Dependency Ratios Revisited

From Tyler Cowen at Marginal Revolution:

"Here is a basic argument and model that the youth dependency ratio can matter.

I can see three possible mechanisms. 1) Fewer babies mean that more women work. 2) Fewer babies mean that each baby gets more parental investment; in the long run those people are smarter. 3) Fewer babies raises the savings rate."

He goes on to argue that none of them explain Ireland, at least not very much. I'm still musing over the way economists think, compared to me. But today the Times had an interesting article on manufacturing in India, including the suggestion that manufacturers, because they can look ahead and see China will soon have a high dependency ratio while India will have a low one, are deciding to invest in manufacturing plants in India.

USDA Does It Again (Updated)

As reported on AgWeb - Your Spot for Futures Trading, Commodities Info, Ag News, Successful Farming Tips & More, and many more media outlets serving agriculture:

"Agriculture Secretary Mike Johanns today announced during a visit to South Dakota $780 million in assistance to help farmers and ranchers manage drought and weather related production challenges. "

Sounds good, doesn't it? But the reality is less impressive, particularly in South Dakota. Upland cotton, peanuts, and grain sorghum aren't really big crops in that state, and the bulk of the $780 mill is in accelerated counter-cyclical payments for those crops. There's no explanation of why the crops were selected, but perhaps because the economists were reasonably comfortable that the payments would be earned. (The computation of the payment rate typically requires collecting national weighted average market prices for a year. So when I worked cotton payments weren't made until February of the next year.) [Updated note: According to this,
the 2002 Act changed the schedule, partial payments are made in October, then February, then after the end of the marketing year. There's nothing I've seen to specify whether USDA is just moving the October payment up by a month or more.] If I'm right, there's no intrinsic relationship between the drought and the payments, except the fact this is a year divisible by 2.

According to this site, the severest drought is in Wyoming, western South Dakota and western Nebraska, which are wheat areas, and in Texas and Oklahoma which do grow sorghum and cotton. It would be interesting to know if there was any consideration of advancing the payments just to producers in the disaster-affected counties. It would be do-able, if legal.

It's also interesting to note that Johanns has just cost the taxpayers X million dollars. Moving up the payments means the Treasury Department has to borrow the money earlier than it would have, and 5 percent interest on $700 mill starts to add up. (Relax, it's not "real money" according to Senator Dirksen's definition.)

Suicide as Signaling Device

Tyler Cowen at Marginal Revolution refers to this old Slate story:

Attempting suicide can be a rational choice, but only if there is a high likelihood it will cause the attempter's life to significantly improve.Marcotte couldn't test the relative "life improvement" of successful suicides—since they were, of course, dead—but he could study those who had failed at suicide to determine if their lives improved after the attempt. The results are surprising. Marcotte's study found that after people attempt suicide and fail, their incomes increase by an average of 20.6 percent compared to peers who seriously contemplate suicide but never make an attempt. In fact, the more serious the attempt, the larger the boost—"hard-suicide" attempts, in which luck is the only reason the attempts fail, are associated with a 36.3 percent increase in income. (The presence of nonattempters as a control group suggests the suicide effort is the root cause of the boost.)

A commenter links to this piece on a possible evolutionary link for depression. See Hagen

It seems to me possible that there's a correlation to the evolutionary explanation for such things as peacock tails and conspicuous displays, known I think as "handicapping". The idea is that animals do things that make no apparent sense except to send the signal that they are fit. The bigger the horns, the more striking the tail, the higher the jump, the more dangerous the exploit--each one is a social signal showing more evolutionary fitness.

Depression and suicide attempts might work similarly--the more you invest in showing your unhappiness, the more convincing the signal, and the greater the chance for reaction.

Why Move to DC?

A commenter on my housing post asked:

Does the higher cost of housing in WDC discourage qualified civil servants from taking a transfer to WDC? Why transfer to WDC, fight traffic and parking spaces, while you could receive a comparable income from staying in fly over country. Both jobs provide the ability to do the people's work!

Good question for which I've some answers (using "DC" loosely to mean the general area): Why transfer to DC--

1. Because you're an arrogant SOB who thinks you can compete in the biggest frog pond. Why did Alex Rodriguez move from Texas to the Yankees? Not only can you rise to the top in an agency, but you can switch agencies (though not the way Jimmy Carter envisioned when he pushed the Senior Executive Service).
   
2. Because you can change the whole country from a post in DC. (Early in my first job I instructed the whole bureaucracy to change the way they referred to county offices--instead of "ASCS county offices" it was to be "county ASCS offices". Now that is power!!)
3. Because you can look the bastards who are screwing you straight in the eye, rather than having to imagine what they look like.
4. Because DC really is a great place to live, simply for the opportunities. Opportunities for the single person to indulge in culture, opportunities for children to get into something they love (whether ballet, swimming, science, whatever).
   
5. Because in DC you have the wind behind you, rather than blowing in your face. (To see what I mean, read the book, "Denison, Iowa," to get a sense of what it's like to live where the wind is against you.)
6. Because you can work the system--sacrifice now to get a house, then retire to a low cost region where your dollars buy much more. (I remember a guy from SCS who was transferred to Ft. Collins in 1991. He was having big problems with the move, simply because there wasn't a mansion in Ft. Collins big enough to absorb the proceeds from his DC house. Ft. Collins is highly rated for livability.)
7. Because you're a romantic fool from the sticks who loves to see the Washington Monument every work day and to rub elbows with people from all over the world.
8. Because it's an endless comedy show, watching the politicians come and go, posture and preen, but rarely come clean.
9. Because no situation is perfect and people can adapt to most anything, even a 2 hour commute one-way. Like Gilbert's book, Stumbling on Happiness, says, it's hard to estimate the future because you forget the dailyness of life.
   
10. It feels so good when you leave.
    

Housing Crisis and SRO's

Michael Grunwald had an article on the incredible cost of housing in the DC area yesterday. Today he hosted a discussion on it. He talked about government housing aid, zoning restrictions, and similar subjects. Some comments:

• In the late 60's I was renting an efficiency in downtown DC--somewhere around $110 a month. I started off working for the government at $5K, so I was spending maybe 25 percent of my salary for housing. I ended buying in Reston for $55K at about the peak of the housing boom in the 70's. These may be wrong, but my impression is that starting salary for the Feds is around $30-35K (6 times mine), my townhouse is about 6 times more valuable, and rental rates may be a bit higher than 6 times $110.
• I remember Reston was originally planned (in '64 or '65)to have lots of multifamily housing, but they ended up changing to have more single family houses and fewer townhouses, condos and apartments. Responding to the market they said.
• The free market creates its own solution to housing problems--in some areas, including mine, immigrants are buying houses based on having multiple people rooming there. It may or may not be legal, but it works. It also represents another advantage of immigrants over natives in the competition for opportunity. Immigrant males are more willing to live crowded than are natives.
• One positive sign of the change is there's less competition for parking spaces. :-) The new immigrants don't have money for cars; they ride bikes or buses or carpool.

Dependency Ratios for Countries and Corporations

The always interesting Malcolm Gladwell has a new article in The New Yorker: Fact, concerning dependency ratios (the ratio of workers to dependent children, aged, and disabled). A quote:

"But, as the Harvard economists David Bloom and David Canning suggest in their study of the “Celtic Tiger,” of greater importance may have been a singular demographic fact. In 1979, restrictions on contraception that had been in place since Ireland’s founding were lifted, and the birth rate began to fall. In 1970, the average Irishwoman had 3.9 children. By the mid-nineteen-nineties, that number was less than two. As a result, when the Irish children born in the nineteen-sixties hit the workforce, there weren’t a lot of children in the generation just behind them."

Gladwell argues that dependency ratios explain why Bethlehem Steel went bankrupt, why GM and Ford are headed there and why Ireland is booming. It further explains [much of] the differential between development rates in Asia, where birth rates in China and elsewhere have declined sharply, and those in Africa, where rates are still high.

I found it, as is often the case with Gladwell, a bit stretched but provocative. He rides the idea too far, particularly when he ignores any discussion of why differences in birth rates, as between China and the Congo say. Was it the case that the communist state of China provided cradle to grave security, hence was able to enforce its one-baby policy while the Congo essentially has a kleptocratic state providing no security and therefore the greatest of encouragements to have many children? But how about Taiwan or South Korea?

But to push the idea farther--how about classes--should we take more seriously than we do the differences in birth rates between classes in the U.S.?

Threats to Privacy

Via George Buddy, see this for the ACLU take on future pizza ordering. As a long-time ACLU member (though I hasten to add I don't carry the card) I'm going to take this much too seriously and quibble with it.

• I doubt there'll be a national ID number. Surely we'll have the sense to realize that we already have world identifiers (at least everyone with an e-mail account does).
• No one would verify the information--by then the information would be accurate enough that verification wouldn't be cost-effective in this scenario. (I realize the verification is a means to emphasize how much info the pizza parlor has access to.)
• There's no economic rationale for the parlor to link to some of the records shown; the customer is only going to get aggravated by it and a business wants to please its customer. Cui bono? That's always a good question, particularly when there's a cost to doing something. 10 years from now the cost of transfering data will be negligible, but there's still a major cost in establishing means to move data between bureaucracies (like an insurance company and a pizza parlor).

All of which is not to say that we shouldn't worry. It is rational to worry about things that don't make sense, like the Bush administration. Generally I think people like the ACLU and EPIC worry about the wrong things. I was particularly impressed by David Brin's book, Transparent Society, a few years back. To oversimplify, I'd allow public bureaucracies to maintain lots of data, provided they included their own data in the database and made it generally available as well as giving people access to their own data with a detailed audit trail.

But that's another day.

Kudos for Fred Kaplan

Ran across this prescient post on Slate from March 2003--read the whole thing.

How the Bush administration is botching the Iraq crisis. By Fred Kaplan - Slate Magazine: "It is becoming increasingly and distressingly clear that, however justified the coming war with Iraq may be, the Bush administration is in no shape—diplomatically, politically, or intellectually—to wage it or at least to settle its aftermath."

Reforming Bureaucracy--Empowering Operatives

Last night Lehrer Newshour had another in its series of interviews with people on immigration. The interviewee was an immigration lawyer. She mentioned a case where the waiting for legal immigration (from the Philippines?) would take 12 years, during which no visitor visa would be allowed. She mentioned another case of a high school student who would be sent back because she had no adult advocate here (parents split, father brought her here, then split, etc.) which even Immigration agreed was deserving.

That leads to a thought. With computers and databases, it's easy enough to track histories. So we could empower "operatives" (James Q. Wilson's term for the front-line bureaucrat) to make decisions and track how good or bad they are. For example, in the case of immigration, allow each frontline worker to let in two people a year under a special program. Track the history of the people let in and tie it back to the worker. So if Joan Doe lets in someone who runs afoul of the law, that should impact her ability to make future decisions, her promotability, her pay, etc. Contrarily, let in someone who becomes a good U.S. citizen and you get rewarded.

We could apply the same principle in other bureaucracies.

Caps Lock

Eugene Volokh here supports the campaign to remove the Caps Lock key. From the comments it seems that lawyers still use all caps (and in some cases monospaced fonts). But then, don't the Brits still wear wigs?