My good friend and colleague John List has very ambitious summer plans.
We’ve both believed for a long time that the combination of creative economic thinking and randomized experiments has the potential to revolutionize business and the non-profit sector. John and I have worked to foment that revolution through both academic partnerships with firms as well as a project of John’s called the Science of Philanthropy Initiative (SPI), whose mission is “evidence-based research on charitable giving.”
A new NBER working paper (abstract; PDF) by University of Chicago researchers Sara Heller, Harold A. Pollack, Roseanna Ander, and Jens Ludwiganalyzes the effects of a Chicago program targeted at “disadvantaged male youth grades 7-10 from high-crime Chicago neighborhoods.” The results of the intervention look promising:
Improving the long-term life outcomes of disadvantaged youth remains a top policy priority in the United States, although identifying successful interventions for adolescents – particularly males – has proven challenging. This paper reports results from a large randomized controlled trial of an intervention for disadvantaged male youth grades 7-10 from high-crime Chicago neighborhoods. The intervention was delivered by two local non-profits and included regular interactions with a pro-social adult, after-school programming, and – perhaps the most novel ingredient – in-school programming designed to reduce common judgment and decision-making problems related to automatic behavior and biased beliefs, or what psychologists call cognitive behavioral therapy (CBT). We randomly assigned 2,740 youth to programming or to a control group; about half those offered programming participated, with the average participant attending 13 sessions. Program participation reduced violent-crime arrests during the program year by 8.1 per 100 youth (a 44 percent reduction). It also generated sustained gains in schooling outcomes equal to 0.14 standard deviations during the program year and 0.19 standard deviations during the follow-up year, which we estimate could lead to higher graduation rates of 3-10 percentage points (7-22 percent). Depending on how one monetizes the social costs of crime, the benefit-cost ratio may be as high as 30:1 from reductions in criminal activity alone.
Three of my colleagues and friends at the University of Chicago — Kerwin Charles, Erik Hurst, and Matt Notowidigdo — recently presented some new research that aims to understand the ups and downs in the U.S. labor market. It’s more serious and important than the usual stuff we deal with on the blog, but every once in a while we deviate from trivialities when something really good comes along.
They’ve been kind enough to put together a layperson’s version of the research below. For those looking for the full-blown academic version, you can find that here.
A Structural Explanation for the Weak Labor Market By Kerwin Charles, Erik Hurst, and Matt Notowidigdo
In the aftermath of the Great Recession, the labor market has remained anemic. Between 2007 and 2010, the employment-to-population ratio of men between the ages of 21 and 55 with less than a four-year degree fell from 82.8 percent to 73.8 percent. As of mid-2012, the employment-to-population ratio for these men remained depressed at 75.6 percent.
In our new working paper (abstract; full PDF), we show that the recent sluggish labor market in the U.S. – particularly for prime age workers without a college degree – can be traced back to the large sectoral decline in manufacturing employment that occurred during the 2000s. After decades of relative stability, total manufacturing employment in the U.S. fell by 3.5 million jobs between the beginning of 2000 and the end of 2007 (see chart below). These manufacturing jobs were lost even before the Great Recession started. During the recent recession, another 2 million manufacturing jobs were lost. While there is talk of a recent manufacturing rebound in the U.S., the recent increase is only a tiny fraction of the total manufacturing jobs lost during the 2000s.
If you follow the economic policy debate in the popular press, you would be excused for missing one of our best-kept secrets: There’s remarkable agreement among economists on most policy questions. Unfortunately, this consensus remains obscured by the two laws of punditry: First, for any issue, there’s always at least one idiot willing to claim the spotlight to argue for it; and second, that idiot may sound more respectable if he calls himself an economist.
How then can the quiet consensus compete with these squawking heads? A wonderful innovation run by Brian Barry and Anil Kashyap at the University of Chicago’s Booth School Initial on Global Markets provides one answer: Data. Their “Economic Experts Panel” involves 40 of the leading economists across the US who have agreed to respond on the economic policy question du jour. The panel involves a geographically and ideologically diverse array of leading economists working across different fields. The main thing that unites them is that they are outstanding economists who care about public policy. The most striking result is just how often even this very diverse group of economists agree, even when there’s stark disagreement in Washington.
There is an old quip, attributed to George Bernard Shaw, that if all the economists were laid end to end, they’d never reach a conclusion.
My own experience has always been just the opposite. Most economists think very much alike.
If you want to feel like the smartest person in the room, often a good way to accomplish this is to be the only economist. Frequently, the one economist will say things that make a lot of sense that no one else would ever come up with. When I am that one economist, I sometimes feel like a genius. Until a second economist enters the room, that is. Because when the second economist shows up, he or she often says all the smart things I was going to say, before I can say them. It turns out, it is not the economist who is brilliant, but rather the training we get as economists which leads us to think differently from non-economists, that sometimes makes us seem smart.
Last week, I was out in Chicago for a couple of days working with Levitt. We had lunch at the Booth School cafeteria (with its great soda design) — or at least we tried to have lunch. There was a nice-looking case of sandwiches, and I asked the guy behind the counter for one of the turkey-cranberry sandwiches.
“No,” he said. “I can’t sell it to you.”
“Why not?” I asked.
“We’re closing. I can’t sell it to you.”
It was about 2:32 p.m. on a weekday afternoon. The sandwich I was eyeing was one of maybe 15 or 20 in the case. And then the guy behind the counter drags over a big trash can and throws my sandwich into it, and then all the other sandwiches too. It might have been my imagination — or maybe just hunger — but he seemed to take delight in throwing away the food for which I was ready to pay full price.
A pair of new studies raise questions as to whether sex offender registries and community notification laws actually reduce recidivism of sex offenders, or even lead to lower sex crime rates overall. Both are published in the University of Chicago’s Journal of Law and Economics.
The first study by Jonah Rockoff of Columbia Business School, and J.J. Prescott, a law professor at the University of Michigan, parses out the effectiveness of the two basic types of sex offender laws. While they find that the registration of released sex offenders is associated with a 13% decrease in crime from the sample mean, public notification laws proved to be counterproductive, and led to slightly higher rates of sex crime because of what the authors refer to as a “relative utility effect”:
Our results suggest that community notification deters first-time sex offenders, but may increase recidivism by registered offenders by increasing the relative attractiveness of criminal behavior. This finding is consistent with work by criminologists showing that notification may contribute to recidivism by imposing social and financial costs on registered sex offenders and, as a result, making non-criminal activity relatively less attractive.
…[C]onvicted sex offenders become more likely to commit crime when their information is made public because the associated psychological, social, or financial costs make crime more attractive.
Just about every university has an alumni magazine, and they all follow the same tried-and-true recipe: highly partisan stories touting the wonderful accomplishments of the faculty, students, athletics, and alumni.
I had always thought of my university’s alumni magazine as being cut from the same cloth.
Until I read the most recent issue, that is.
I ran into someone the other day whom I had never met and who fit the following five criteria:
1. He/she attended the University of Chicago.
2. He/she is still alive.
3. He/she is a whole lot smarter than I am.
4. He/she is a whole lot more famous than I am.
5. He/she is even more controversial/notorious than I am.
Tom Hundley had a long piece in the Chicago Tribune on Sunday describing the influence of the University of Chicago on Barack Obama. The most interesting part comes near the end, where law professors Cass Sunstein and Richard Epstein spar over whether Obama really believes in free markets. Sunstein says, “As Nixon went to China, Obama will go to deregulation.” . . .
On Bloomberg.com, John Lippert presents an interesting and extremely well-reported article on the financial crisis’s impact on the thinking of Chicago economists. It does a nice job of capturing the multifaceted nature of the institution, with people on all sides of the issues. I absolutely love the following excerpt, which better captures what it is like to hang around with . . .
There is a mini-controversy on the University of Chicago campus surrounding the announcement of plans to raise money for a Milton Friedman Institute here at the university. Some non-economists are concerned that the Friedman Institute will push a right-wing agenda and tarnish the reputation of the university. Some who knew Friedman well have the opposite worry: that the Institute won’t . . .
A modern variant of David versus Goliath is unfolding in academic economics. Ashwini Agrawal is David. He is a graduate student getting a Ph.D. at the University of Chicago Graduate School of Business. The A.F.L.-C.I.O. is Goliath. Here is the background, as I understand it: The A.F.L.-C.I.O. manages huge pension funds for its members. These pension funds are invested in . . .
I make a brief cameo appearance in this Chronicle of Higher Education article about how universities allocate students to popular courses. It mentions the student who tried to sell her spot in my class, thereby bringing down the wrath of the University administration. I liked her approach, though, so we’ve now got her employed doing research assistance for the sequel . . .
If you go into the cafeteria at the University of Chicago’s Graduate School of Business, you will come upon a rather extraordinary display in the soda case: It reminded me of a Mondrian painting, maybe “Broadway Boogie Woogie.” As it turned out, the man responsible for the display was standing nearby, and we fell to chatting. His name is Derek . . .
I sometimes do wear a wig and too much eye makeup, but that’s not what I had in mind. The answer to the question is that people are scalping tickets to both of our performances. There was uproar recently about the steep prices resellers were getting for her concert tickets — sometimes upwards of $2,000. My venue is a little . . .
This season’s show “Apprentice” with Donald Trump ended with Trump asking the winner whether the runner-up, Rebecca Jarvis, should also be hired. The winner said, “The show is called ‘The Apprentice,’ not ‘The Apprenti.’ ” Not particularly important, but first let’s just note that if the plural of apprentice is “apprenti,” then by the same token our book should be . . .
Malcolm Gladwell’s latest piece in the New Yorker is interesting as always. It is about Ivy League admissions. I particularly like this quote (especially the last sentence): The Ivy League schools justified their emphasis on character and personality, however, by arguing that they were searching for the students who would have the greatest success after college. They were looking for . . .
I found this list of what is supposed to be the future winners of the Nobel Prize in Economics on a blackboard at the U of C, for what it is worth. Who knows whether the people who made the list know what they are talking about. There are about 40 people on the list, and about 2 people get . . .
I’ve had the chance to meet a lot of smart people in my life. Without question, Kevin Murphy is the smartest of them all. Not only is he smart, but he is also one of the kindest, most loyal, and most generous people I’ve known. So I could not be happier that the MacArthur Foundation today named him as one . . .