be in the model. Without that, you shouldn’t run around saying single parenthood is the most important factor. (RCA also believes I shouldn’t have said in the post that “Percent Black statistically explains the relationship between single motherhood and intergenerational immobility.”  I think “explains” is defensible, in that the effect is no longer statistically distinguishable from zero at the conventional level, but it’s clearly not the same as proving there is no effect, so I’ll take the criticism, too.)

I actually first did the little analysis in an earlier post, debunking a univariate analysis by Scott Winship and Donald Schneider. In that case I concluded: “This [my analysis] is not a rigorous examination of the cause of intergenerational immobility. It is just debunking one bivariate story that is too easily picked up by the forces of bad.” That seems about right.

Anyway, in conclusion, it was incorrect based on what I did for me to tweet, “the single mother effect in Chetty is all in the % Black effect.” I should just say single parenthood hasn’t been proven to matter as much as its partisans say it has. Even if it’s less effective in a tweet. This is a common frustration, that it takes more work to debunk something than to bunk it in the first place. But that’s not a good excuse.

Finally, I’m grateful that what I write matters enough that someone would go to the trouble of testing my claims to hold me accountable.

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I knew that marriage-is-good-for-the-economy thing sounded familiar

When I wrote the other day about Brad Wilcox’s “Strong Families, Prosperous States” report, I forgot about a conceptually similar foundation-money spoof he produced four years ago which claimed, among other things, that “Strong, sustainable families pay long-term dividends to the entire economy.” (It was part of a report that included such recommendations as “Clean up the culture” and “Respect the role of religion as a pronatal force.”)

One of the conclusions of Wilcox’s new report is that states with more married couples have higher household income than states with fewer married couples. Hm. I realize now that’s building on the report he wrote four years ago, basically saying that marriage makes households spend more, so Proctor and Gamble is excellent. I wrote about it here, but hardly any of you were reading back then, so here is an edited rehash:

Farce or fraud?

Did you know that married couples with children spend 50-times more on childcare than single adults without children? Well, if you didn’t you might not realize how good marriage is for “the economy.”

Brad Wilcox and Kathryn Sharpe have a contribution in the Bradley Foundation-funded report, “The Sustainable Demographic Dividend,” which aims to describe the benefits of marriage for the economy.

What they do is produce a simple table showing that married-couple-with-children households spend more on various things than single-childless households. If you’re thinking, “but there are more people in married-couple-with-children households,” then you may already have done more thinking than the report’s authors.

To explain why this spending pattern occurs, they offer several reasons, the first of which is “household size.” Wait — you’re still thinking — if household size explains the difference in spending, then it’s not a difference in spending, it’s a difference in accounting, just pooling the spending of several people and calling it a spending increase. So how does this help “the economy”? Believe it or not, this is their reasoning:

To serve the needs of all the adults and children in their homes, they are more likely to buy many brands in bulk, from Bounty to Tide, and to fill their shopping carts at the local grocery store.

I must be doing something wrong, because I thought I spent less in the end when I bought in bulk. (But then again, I’m apparently not as good at raising money from giant foundations, either.)

The data abused in this report are from the Consumer Expenditure Survey, which is the authoritative source on household spending in the U.S. It’s something I’ve used before to study household spending (here and here). And if you use it, all I can say in a sentence is: you better account for household size, since all the spending is reported for households, not individuals.

To illustrate this, I did a simple manipulation of the data in Wilcox and Sharpe’s report. They list average spending on specific categories for households according to family structure. Yes, households. Here is a taste of the table:

oldwilcoxtable

This shows, for example, that single-childless households average a paltry $1.40 per week on cereal, compared with a robust economic contribution of $4.44 for married-with-children households. This doesn’t just mean children are good for “the economy,” because single parents spend only $2.86. So spouses are good for “the economy” too.

Or, maybe this just means people eat cereal.

I took the data from their list and compared married-with-children households to the sum of single-childless and single-parent households. On average, if every adult buys one beer a day, and every child buys one glass of milk, then the level of spending in married-with-children households should be the same as the sum of spending in single-childless plus single-parent households (if they have the same number of children). This is not serious consumer science, but it’s appropriate for a blog-scale debunking. And the results:

This graph is for weekly expenses on small consumer items;* the graph for bigger ticket items looks about the same. If the dots fell along the dotted line, my beer-and-milk hypothesis would be supported. It’s pretty close — but tipping a little the way you would expect it to — toward bigger households spending less, since they have economies of scale (“buying in bulk”).

Anyway, the analysis is junk. But the more interesting question is: Is this farce or fraud? Maybe they really don’t know what they’re doing, in which case the foundation funding makes it a farce. Or maybe it’s fraud.** Maybe they are deliberately misleading the public, the foundation, and the major corporations they are hoping will spend their “philanthropy” money on such “public education” projects.

Actual recommendations:

Companies whose fortunes are linked to the health of the family, such as Procter & Gamble, spend billions of dollars each year on advertising. … Executives with oversight across brands should ask themselves a simple question: Do the messages used in our advertising make family life look attractive? Or do they exalt single living? Obviously, it’s in their long-term interest to do more of the former.

If you have another 3 minutes, consider watching this hilarious video they link to as an example of “family life = attractive.” It’s from Proctor & Gamble’s 75th anniversary in the Philippines (unless it’s a spoof, too), which includes images like this:

2015 Population addendum

Of course, people spend more than things that aren’t people, so population growth spurs economic growth. But not all economic growth is the same, because, for example, people without incomes create less “demand” (because they “choose” not to consume as much). As I explain in this one-minute animated video, rich families spend a lot more on their kids than poor families do. Is that waste, or economic stimulus? The answer might affect whether we want to take money from rich people and give it to poor people to spend on their kids, or coerce poor people into having fewer kids, or coerce rich people into having fewer kids — or convince rich men to marry poor women. My guess is that, if you want more people to grow the economy (which is not an unambiguously good thing, but for argument’s sake), the most efficient thing would be to get poor people to have more kids and then train those kids to be high-skilled workers. Also, allowing more poor people to immigrate. Probably getting rich people to have more kids and spend more on them is not as good, because there is so much waste on rich kids. But I could be wrong.

Anyway, none of this that I can see suggests much influence of “marriage” on the economy, and if it did I wouldn’t want the state to be promoting marriage anyway. If Proctor and Gamble wants to promote marriage, that’s fine, as long as they’re taxed at a sufficiently high rate, too.

* cereal, baked goods, beef, pork, other meat, poultry, seafood, eggs, dairy, fresh fruit, fresh veggies, processed fruit, processed veggies, sweets, non-alch bevs, oils, misc. food, alchohol, tobacco, personal care products and services, and household products and services.

** colloquial use of the term “fraud” in this blogosphere context is not meant to express or imply legally criminal fraud.

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Exceptions overwhelm the rules in economics

I wrote a short essay for the New York Times Room for Debate feature. The question was, “Have we given economists too much authority?” Here’s my answer, as edited by the Times. You can read the other essays and comments here.

rfdecon-sfSpan

Exceptions Overwhelm Economic Rules

There is a lot to be said for the common critique of economists: They see society as the product of freely acting, rationally calculating individuals for whom monetary reward is the primary source of motivation. Free markets, to them, are the pure expression of social function and economic growth through their realization is the only outcome that matters.

But people do not simply act rationally to maximize their economic rewards, because they can have incomplete or inaccurate information, ideological biases, conflicting desires or collective interests. Exploitation, dishonesty, violence, ignorance and demagoguery set vast areas of social life apart outside the model. The multiplying exceptions overwhelm the rule bringing the model’s utility into question.

Group behavior and social structure are central to understanding society. Collective identity yields networks of solidarity that drive social interaction in ways individual self-interest alone cannot determine. Economic growth is one of many legitimate goals.

In reality, many economists don’t hew so firmly to these mainstream dogmas. But economists’ influence is largely proportional to the degree with which their analysis comports with the interests of those who make the most influential decisions. The free market orientation, individualist logic and materialist values of some economists serve well the captains of industry (or, nowadays, of finance), who in turn reward their compliant consultants with privileged perches around the seats of power.

Jeb Bush reflected this alliance in his speech to the Detroit Economic Club on Wednesday, when he asked, “If a law or a rule doesn’t contribute to growth, why do it?” Going out on a limb, other justifications for government action might include reducing inequality, improving social cohesion, reducing conflict, enhancing health or protecting the environment.

If their influence is dependent on their contribution to already-powerful agendas, maybe economists don’t have as much real influence as it seems. On the other hand, people with training in the other social sciences have more impact than we often think, partly because they work not as “sociologists,” say, but under job titles such as analyst, demographer, statistician, consultant, teacher, organizer or survey director.

Of course, the common belief that economists have outsized influence is not wholly false, and they have worked hard to build it, but the uncritical acceptance of that image is part of what makes it a reality.

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On Contexts: Sociology unfound

Over on the Contexts blog, I wrote a follow-up to Justin Wolfers’ piece about economists dominating the news: here it is.

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