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How the IQ Taboo Promotes Statistical Discrimination

Last week I wrote a post on the importance of acknowledging the existence of a racial IQ gap. In the comments, I mentioned that I believe that the taboo on the IQ gap promotes statistical racial discrimination. The reason for this is that IQ scores tend to predict job performance reasonably well. All else being roughly equal, it is in an employer's best interest to hire the candidate with the highest IQ.

But because of the IQ taboo, IQ tests are presumed to be racist, and employers are barred from using them in most cases. Hence an employer who wants to select the smartest candidate is forced to rely on some proxy for IQ. Here blacks are doubly disadvantaged. First, race is a proxy for IQ. Given two job candidates, it's a good--albeit far from sure--bet that the white candidate is smarter than the black candidate. On top of that, an employer who attempts to gauge candidates' intelligence through non-technical interviews (technical interviews are often thinly veiled IQ tests) may unintentionally end up underestimating the intelligence of black candidates due to cultural factors such as the use of black vernacular English and/or subconscious stereotyping.

In short, when employers are denied the right to use IQ tests to gauge candidates' intelligence, racial discrimination becomes a +EV strategy.

One might object that most employers don't know about the IQ gap. This is probably true. But it's likely that many have noticed a performance gap. If an employer notices that his black hires have more often than not underperformed his white hires, or that this was true of his coworkers before he opened up shop himself, he will be inclined to discriminate on the basis of race. Worse, if he remains in the dark about the explanation for this phenomenon, he may drift towards outright bigotry.

Another objection one might raise is that education serves as a good proxy for IQ. This is true, but it is an imperfect proxy made even more imperfect by affirmative action. At many elite universities, the median black SAT score is 200-300 points below the median white SAT score--a difference of 1-1.5 standard deviations. Because blacks face lower admissions standards than whites at schools which practice affirmative action, it's a reasonable--though again not sure--bet that a white candidate is more intelligent than a black candidate who graduated from the same college.

That said, I suspect that employers hiring college-educated workers are generally better able to measure the qualifications of job candidates, so I would expect racial discrimination to be less attractive to such employers. Consider instead the portion of the labor force which has only a high school diploma. Assume that this consists of everyone with an IQ between 80 and 105. If the median black IQ is 85 and the median white IQ is 100, this means that the IQs of white high school graduates will tend to cluster at the high end of that range, while the IQs of black high school graduates will tend ot cluster at the low end. Although the IQ gap is somewhat narrower than it is in the full population, it still persists--perhaps it is 10 points rather than 15--and it still pays to discriminate.

Statistical discrimination is how we make judgments when we lack the information necessary to judge others as individuals. The antidote is not obscurantism, but enlightenment--the easier it is to judge others as individuals, the less statistical discrimination there will be.


Why It's Important to Acknowledge the IQ Gap

Due to the Watson kerfuffle, there's been a lot of talk recently about the black-white IQ gap. One argument that I hear with some regularity is that even if it is real, we shouldn't talk about it, because no good can come of it, but much bad can.

I don't know for sure whether anything bad would come of widespread knowledge of the black-white IQ gap, but I doubt it. I do suspect that most people lack the rudimentary understanding of statistics necessary to see what does and what does not follow logically from the fact that the median black IQ is 10-15 points below the median white IQ. Certainly this is true of most of the people who have been critical of Watson.

On the other hand, I also believe that most who would use this as a justification for racism are already racist. Even those who don't know about the IQ gap are not blind to its effects: Blacks commit violent crimes at rates much higher than whites, and are also much more likely to have children out of wedlock and to go on welfare. These are not valid reasons to conclude that blacks are inherently inferior to whites, or to discriminate against them, but to someone predisposed to reach that conclusion, they are probably reason enough. Learning of the IQ gap is unlikely to make much of a difference.

What I do know is that considerable harm is done by the left's continued refusal to acknowledge the racial IQ gap. When they insist that the racial achievement gap--the lower average income of black wage-earners and their underrepresentation in higher education and lucrative and high-status occupations--is prima facie evidence of racial discrimination and a need for government intervention, then we have no choice but to counter these assertions with evidence of a more plausible and better-documented explanation.

Opposition to anti-discrimination laws is not simply a matter of freedom to be a bigot. When government can second-guess employers' decisions and force them to spend resources defending them in court, that imposes costs on all of us. Likewise when employers make suboptimal hiring and promotion decisions in order to defend against discrimination charges proactively. And all of this is because of the taboo on the racial IQ gap and the consequent assumption that racism must be behind any significant achivement gap.

My advice to those who would like to keep discussion of the racial IQ gap to a minimum is to cease their loud and self-righteous scapegoating of imaginary white racists for the racial achievement gap, and to stop advocating destructive government interventions designed to solve a problem that may not even exist.


Warren Meyer on Global Warming

Over at Coyote Blog, Warren Meyer has made a video summarizing his arguments against predictions of catastrophic anthropogenic global warming. He makes what strikes me as a fairly convincing case, and I'd be interested in hearing a rebuttal, if there is one yet.

Links to the video in several formats, including an offer for a free DVD, here.


Careful What You Wish For

Jane Galt, blogging for The Atlantic under her new pen-name, has a series of posts in response to Jonathan Chait's claim that Republican tax policy is driven by economic crackpottery, pointing out that there are good arguments for tax cuts that don't rely on the dubious claim that the US economy circa 2000 was on the right side of the Laffer curve.

Chait's criticism of the sillier aspects of folk supply-sidism is not unreasonable; I cringe every time I hear someone claim that Reagan's tax cuts caused tax receipts to rise. But the implication that this proves that Republican economic policy is made by crackpots--and that this is a pathology peculiar to Republicans--is.

It should be obvious to anyone who's ever heard a Democratic politician rail against free trade and price-gouging that crackpottery knows no party lines. And to be fair to the Republicans, at least the low-tax agenda is defensible, if not the marketing. Mercantilism and the "price-gouging" canard are rubbish through and through.

But rather than bickering over which party's speechwriters can cram more economic fallacies into a single speech, it may be more instructive to consider why the quality of debate is so low. I suspect that the reason that the more sophisticated arguments for low taxes aren't featured in campaign speeches is that they simply don't win votes. The median voter--and probably even the voter at the 90th percentile--is incapable of following and evaluating sophisticated economic arguments, so the dominant strategy is to present simplistic arguments that resonate with the typical voter's prejudices. Universal suffrage, by its nature, lowers the quality of debate.

Which is why I find this complaint doubly hypocritical coming from the left. Not only are they guilty of pushing their own agenda with arguments of equal or lesser quality, but they frequently push to expand the franchise to or increase voter turnout among the demographics least capable of following sophisticated economic arguments, such as convicted felons, the poor, the homeless, and young adults. When Democrats stop trying to turn out the clueless vote and start trying to increase the quality of the median voter (perhaps, e.g., by endorsing Bryan Caplan's proposal to give extra votes to college graduates), I'll take complaints about Republican sophistry seriously. Until then, I'm happy to see them reap as they have sown.


Rubbernecking

Bast. Train wreck. Ever.

It's okay to laugh, because the person who was killed would have died of old age by now anyway. Full story here.


Changes

We've recently made some changes here at The Distributed Republic. Briefly:

  1. The Recent Comments box in the right sidebar now has a "more" link at the bottom. Click it for a more complete list of recent comments.
  2. We fixed a bug that was causing some comments not to show up in the Recent Comments box.
  3. We've broken the Recent Posts box in the left sidebar into two separate blocks: one for Catallarchy, and one for Community posts.
  4. You can now mark a Blog Entry as Public or Personal. Public posts will show up in the Community view, while Personal posts will only show up on your personal blog.
  5. We now have the ability to steal promote your posts to the front page.

Give the new features a try, and let us know how you like them.


Metareviewing, or Why Does Bryan Caplan Hate the Constitution?

Daniel Casse, reviewing Bryan Caplan's The Myth of the Rational Voter (interview with co-blogger Trent McBride here) for the Wall Street Journal, concludes with this:

The deeper problem with Mr. Caplan's thesis, however, is its lack of any reference to the special character of American democracy. For him, democracy fails because it doesn't produce the most economically efficient results. He would prefer to see independent experts shape policy or to put more power into the hands of the unelected solons on the Supreme Court.

Such a strategy might be more efficient, but then again, American democracy has never been about efficiency. Hamilton and Madison (conspicuously absent in "The Myth of the Rational Voter") consciously set out to create an inefficient system that let one faction counter the other.

This analysis is deeply confused. First, it's based on equivocation. The Constitution was not designed to produce economically inefficient laws, as is implied here in the contrast Casse attempts to draw between the economic efficiency Caplan advocates and the inefficiency designed into the Constitution. Rather, it was designed to make the process of introducing new legislation inefficient, expressly for the purpose of preventing a proliferation of new laws. Caplan's recommendations aren't at odds with this feature of the Constitution--they're explicitly designed to make the process of introducing new legislation even more inefficient.

To give an example, Caplan proposes a Council of Economic Advisers who would have the ability to strike down laws deemed uneconomical. Such a council would be able to shape policy, but only in the sense that a sculptor can shape rock: by chiseling away, never by adding. One might even say that Caplan consciously set out to create an inefficient system that let one faction counter another.

Another of Caplan's suggestions is to give an extra vote to college graduates, who tend to be better informed economically than the population at large. On this point, Casse may be right about Caplan's proposals running contrary to the spirit in which our nation was conceived. After all, if the Founding Fathers had intended to depart from the one-man-one-vote principle, they probably would have restricted the franchise to property owners or something absurd like that.


Competition for Status Is a Given

Tyler Cowen says, "The only way to lower the total amount of these status games is to...umm...lower real gdp.  Which is not a good idea."

Not only is this not a good idea, but it doesn't even work. Even if the government could somehow ensure that everyone had the same income and the same sum in the bank, people would find other dimensions on which to compete for status. That there will be competition for status is a given; the only question is what form it will take. In primitive societies it often took the form of combat. In modern market economies it usually takes the form of wealth generation. I know which form I prefer.


Does Public Education Matter?

The usual objection to privatization of schools (without vouchers) is that the children of the poor would not be able to go to school if it were not publicly funded. The stock libertarian response to this is that a free market in education would create powerful incentives for entrepreneurs to find ways to educate children better, faster, and at lower cost than public schools do now, and that charity would pick up the difference for chilfdren whose parents still couldn't afford to educate them.

These are good points, but a more important question than how poor children would get formal education under a market system is whether anyone would notice a difference if they didn't. Universal formal education is alleged to have three significant benefits:

  1. It teaches children the skills they need to become productive members of society.
  2. It instills in children the cultural values and historical knowledge they need to become good citizens and informed voters.
  3. Failing all else, it keeps chlidren off the streets for six to seven hours per day.

The first claim is dubious. Aside from reading, writing, and basic arithmetic, most of the things children learn in school are of little to no practical use to those not going on to higher education. The skills that people use in their daily lives, at work or otherwise, are mostly learned outside of the classroom. Yes, high school graduates make significantly more money than high school drop-outs, but this is most likely because failing to complete high school is often a proxy for problems that go far beyond having missed out on a few years of formal education.

And even if we grant that the importance of literacy and numeracy justifies the existence of universal formal education, it doesn't justify thirteen years of formal education, nor is it clear that public schools are doing an adequate job of teaching students even these basic skills. This is not to say that school is a waste of time for all students, but I suspect that the vast majority of those who really benefit from it are from the middle and upper classes--i.e., the students whose parents would be able to afford education even without subsidization. Many students, particularly those from the lower classes, might benefit much more from an apprenticeship, perhaps including or preceded by a year or two of basic education in literacy and numeracy, than from the standard thirteen years of formal education.

The second claim is laughable. Even if we set aside the sinister implications of entrusting the state with shaping the values of our nation's children, it's clear that the public schools have failed miserably to instill in them the sort of values and knowledge that would make for good citizens and informed voters. Only a small minority of Americans have even the most rudimentary understanding of the Constitution. Economic and statistical illiteracy are rampant even among the college-educated. And knowledge of American history is in only a slightly better state. Public schools have failed miserably in this.

The third claim is more or less true, but beside the point. Jobs or apprenticeships would keep children off the streets, too, and that wouldn't cost a dime.

In short, the children whom it is argued would be denied a decent education under a fully privatized education system are for the most part already being denied a decent education. Privatization has a clear upside (less money wasted on ineffective schools, plus the opportunity for something much better than the status quo) and no obvious downside.


Cheese Prices

Has anyone else noticed that the price of high-end cheese has increased much faster than most other foods over the past five years or so? To give a specific example, back in 2002, I could find Parmigiano Reggiano for under $10/pound, and now I rarely see it for less than $15-16/pound. Montgomery cheddar, from Neal's Yard, used to sell for about $13/pound in Seattle, and now I can't find it for less than $20. More generally, the average price for high-end cheeses used to be around $15-16/pound, going up to as high as $20-23, whereas now the standard seems to be $20-22, all the way up to $30-35.

My guess is that the price of imported cheeses has risen due to the recent weakness of the dollar. The price of domestic cheese has risen similarly, though. I suspect that this is the law of one price combined with the fact that the market for high-end cheeses has traditionally been dominated by European cheesemakers, leaving domestic artisanal cheesemakers unable to step up production quickly enough to make up for the reduction in supply.

I believe the price of commodity-grade cheese has been fairly stable, but I haven't paid as much attention to that. Does anyone have any additional observations or alternative hypotheses?

While we're on the topic of cheese, I want to take the opportunity to shill for Cato Corner, whose booth in the Union Square market in Manhattan I had the good fortune to stumble upon a few years ago.


Fat and Status

In response to this comment and the one immediately following it, regarding women being judged more harshly than men for being fat, I offer the following conjecture:

Both men and women are judged, even by members of their own sex, on the basis of their attractiveness to members of the opposite sex. The reason that women are judged more harshly for being fat than men are is that men find fat more unattractive than women do. Conversely, and for the same reason, men are judged more harshly for being underweight or for having lackluster social skills.

Such refutations as may exist are left as an exercise for the reader.


The Hardest-Working Americans

Nancy Pelosi, regarding Congress's decision to increase the minimum wage to $7.25/hour:

After 10 years of indifference, we are raising the wages for the hardest-working Americans

With all due respect to minimum-wage workers (which is to say, considerably more than is due to Pelosi), to describe them as "the hardest-working Americans" is a bald-faced lie. According to the left-wing Economic Policy Institute (PDF), 58% of workers earning less than the proposed minimum wage of $7.25/hour work less than 35 hours per week.


A Race to Where Now?

Warren "Coyote" Meyer brought to my attention this AP report:

The Bush administration said Tuesday it will fight to keep meatpackers from testing all their animals for mad cow disease.

The Agriculture Department tests fewer than 1 percent of slaughtered cows for the disease, which can be fatal to humans who eat tainted beef. A beef producer in the western state of Kansas, Creekstone Farms Premium Beef, wants to test all of its cows.

Larger meat companies feared that move because, if Creekstone should test its meat and advertised it as safe, they might have to perform the expensive tests on their larger herds as well.

Pretend you're not a libertarian. What's wrong with this picture?

Answer: This never happens. Because producers, if they compete at all, compete only on price--not on things like quality, safety, and reliability--unregulated capitalism is a race to the bottom in which every corner is cut in the tireless pursuit of profit. The surreal race to the top which Creekstone's competitors predict is a phenomenon entirely foreign to market economies.


The Cart of Public Opinion

Is it wrong to fantasize about hanging out in the parking lot in front of a grocery store, waiting for someone to leave a shopping cart in the middle of a parking space, and then rolling it into his car as he drives away?

For extra credit (redeemable for absolutely nothing), is it wrong to do this when I should be finishing the follow-up to this post?

For extra extra credit, devise a market-based solution to this problem.


A Thought Experiment on the Balance of Trade: Part the First

A few years ago, I came up with a thought experiment to demonstrate that a trade deficit or surplus is not, in and of itself, particularly meaningful. Not yet having been inducted into the cow-cult formerly known as Catallarchy, and being too lazy to set up my own blog, I just sat on it. But it's kind of lumpy and I'm getting tired of sitting on it, so here we are:

Consider first a country "A" existing in autarky--that is, not engaging in any sort of foreign trade. Each year, the only goods available for use are the goods produced that year, or goods produced in prior years but not yet consumed.

Next we add trade with a second country "B" into the mix. First, the case of balanced trade. There will be gains from trade on both sides due to comparative advantage, so both countries will now have access to more goods than they would under autarky. But there is no net trade surplus or deficit.

Now consider a perpetual trade imbalance. Each year country A imports goods from country B, but sends back only money in return. Rather than using the money to buy goods from country A, the citizens of country B hold on to the money, and this imbalance persists indefinitely. For country A, this arrangement is clearly preferable to balanced trade. Not only do they have access to goods imported from country B, but they are able to keep the goods they otherwise would have exported.

Of course, this is an unlikely scenario (albeit not a completely absurd one; if country A's currency is very stable and country B's is not, the citizens of country B may wish to use country A's currency for domestic trade rather than sending it back in exchange for country A's exports). But it's important to understand that a perpetual trade deficit is actually quite desirable. This runs contrary to the intuitions most people have on the topic.

Let's stop here for today. Next week we'll see what happens when the trade imbalance evens back out.