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More on Fertility Rates

Back in March, I mentioned that postponement of childbirth could create an illusion of declining fertility and provided a crude proof-of-concept example. However, it was never really clear to me what the magnitude of this effect would be or whether it could plausibly account for a significant portion of the recent decline in European fertility rates. I finally got around to creating a somewhat more realistic model this weekend.

I found that the effect could be fairly significant. When mean maternal age is increasing at a rate of one month per year, total fertility rate is understated by 8%. At two months per year, TFR is understated by 14%. At three and four months per year, it's understated by 20% and 25%, respectively. At six months per year, it's understated by a full third. Increases in mean maternal age at first birth (presumably a reasonable proxy for median maternal age at all births) has been roughly one to two months per year in much of Western Europe, so this could presumably account for perhaps a 0.1-0.3 point reduction in TFR---probably not enough to bring them up to replacement levels, but maybe enough to convince some people that the sky isn't falling quite so rapidly as they thought.

Methodological details below the fold. Read more »


Greg Mankiw (rhymes with "thank you") says that there's no one way to measure the progressivity of the tax code, giving as an example:

There are two people. A rich guy earns $200,000. A poor guy earns $20,000. At first, the rich guy pays $50,000 in taxes, and the poor guy pays $1,000. Then a new President takes office and cuts the rich guy's taxes to $48,000 and the poor guy's taxes to $800.

Best Lines I\'ve Read Since Wednesday

Today, from Bloomberg via Google News:

Lawyers on both sides raised no objections to continued deliberations. After the jurors left the courtroom, Moussaoui shouted, "Moussaoui aggravating curse on America!'' Yesterday, after the judge announced that deliberations would be canceled for the day because one juror was ill, Moussaoui said, "Moussaoui biological warfare!''

For someone who's devoted his life to killing us all, he's kind of cute. Read more »

Defense Spending

I mentioned as an aside in a comment on my last post that defense spending has basically been flat after adjusting for inflation and population growth. Somebody (well...nobody, really) asked me to provide citations for that claim. As I noted in the comment thread, I compiled the data from the Economic Report of the President, tables B-1, B-7, B-34, B-80, and B-85, and then subtracted out Federal grants to states to avoid double-counting. Read more »


I'm having an argument over at Alas (a blog) about trends in government spending over time, in particular spending on social services. Ampersand, the blog's owner, in a post called "Government spending is not up, up, up", claims that government spending has been nearly flat for almost four decades, and defends a commenter's description of the US social system as having been "starved, looted, privatized, and starved some more---pretty much steadily over the last two or three decades."

This has prompted me to do something I've been meaning to do ever since I took the dark oath that secured my place as a Catallarchist: Make charts, and lots of them. There's a lot of material to cover, so I'm going to do this as a series of posts. Today I'll discuss trends in total government spending. All data are from the Economic Report of the President, unless otherwise specified.

Government spending as percentage of GDP

Ampersand is basing his claim that government spending has been relatively flat since 1968 on the fact that spending as a percent of GDP hasn't changed much over the last 20-30 years. The chart on the right (click to enlarge) shows spending as a percentage of GDP, broken down into Federal spending, state spending, and federal grants to states (not double-counted). While one could argue that spending as a percentage of GDP hasn't really gone anywhere since 1980, and even then only because of the (possibly anomalous) decline in the '90s, it's a bit of a stretch to say that it's been flat since 1968. Read more »

The Other Vouchers

Aside from concerns about a breach in the wall of separation between church and state, the left has expressed two major objections to the creation of school voucher programs to fund primary and secondary education:

  1. A voucher system would weaken the public school system by diverting funding to private schools.

Outsourcing and Race

Matt's recent post on immigration and cosmopolitanism brings to mind a question I've been meaning to ask for some time: Does anyone else find left-wing opposition to white-collar outsourcing as surreal as I do? Read more »

Lies, Damned Lies, and Really Pretty Charts

Via Hit and Run, that old Death and Taxes chart is making its way around the blogosphere again. While it's a clever idea, and very nicely executed, the message it's designed to convey---that the US government has prioritized military spending at the expense of social programs---is simply not true.

The problem with the chart is that it shows only part of the Federal budget, specifically so-called "discretionary spending." To be fair, this is explicitly acknowledged in the central circle:

The discretionary budget is that amount of money that Congress has direct control of; essentially, the money taken out of your paycheck under Federal Income Tax. Corporate and Excise taxes also contribute a small portion to the total. Military spending accounts for over half of the discretionary budget. However, when the White House releases its budget pie graph it includes mandatory expenditures such as social security and medicare. This is misleading because Congress has no control over manditory expenditures [sic as needed].

This is wrong for a number of reasons. See how many you can find before peeking below the fold. Read more »

Labor Unions and Evolution

Maia, a real, live Marxist guest-blogging at Alas (a blog), makes some snide comments about a campaign by the Engineers (a New Zealand labor union) to encourage productivity increases. From the press release:

Improving workplace productivity is important for the future of your job, the industry you work in and New Zealand's economy.


Declining Fertility Rates

Arnold Kling recently mentioned the declining fertility rates in Europe. I've been wondering for a while if perhaps this can be partially explained as a statistical illusion caused by women delaying (but not forgoing altogether) childbirth.

Calculating a nation's fertility rate necessarily involves some guesswork. For obvious reasons, it's not possible to know how many children a twenty-year-old woman will have over the course of her fertile life. But if we wait until she reaches menopause to count her children, then the fertility statistics will be perpetually out of date.

The method actually used to calculate the total fertility rate is to sum up the fertility rates for each age group. For example, suppose for the sake of brevity that women are fertile only between the ages of 23 and 27, and that in a given year we have the following birth rates:

Age Birth Rate
23 60%
24 50%
25 40%
26 30
27 20%

Of Trade and Tenure

There are some protectionists who think it clever to suggest from time to time that academics who support free trade should be replaced with employees of an Indian or Chinese outsourcing firm. To the extent that this is feasible, I think it's a splendid idea. Sending American students to foreign universities might be just what we need to keep the costs of higher education under control, while at the same time improving our relations with foreign nations. And for all the typical American student learns in the course of acquiring a B.A. Read more »

Harry Browne, 1933-2006

Via Lew Rockwell comes news that Harry Browne has died. I'm not terribly familiar with his work, but I read and enjoyed How I Found Freedom in an Unfree World, and I heard him speak once during the 2000 election season. It was on that day that I first began to see the madness of a system that would give us George W. Bush and Al Gore as "serious" candidates while treating a man like Harry Browne as a "joke".


Via Division of Labour, an article in the Chronicle of Higher Education brings to our attention a letter written by Peggy Mastroianni, Associate Legal Counsel at the Equal Employment Opportunity Commission, in response to a FOIA request. According to Mastroianni, employers who use an exclusively Internet-based hiring process may fall afoul of federal antidiscrimination laws if the effect is to disproportionately exclude certain protected groups.

For the time being, it's probably best not to make too much of this. This was a response to a hypothetical question, and no legal action is currently being pursued on these grounds. Nevertheless, I do think that this provides a valuable illustration of a broader problem with antidiscrimination laws. Read more »

Markets and the 90% Case

At Marginal Revolution, Alex Tabarrok argues that where laws permit it to do so, the medical insurance industry has been largely successful in overcoming adverse selection.

A few commenters object, pointing out that those with poor health are either denied coverage or required to pay above-average rates. They may be confused about what "adverse selection" is---it's when low-risk customers avoid buying insurance because they get charged the same rates as high-risk customers but are less likely to get their money's worth---but they do have a valid point. That people with congenital health problems face higher insurance rates isn't a market failure, because it's exactly how markets are supposed to work. But it is a problem. And it's a problem that will only get worse as the ability to screen for potentially costly genetic defects improves.

But the left-wing solution to the problem---nationalizing the health care and/or health insurance industries---is wrong. It's wrong not just because runs contrary to libertarian principles, but because, for the sake of a small minority for whom the market doesn't provide a satisfactory solution, it deprives the vast majority of the very real benefits of market-driven medicine. Read more »

Purchasing Power, Taxes, and Wal-Mart

In order to make meaningful comparisons of standards of living in different countries, economists typically adjust incomes for purchasing power. For example, China's per-capita GDP is (if we put aside certain doubts for the moment) on the order of 10,000 yuan, or $1,240. But simply converting yuan to dollars at the market rate doesn't tell the whole story. Because prices are so much lower in China, the standard of living of a person in China making $1,240 per year is much higher than that of a person in the US making the same amount (for one, the person in China can put a roof over his head).

On a purchasing power parity (PPP) basis, China's per-capita GDP is about $5,600. Still not great, but it keeps people eating and indoors at night.

Of course, cost of living isn't necessarily uniform within a given country, and it varies quite widely within the United States. According to CNN Money's cost of living calculator, a bit over $20,000 will take you as far in Conway, Arkansas as $50,000 will take you in Manhattan. The biggest difference is housing, and the gap may narrow a bit if and when the bubble pops, but the fact remains that any given salary will give you a much higher standard of living in Conway than in Manhattan.

However, the Federal Government frequently fails to take this into account when designing policies. Read more »