Category Archives: Social Science

US Birth Rate Hits New Low – A Nation of Singles – Forecasts & Trends

US Birth Rate Hits New Low – A Nation of Singles – Forecasts & Trends

According to this article, “the fertility rate needed to maintain the current US population is 2.1 children born to women of child-bearing age… the US fertility rate among women is now only 1.9 children and falling.”

Apparently the US is in much better shape in this regard than Europe; e.g., according to a recent Forbes article entitled “What’s Really Behind Europe’s Decline? It’s The Birth Rates, Stupid“, the fertility rate among women in Spain presently stands at 1.4 children and falling.  This and similar “birth dearths” in other Mediterranean countries such as Greece, Italy and Portugal are contributing significantly to the economic malaise in Europe.  The above referenced Forbes article notes,

“Essentially, Spain and other Mediterranean countries bought into northern Europe’s liberal values, and low birthrates, but did so without the economic wherewithal to pay for it. You can afford a Nordic welfare state, albeit increasingly precariously, if your companies and labor force are highly skilled or productive. But Spain, Italy, Greece and Portugal lack that kind of productive industry; much of the growth stemmed from real estate and tourism. Infrastructure development was underwritten by the EU, and the country has become increasingly dependent on foreign investors.

Unlike Sweden or Germany, Spain cannot count now on immigrants to stem their demographic decline and generate new economic energy. Although 450,000 people, largely from Muslim countries, still arrive annually, over 580,000 Spaniards are heading elsewhere — many of them to northern Europe and some to traditional places of immigration such as Latin America. Germany, which needs 200,000 immigrants a year to keep its factories humming, has emerged as a preferred destination.”

Print Friendly, PDF & Email

Did the Community Reinvestment Act (CRA) Lead to Risky Lending?

Did the Community Reinvestment Act (CRA) Lead to Risky Lending?

by Sumit Agarwal, Efraim Benmelech, Nittai Bergman, Amit Seru  –  #18609 (AP CF)

Abstract:

Yes, it did.  We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity.  Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams.  We find that adherence to the act led to riskier lending by banks:  in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often.  These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks.  The effects are strongest during the time period when the market for private securitization was booming.

http://papers.nber.org/papers/W18609

Print Friendly, PDF & Email

Are You Brilliant, or Just Lucky?

Are You Brilliant, or Just Lucky? – WSJ.com.

This article applies insights from Michael Mauboussin’s new book entitled “The Success Equation: Untangling Skill and Luck in Business, Sports and Investing” to investment decision-making. I particularly like the author’s description of a classic experiment in which “… people guessed the outcome of a coin toss. When told they got the first four tosses correct, they concluded on average that they would be able to guess 54 of the next 100 coin flips.” In other words, people often fool themselves into attributing skill to pure luck.

Print Friendly, PDF & Email

Mulligan on Redistribution, Unemployment, and the Labor Market

Mulligan on Redistribution, Unemployment, and the Labor Market | EconTalk.

I am looking forward to listening to this EconTalk podcast on my daily walk today.  Here are the program notes for this podcast:

“Casey Mulligan of the University of Chicago and the author of The Redistribution Recession, talks with EconTalk host Russ Roberts about the ideas in the book. Mulligan argues that increases in the benefits available to unemployed workers explains the depth of the Great Recession that began in 2007 and the slowness of the recovery particularly in the labor market. Mulligan argues that other macroeconomic explanations ignore the microeconomic incentives facing workers and employers.”

Print Friendly, PDF & Email

Is Our Adults Learning?

Yesterday, David Brooks published an interesting essay in the New York Times entitled “Is Our Adults Learning?”  The basic premise behind his essay can be summarized in the following quote, “Government doesn’t profit from experience because of the way it goes about testing its policy problems. It should try learning the way businesses do.”

My purpose in posting this commentary on Brooks’ article is to challenge his presumption that it’s even remotely possible for the government to conduct itself like a business.  Avinash Dixit’s 1997 American Economic Review article entitled “Power of Incentives in Private versus Public Organizations” provides the framework for my critique.  In this (admittedly somewhat dated) academic journal article, professor Dixit takes on an earlier version of Brooks’ ideas as exemplified in Al Gore’s 1995 tome entitled “Common sense government”.  In this book, Gore argues for “reinventing”  government by measuring and  rewarding “results, not red tape.”  However, Dixit shows that the problem with Gore’s and Brooks’ platitudes about getting the government to act more like a business is that these “theories” fundamentally ignore the nature of government bureaucracy.  Dixit argues that “a distinct feature of government bureaucracies is that they must answer to multiple principals”, and he goes on to “… develop a model of a common agency to show how the interaction among many principals results in a loss of the power of incentives.”  To illustrate this, Dixit notes that in the real world, a government agency may be formally answerable only to the executive, but in practice Congress, courts, media, and organized lobbies all have a say.  He notes that one way to resolve this “weak incentive” problem at the federal level is to devolve political power to states or localities, where “…agencies can be so designed that each performs fewer tasks, thus reducing the externalities among the principals affected by its actions.”  So basically Dixit rigorously proves with the game theory the wisdom behind federalism!

In closing, it would seem that the least likely place for “decentralizing policy experimentation as much as possible to encourage maximum variation” to be successful would be at the level of the federal government.   The weak incentive problem identified by Dixit explains why government agencies are typically focused on red tape, and not results; it’s all about process and procedure, and rarely ever about results.

Print Friendly, PDF & Email

On the social scientific study of religion

I’d like to give a “shout-out” to University of Washington political scientist (and Baylor ISR Distinguished Senior Fellow) Tony Gill for his “Research on Religion” podcast series. Research on Religion (AKA “RoR”; see http://www.researchonreligion.org/) is a weekly podcast series which is devoted to the social scientific study of religion.

Since I commute regularly from my home in Austin, TX to my Baylor University office (which is located 1-1/2 hours away in Waco, TX), this gives me plenty of time to listen to podcasts. By far and away, my favorite podcast series is (not surprisingly) Econtalk (located at http://www.econtalk.org/). Both EconTalk and RoR follow a similar format, in that there is a new, roughly 1 hour long podcast every week that features an interview between the program host (Russ Roberts on EconTalk and Tony Gill on RoR) and a guest who has typically published a book or article on an important/relevant/timely topic.

Anyway, the direct iTunes link for RoR is http://itunes.apple.com/us/podcast/research-on-religion/id401047404. The direct iTunes link for EconTalk is http://itunes.apple.com/us/podcast/econtalk/id135066958.

Print Friendly, PDF & Email