Wednesday, August 28, 2013

The serendipity of "I have a dream"

The Rev. Dr. Martin Luther King Jr.’s speech at the March on Washington for Jobs and Freedom in 1963 was unusual among great American speeches in that its most famous words — “I have a dream” — were improvised.

King had certainly thought about using the “dream” refrain in Washington. He had been fine-tuning it earlier that year. ...

But King thought he wouldn’t have time to use the “dream” language at the March. ...

When King arrived at the Willard Hotel in Washington the night before the march, he still didn’t have a complete draft. ... King finished at about 4 in the morning and handed the manuscript to his aides so it could be typed up and distributed to the press. The speech did not include the words “I have a dream.”

King awoke the next morning to the disappointing news that the crowds at the March were smaller than expected. “About 25,000,” the television reporters were saying, as King left the hotel. Bayard Rustin, the march’s chief organizer, was standing at the Washington Monument, where reporters pressed him about why so few people had shown up. Rustin looked intently at a yellow legal pad in his hand. “Gentlemen,” he said, “everything is going exactly according to plan.” One of Rustin’s aides looked over his shoulder and saw that the pad Rustin was looking at was blank.

But at Union Station, buses and trains were coming in regularly, swelling crowds that some onlookers compared to those that had gathered at the end of World War II. ...

King had the last speaking slot — not just because he was a hard act to follow, but because some other speakers thought they might get better coverage if they spoke earlier in the day. ...

King read from his prepared text for most of his speech ...

As King neared the end, he came to a sentence that wasn’t quite right. He had planned to introduce his conclusion with a call to “go back to our communities as members of the international association for the advancement of creative dissatisfaction.” He skipped that, read a few more lines, and then improvised: “Go back to Mississippi; go back to Alabama; go back to South Carolina; go back to Georgia; go back to Louisiana; go back to the slums and ghettos of our Northern cities, knowing that somehow this situation can and will be changed.”

Nearby, off to one side, [gospel singer] Mahalia Jackson shouted: “Tell them about the dream, Martin!” King looked out over the crowd. As he later explained in an interview, “all of a sudden this thing came to me that I have used — I’d used many times before, that thing about ‘I have a dream’ — and I just felt that I wanted to use it here.” He said, “I say to you today, my friends, so even though we face the difficulties of today and tomorrow, I still have a dream.” And he was off, delivering some of the most beloved lines in American history, a speech that he never intended to give and that some of the other civil rights leaders believed no one but the marchers would ever remember.
--Drew Hansen, NYT, on the greatest American freestyle ever

The cost of reporting CEO pay to median worker pay

The irony is that it all came out of such a simple-sounding idea: requiring that the pay of a company’s chief executive be compared to the median salary of its employees. Carrying out the law may well result in costs that are just as obscene as the pay it is disclosing.

When the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act was being completed, a new section was inserted in the final hours of negotiation. It was two-thirds of the way in, at Section 953(b). The section was also short, at only 140 words, in a bill that would eventually run about 2,300 pages.

What the section required was that all public companies disclose this median number on worker pay, placed side-by-side to the chief executive’s pay.

What could be so hard about making such disclosure, right? It turns out plenty.

The first problem came in how compensation is calculated. We are decades past the time when manager compensation was simply what you received in a paycheck. Now, compensation includes options, pensions, 401(k) matches, health benefits, parking allowances and other various prerequisites. Calculating this all as one figure — and in particular valuing average stock options for employees as well as top executives — can be difficult.

The problem is compounded because the rule says that the median is calculated with respect to “all” employees.

Take a multinational conglomerate with 50,000 employees across the globe. That company has the task of not only figuring out the total compensation provided to every employee, but it also has to collect and analyze this information, much of which is in different currencies. And some of this information collection is arguably prohibited by privacy rules in the European Union and other countries like Japan and Canada. ...

The end result is that what was thought a simple calculation is turning into an exercise that could cost some companies millions. ...

Even the A.F.L.-C.I.O., which strongly advocated for this disclosure, recognizes that there are problems. In a release, the union argued that companies should not count all employees as the statute says, but rather use statistical sampling methods.

The statute, however, is strongly worded, saying the median should be calculated for “all employees.” If the S.E.C. tries to water down the provision as the A.F.L.-C.I.O. suggests, it may lead to a lawsuit in court to strike the rule down by companies themselves.
--Steven Davidoff, NYT, on the costliness of data analysis

Tuesday, August 27, 2013

Do Europeans think they make fewer mistakes?

Pencils with built-in erasers on the tops are a largely American phenomenon.

Most pencils sold in Europe are eraser-less. Read into that cultural difference what you will.
--Megan Garber, The Atlantic, on performing without a safety net

Sunday, August 25, 2013

We listen to classical music with our eyes

When it comes to classical music competitions, one could be forgiven for thinking how well someone plays is the single most important factor.

New research conducted by a recent Harvard graduate, however, suggests otherwise.

In a study by Chia-Jung Tsay, who last year earned a Ph.D. in organizational behavior with a secondary Ph.D. field in music, nearly all participants — including highly trained musicians — were better able to identify the winners of competitions by watching silent video clips than by listening to audio recordings. The work was described in a paper published this month in the Proceedings of the National Academy of Sciences.
--Peter Reuell, Harvard Gazette, on the stagecraft of musical performance. HT: Marginal Revolution

Saturday, August 24, 2013

Large-sample evidence on the difficulty of women "having it all"

In this paper, I report on measures of life satisfaction and emotional well-being (experienced utility) across groups of college-educated women based on whether they have a career, a family, both, or neither. The biggest premium to life satisfaction is associated with having a family; while there is also a life satisfaction premium associated with having a career, women do not seem to be able to “double up” on these premiums. A qualitatively similar picture emerges from my analysis of the emotional well-being data. Among college-educated women with family, those with a career spent a larger share of their day unhappy, sad, stressed and tired compared to those that are staying at home.

I use two main sources of data. To document overall evaluation of life, I use the General Social Surveys (GSS), 1972 to 2010. I use answers to the question “Taken all together, how would you say things are these days - would you say that you are very happy, pretty happy or not too happy?” I construct a dummy variable that equals 1 if the respond answers “very happy,” 0 otherwise. To document emotional well-being, I use the 2010 Well-Being module of the American Time Use Survey (ATUS WB). Respondents who completed a 24-hour ATUS diary were administered the well-being module. Three activities from the diary were randomly selected and six affect questions related to quality of life were asked about each activity. For each selected episode, respondents were asked to rate, using a scale from 0 to 6 (where a 0 means the feeling was not experienced at all and a 6 means the feeling was very strong), whether they felt: 1) happy, 2) tired, 3) stressed, 4) sad, 5) pain and 6) meaning. Following Krueger and Kahneman (2006), I construct an index which helps classify each particular episode into pleasant or unpleasant (U-index). ...

A given woman in a given year and age group is defined to have a “career” if her annual (GSS) or weekly (ATUS WB) earnings are above the 25th percentile in the relevant year and age group. Depending on the specification, I assign as having a “family” those women that are currently married, or are currently married with children. ...

Consistent with expectation, the least happy group are those college-educated women that have neither career nor family: only 29 percent of these women report being very happy. The happiest group is women with family but no career: 47 percent of them report being very happy. Thirty-four percent of women with a career but no family report being very happy. While both career and family are individually associated with higher life satisfaction, it does not appear that these premiums are additive: only 43 percent of the women that “have it all” report being very happy.

This evidence should only be viewed as correlational because of the many dimensions of unobserved heterogeneity that I cannot address given the constraints imposed by the data and research design.
--Marianne Bertrand, American Economic Review Papers and Proceedings, on evidence that working moms really do have tougher lives

Wednesday, August 21, 2013

Trying to make Parisians nicer

In the City of Light, an eternal question is once again spurring debate: Is the stereotype of the brusque Frenchman justified, or do visitors just not understand the French?

The soul-searching is coming from an unlikely place: the Paris tourism board. It is ramping up a charm offensive to burnish the image of France — and Paris in particular — as a kinder place for tourists. Officials have been deluging cafes, hotels, shops and taxi ranks with 20,000 more pamphlets titled “Do You Speak Touriste?”, a manual on how to make travelers feel more welcome, after 35,000 copies handed out in July ran out. ...

Paul Kappe, an owner of the renowned Brasserie de l’Isle Saint-Louis, perched behind the Cathedral of Notre-Dame, gave a Gallic shrug when he saw the brochure.

“It starts with the assumption that the French are disagreeable,” said Mr. Kappe, a contemplative man who kept a watchful eye on the restaurant’s sunny terrace, full of waiters and patrons crammed behind tiny tables. “Well, that does have the ring of truth,” he said. “But it won’t stop a waiter from being unpleasant.” ...

All of the brasserie’s servers were longtime professionals, dressed impeccably in white shirts and long black aprons. Their smiles were hardly effusive, but they poured wine with an expert turn of the wrist and counseled diners on the “plat du jour.” On the other hand, some deftly ignored patrons clamoring for a bill.

“In the United States,” Mr. Kappe observed, “waiters can be fired at any time and must work for tips, so they have to be nice. In France, you can’t just fire somebody if they’re not doing a good job. If you could, everyone would be friendly.”

Tuesday, August 20, 2013

A biologically accurate Finding Nemo storyline

How [Disney film] Finding Nemo started:

Father and mother clownfish are tending to their clutch of eggs at their sea anemone when the mother is eaten by a barracuda. Nemo is the only surviving egg, and he grows up in his father’s anemone before getting lost on a crazy adventure!

How Finding Nemo should have started if it were biologically accurate:

Father and mother clownfish are tending to their clutch of eggs at their sea anemone when the mother is eaten by a barracuda. Nemo hatches as an undifferentiated hermaphrodite (as all clownfish are born) while his father transforms into a female clownfish now that his female mate is dead. Since Nemo is the only other clownfish around, he becomes male and mates with his father (who is now female). Should his father die, Nemo would change into a female clownfish and mate with another male. Although a much different storyline, it still sounds like a crazy adventure!
--Patrick Cooney, Slate, on Disney clownfish myths

Sunday, August 11, 2013

Programs flirting with each other

From the earliest days of the Internet, robotic programs, or bots, have been trying to pass themselves off as human. ...

Dating sites provide especially fertile ground for socialbots. Swindlers routinely seek to dupe lonely people into sending money to fictitious suitors or to lure viewers toward pay-for-service pornography pages. Christian Rudder, a co-founder and general manager of OkCupid, said that when his dating site recently bought and redesigned a smaller site, they witnessed not just a sharp decline in bots, but also a sudden 15 percent drop in use of the new site by real people. This decrease in traffic occurred, he maintains, because the flirtatious messages and automated “likes” that bots had been posting to members’ pages had imbued the former site with a false sense of intimacy and activity. “Love was in the air,” Mr. Rudder said. “Robot love.”

Mr. Rudder added that his programmers are seeking to design their own bots that will flirt with invader bots, courting them into a special room, “a purgatory of sorts,” to talk to one another rather than fooling the humans.

Friday, August 9, 2013

Cram schools to become a Korean pop star

Kim Chae-young attends cram school five evenings a week, toiling deep into the night. But unlike most young South Koreans who spend hours at special schools to polish their English and math, she studies slide steps and bubbly lyrics.

“I want to become a K-pop icon, one like Psy,” said Chae-young, 13, referring to the Korean rapper of the viral video “Gangnam Style.” “All these hours I spend here are my investment for that dream.”

For the past four years, she has practiced her hip-hop moves at the Def Dance Skool in Seoul, which is just one such school among thousands in South Korea. Even though there is no official tally on the number of schools teaching children and teenagers to become pop entertainers, industry officials all agree that it is on the rise. Even traditional private music and dance schools — more accustomed to teaching Bach and ballet — have switched their curriculums to get with the pop plan. ...

With the motto “cultivating the next generation of K-pop artists,” the Def Dance Skool trains 1,000 students, up from about 400 in 2006. Fees vary but usually run about $135 a month for two or three evenings a week. That’s about the same price that some traditional cram schools, known as hagwon, charge for their academic programs. ...

For Woo Ji-won, an 18-year-old high school senior, it’s her third year in a row trying to pass the audition.

“My classmates are cramming for college entrance exams,” she said. “But I go to a K-pop school seven evenings a week. After coming home past 10, I study K-pop video on YouTube for hours.”
--Choe Sang-Hun, NYT, on buying costly lottery tickets

Experiencing local cuisine at McDonald's

You can still find a Big Mac and a box of nuggets here, but they are overshadowed on the menu boards by the bigger stars of the French universe: the McDoo, a warm ham and cheese take on the croque-monsieur, leafy salads that bounce like a Kardashian’s backside, and a line of burgers featuring artisanal French cheeses like Comté and Camembert that McDonald’s rolled out earlier this year. ...

I have come for the McCamembert, but I’m told the burger has sold out all across France, so I settle for a McRaclette, named for the famous cow’s milk cheese from the Alpine highlands. ... Afterward, I decamp to the McCafé for a cappuccino and a plate of green tea macaroons. ...

McGowan talks reverently about Tokyo’s Tuna McMuffin, with a note of disappointment about the thin pumpkin soup served in Hong Kong, and in general astonishment of the spicy stir-fries—a touch of fish sauce, shallots, and fresh mint—served at McDonald’s Thailand (his favorite McDonald’s country in the world).

Comb through McDonald’s menus and you begin to see a more adventurous way to eat in what many consider to be the least adventurous eating establishment on the planet.

For breakfast, why not a bowl of chicken congee with fried garlic and chilies by the beach in Bali? Or Gallo pinto—spice-charged rice and beans—on the streets of San Jose, Costa Rica?

Big Mac no longer holding your interest? Order the Bulgogi Burger in Seoul, a tray of Currywurst in Berlin, or a grilled chicken pita in the Middle East.

Don’t want fries with that? You can try caldo verde in Portugal, gallo pinto in Costa Rica, yucca sticks in Venezuela, cheese empanadas in Chile, or a block of DOP Parmigiano Reggiano in Italy. Late-night munchies? A heaping poutine in Canada will soak up a bit of that booze.

This isn’t just a matter of swapping ranch for chimichurri or subbing ground chicken for ground beef. These new additions represent a paradigm shift in the McDonald’s way: in the sourcing of ingredients, the assembly line preparation, and the local perception of America’s most famous export. Consider Israel, where McDonald’s offers 100 percent kosher restaurants, and the beef is leaner and grilled over charcoal fires—more in keeping with the local desire for a healthier meal. Or India, where beef and pork have never made the menu, McDonald’s is about to go one step further this year and open its first ever vegetarian restaurant. And in Italy, where the opposition to McDonald’s was once so fierce that it sparked the global Slow Food movement, the fast-food titan has joined forces with supermarket superpower Barilla to offer up a line of pasta dishes. The first creation on tap? Penne with tuna, tomatoes, olives, and capers.
--Matt Goulding, Slate, on McDonald's adapting instead of dying

Wednesday, August 7, 2013

Why city bus service usually sucks

Buses often fall down on the job—not because they’re buses, but because they’re slow. Buses are slow in part because city leaders don’t want to slight anyone and thus end up having them stop far too frequently, leaving almost everyone worse off. Buses also tend to feature an inefficient boarding process. Having each customer pay one at a time while boarding, rather than using a proof-of-payment where you pay in advance and then just step onto the bus, slows things down. That can generate a downward spiral of service quality where slow speeds lead to low ridership, low ridership leads to low revenue levels, and low revenue leads to service that’s infrequent as well as slow. Closing the loop, a slow and infrequent bus will be patronized almost exclusively by the poor, which leads to the route’s political marginalization.

Worst of all, even though a bus is a much more efficient use of crowded space than a private car, it ends up stuck in the same traffic jam as everyone else.

The best light rail systems avoid these pitfalls, giving trains dedicated lanes, a sensible way for customers to pay, and stations that are far enough apart that the train isn’t stopping every three blocks. But low-quality rail can have the exact same problems. ... But by the same token, it should be perfectly possible to construct bus lines that have the major virtues of light rail and just happen to run on roads rather than rails. ...

But the biggest possibility for bus transit wins requires something even more contentious than spending money—repurposing lanes. ... Far and away the cheapest way to speed the movement of people through congested space is to take some of those lanes away from cars and give them to buses. That will decrease your movement of vehicles, but increase your movement of people since buses are a much more efficient use of space.
--Matthew Yglesias, Slate, on saying no to light rail

Tuesday, August 6, 2013

Ted Koppel on how terrorism works

June 28, 2014, will mark the 100th anniversary of what is arguably the most eventful terrorist attack in history. That was the day that Gavrilo Princip, a Bosnian Serb, shot and killed the heir to the Austro-Hungarian throne.

In one of those mega-oversimplifications that journalists love and historians abhor, the murder of the Archduke Franz Ferdinand and his pregnant wife, Sophie, led directly and unavoidably to World War I. Between 1914 and 1918, 37 million soldiers and civilians were injured or killed. If there should ever be a terrorists' Hall of Fame, Gavrilo Princip will surely deserve consideration as its most effective practitioner.

Terrorism, after all, is designed to produce overreaction. It is the means by which the weak induce the powerful to inflict damage upon themselves—and al Qaeda and groups like it are surely counting on that as the centerpiece of their strategy.

It appears to be working. ...

It was only 18 months [after September 11], with the invasion of Iraq in 2003, that the U.S. began to inflict upon itself a degree of damage that no external power could have achieved. Even bin Laden must have been astounded. He had, it has been reported, hoped that the U.S. would be drawn into a ground war in Afghanistan, that graveyard to so many foreign armies. But Iraq! ...

Saddam was killed, it's true, and the world is a better place for it. What prior U.S. administrations understood, however, was Saddam's value as a regional counterweight to Iran. It is hard to look at Iraq today and find that the U.S. gained much for its sacrifices there. Nor, as we seek to untangle ourselves from Afghanistan, can U.S. achievements there be seen as much of a bargain for the price paid in blood and treasure.

At home, the U.S. has constructed an antiterrorism enterprise so immense, so costly and so inexorably interwoven with the defense establishment, police and intelligence agencies, communications systems, and with social media, travel networks and their attendant security apparatus, that the idea of downsizing, let alone disbanding such a construct, is an exercise in futility. ...

We have created an economy of fear, an industry of fear, a national psychology of fear. Al Qaeda could never have achieved that on its own. We have inflicted it on ourselves.

Over the coming years many more Americans will die in car crashes, of gunshot wounds inflicted by family members and by falling off ladders than from any attack by al Qaeda.

There is always the nightmare of terrorists acquiring and using a weapon of mass destruction. But nothing would give our terrorist enemies greater satisfaction than that we focus obsessively on that remote possibility, and restrict our lives and liberties accordingly.
--Ted Koppel, WSJ, on self-inflicted wounds

How to get dog owners to pick up after their pets

In the worldwide battle to get dog owners to clean up after their pets, enter Brunete, a middle-class suburb of Madrid fed up with dirty parks and sidewalks.

Some cities hand out steep fines. But in these tough economic times, the mayor here, Borja Gutiérrez, did not much like that idea. Instead, this town engaged a small army of volunteers to bag it, box it and send it back to its owners.

“It’s your dog, it’s your dog poop,” Mr. Gutiérrez said. “We are just returning it to you.” ...

The dog owners got their packages — white boxes bearing the seal of this town and labeled “lost and found” — within hours. ...

Delivering 147 boxes of the real stuff seems to have produced a far more lasting effect in this town of about 10,000 residents. The mayor guesses a 70 percent improvement even now, several months after the two-week campaign.

A casual inspection of the town park near City Hall seemed to support his claim. Dog owners without exception were carrying plastic bags, a sight that is still extremely rare across Spain. Most of the owners seemed to find the lost and found campaign funny. ...

The sting operation worked like this: Volunteers were instructed to watch for negligent dog owners and then to approach their dogs to pet them. After a few flattering remarks about the beauty of said dog, they asked what breed it was. Then they asked the dog’s name.

Back at City Hall, where more than 500 residents have their pets registered, that was enough information to get to an address.

No one has yet publicly admitted to receiving a package. But these days asking a dog’s name in Brunete is likely to earn you a hard look.
--Suzanne Daily, NYT, on internalizing the externality

Does plastic surgery make you more attractive?

For the study, researchers played a quick game of "Hot or Not?" They had 50 people with no expertise in plastic surgery rate the attractiveness of a group of 49 patients who had received some sort of aesthetic facial procedure, such as face-lifts, neck-lifts, or brow-lifts (all the lifts, really), on a scale of 1 to 10. Each rater saw a before or after picture of each patient, but not both. They also estimated the person’s age.

The difference between patients’ perceived age before surgery and after was 3.1 years, on average, but there was no statistically significant change in overall attractiveness ratings, meaning for the study's purposes, people were no more attractive after plastic surgery. ...

But probably the opinion that matters the most is the one of the person paying for it, and studies have shown that patients typically report high levels of satisfaction with their cosmetic procedures, and can see improvement in anxiety or depression they may have experienced before the procedure. One study from 2005 found 87 percent of patients reported being satisfied with their surgeries, and rated their own attractiveness more highly after the procedure.
--Julie Beck, The Atlantic, on the returns from plastic surgery

Recently crowned Miss Korea 2012, Kim Yu-mi, openly admitted to having gone under the knife in order to achieve her pageant-winning good looks.

After high school photos of the now 21-year-old Kim surfaced on the internet, scandal ensued. The delicate beauty is only a shadow of her former self, the images of the much younger Kim little resembling who she is today.

--Chelsea Hawkins, KoreAm, on the returns from Korean plastic surgery

Monday, August 5, 2013

NSA intercepts are used to investigate Americans, and then the government covers it up

A secretive U.S. Drug Enforcement Administration unit is funneling information from intelligence intercepts, wiretaps, informants and a massive database of telephone records to authorities across the nation to help them launch criminal investigations of Americans.

Although these cases rarely involve national security issues, documents reviewed by Reuters show that law enforcement agents have been directed to conceal how such investigations truly begin - not only from defense lawyers but also sometimes from prosecutors and judges.

The undated documents show that federal agents are trained to "recreate" the investigative trail to effectively cover up where the information originated, a practice that some experts say violates a defendant's Constitutional right to a fair trial. If defendants don't know how an investigation began, they cannot know to ask to review potential sources of exculpatory evidence - information that could reveal entrapment, mistakes or biased witnesses.

"I have never heard of anything like this at all," said Nancy Gertner, a Harvard Law School professor who served as a federal judge from 1994 to 2011. ...

"It is one thing to create special rules for national security," Gertner said. "Ordinary crime is entirely different. It sounds like they are phonying up investigations." ...

The unit of the DEA that distributes the information is called the Special Operations Division, or SOD. Two dozen partner agencies comprise the unit, including the FBI, CIA, NSA, Internal Revenue Service and the Department of Homeland Security. ...

A former federal agent in the northeastern United States who received such tips from SOD described the process. "You'd be told only, ‘Be at a certain truck stop at a certain time and look for a certain vehicle.' And so we'd alert the state police to find an excuse to stop that vehicle, and then have a drug dog search it," the agent said.

After an arrest was made, agents then pretended that their investigation began with the traffic stop, not with the SOD tip, the former agent said. The training document reviewed by Reuters refers to this process as "parallel construction." ...

One current federal prosecutor learned how agents were using SOD tips after a drug agent misled him, the prosecutor told Reuters. In a Florida drug case he was handling, the prosecutor said, a DEA agent told him the investigation of a U.S. citizen began with a tip from an informant. When the prosecutor pressed for more information, he said, a DEA supervisor intervened and revealed that the tip had actually come through the SOD and from an NSA intercept.
--John Shiffman and Kristina Cooke, Reuters, on covering up the surveillance state

Friday, August 2, 2013

Teachers who are paid like professional athletes

Kim Ki-hoon earns $4 million a year in South Korea, where he is known as a rock-star teacher—a combination of words not typically heard in the rest of the world. Mr. Kim has been teaching for over 20 years, all of them in the country's private, after-school tutoring academies, known as hagwons. Unlike most teachers across the globe, he is paid according to the demand for his skills—and he is in high demand.

Mr. Kim works about 60 hours a week teaching English, although he spends only three of those hours giving lectures. His classes are recorded on video, and the Internet has turned them into commodities, available for purchase online at the rate of $4 an hour. He spends most of his week responding to students' online requests for help, developing lesson plans and writing accompanying textbooks and workbooks (some 200 to date). ...

Sixty years ago, most South Koreans were illiterate; today, South Korean 15-year-olds rank No. 2 in the world in reading, behind Shanghai. The country now has a 93% high-school graduation rate, compared with 77% in the U.S. ...

The bulk of Mr. Kim's earnings come from the 150,000 kids who watch his lectures online each year. ... He employs 30 people to help him manage his teaching empire and runs a publishing company to produce his books. ...

To call this mere tutoring is to understate its scale and sophistication. Megastudy, the online hagwon that Mr. Kim works for, is listed on the South Korean stock exchange. (A Megastudy official confirmed Mr. Kim's annual earnings.) Nearly three of every four South Korean kids participate in the private market. In 2012, their parents spent more than $17 billion on these services. That is more than the $15 billion spent by Americans on videogames that year, according to the NPD Group, a research firm. The South Korean education market is so profitable that it attracts investments from firms like Goldman Sachs, the Carlyle Group and A.I.G.

It was thrilling to meet Mr. Kim—a teacher who earns the kind of money that professional athletes make in the U.S. An American with his ambition and abilities might have to become a banker or a lawyer, but in South Korea, he had become a teacher, and he was rich anyway.
--Amanda Ripley, WSJ, on the new teaching economies of scale. Compare with my 2009 entry, when the top teacher salary was about $2 million

Thursday, August 1, 2013

Having a parent on welfare CAUSES an increase in an adult child's likelihood of being on welfare

Strong intergenerational correlations in various types of welfare use have fueled a long standing debate over whether welfare dependency in one generation causes welfare dependency in the next generation. Some claim a culture has developed in which welfare use reinforces itself through the family, because parents on welfare provide information about the program to their children, reduce the stigma of participation, or invest differentially in child development. Others argue the determinants of poverty or poor health are correlated across generations, so that children's welfare participation is associated with, but not caused by, parental welfare use. However, there is little empirical evidence to sort out these claims. In this paper, we investigate the existence and importance of family welfare cultures in the context of Norway's disability insurance (DI) system. To overcome the challenge of correlated unobservables across generations, we take advantage of random assignment of judges to DI applicants whose cases are initially denied. Some appeal judges are systematically more lenient, which leads to random variation in the probability a parent will be allowed DI. Using this exogenous variation, we find strong evidence that welfare use in one generation causes welfare use in the next generation: when a parent is allowed DI, their adult child's participation over the next five years increases by 6 percentage points. This effect grows over time, rising to 12 percentage points after ten years. ...

Since our baseline sample consists of children who are age-eligible for DI (at least 18 years old), our estimates cannot be attributed to differential parental investments during childhood. Our results are also not driven by differential investments as young adults, since the intergenerational relationship remains strong even when we exclude children who live at home or focus on children who are least 25 years of age.
--Gordon Dahl, Andreas Kostol, and Magne Mogstad, "Family Welfare Cultures," on transmitting the culture of poverty. HT: Joachim Voth