Arnold Kling  

Bernie Saffran Memorial Conference

What the Future Holds... The Economics of Inheritance i...

I attended an economics conference held in honor of Bernard Saffran, the Swarthmore economics professor who died last November. I took away observations in three categories:

1. current research: although Steve Levitt was not there, his style of economics permeated the presentations.

2. fiscal policy and political economy: Economists across the spectrum see fiscal policy as a mess. Left-leaning economists continue to have faith in big government.

3. gossip and anecdotes

At the conference, five research papers were presented by former students of Bernie Saffran, all of whom were of more recent vintages than me. Although the topics were diverse, in each case the paper presented credible empirical results on interesting questions, some of which went beyond traditional economics. In that sense, one can say that if Steve Levitt's freakonomics did not exist, Bernie's influence on Swarthmore students would have invented it. (In hallway conversations among conference participants, Levitt was admired, but the book was considered uncharacteristically self-promoting.)

Here were the papers:

Thomas Dee tested whether allowing gay marriage reduces risky sex. His finding was affirmative. It struck me that everyone who commented or asked a question about the paper felt compelled to preface their remarks by saying, "Now, I don't really know anything about gay sex, but..."

Jeff Miron talked on "The Determinants of Crime." He argued that most economic theories of crime do not find strong empirical support (he criticized a number of Levitt papers, including the infamous claim that abortion reduced crime). He said that the overall historical pattern of violent crime in the U.S. in the twentieth century is consistent with the view that stronger enforcement of prohibition (on alcohol in the 1920's and on drugs in the 1980's) causes more crime.

Michael Greenstone looked at the effect of hazardous waste clean-ups on house prices in comparison with house prices near hazardous waste sites that were not cleaned up. He found essentially no difference, suggesting that the $30 billion Superfund had no benefit--the money could have been handed out more effectively as a cash transfer.

Christina Paxson looked at cognitive development of children in Ecuador, and the extent to which it was affected by the parents' economic status, indicators of the child's health, and parenting style as assessed by the interviewer. During the Q&A, Jeff Frankel expressed the surprise that many of us felt that a place like Ecuador would allow social scientists to design controlled experiments to test income transfer programs (this is the next phase of Paxson's research).

Paul Harrison looked at the pattern of how bond rating agencies announce downgrades to see whether the agencies appear to be influenced more by the companies that issue bonds or by the need to maintain a reputation for integrity. He found that the evidence slightly favored the latter.

The topic of fiscal policy came up at two panel discussions and during a talk by Kevin Hassett. I plan to write a longer essay summarizing my reaction to this, which will also incorporate my reaction to the discussions of political economy. The left (this being Swarthmore, they were in the majority) tended to blame the Bush tax cuts. The right (represented by Hassett) blamed Bush-era spending.

I believe that it was Joseph Stiglitz who criticized Alan Greenspan's support for tax cuts. Back in 2001, Greenspan argued that unless we cut taxes, the then-pending surpluses would retire the national debt and make monetary policy impossible. On several levels, Greenspan's argument represented horrible economics, and I believe that Greenspan deserves Stiglitz's criticism.

Otherwise, however, Stiglitz lived up to my caricature of him (reprinted in Learning Economics). Stiglitz snorted at the notion of laissez-faire, saying that the conditions of perfect markets that underly the fundamental welfare theorem are laughably implausible.

Finally, under anecdotes and gossip:

Thomas Dee recounted a conversation with Bernie where Tom recalled the conflict he felt between extending a class discussion and staying on schedule to cover the material. Bernie reportedly said "Never let the material get in the way of learning." A great line, reflecting the view that students are learning when they are active, not when they are passively listening to the teacher.

At dinner Friday night, I sat next to Anita Summers and across from Cathy Rivlin, each of whom happens to have a more-famous relative. Summers, without once mentioning his name, described how she had wanted her oldest son to go to Swarthmore. However, when he visited MIT, he decided that it would be the place for him, and it turned out to be right. She used that example to make the point that small class sizes are not necessarily best for everyone.

Summers initiated a discussion with Rivlin on the subject of balancing child-rearing and a career. I refrained from asking Summers about her Swarthmore-spurning son's views on the topic.

Comments and Sharing

CATEGORIES: Fiscal Policy

COMMENTS (4 to date)
marcus stanley writes:

It is not "Levitt-style" economics. It is the use of natural experiments in empirical econ, a movement that started in the late 1980s and early 1990s in labor economics in Cambridge (Harvard and MIT), with people like Josh Angrist, David Card, Larry Katz, Alan Krueger. Levitt was a grad student in the mid to late 1990s at Harvard, picked up on this, and was an unusually clever and talented practitioner of it. Also the first one to write a best seller.

Commenterlein writes:

I sense a wee bit of reverse causality in your left-right classification. Is it really the case that economists on the left support what you call "big government", or is it simply the case that you think of people wo advocate for a larger role of the government as being "on the left" and therefore ideologically predisposed to advocate for things you disagree with?

You may deem this a trivial disctinction, but it is definitely not. It is a general but unfortunate human tendency to quickly classify people whom one disagrees with as belonging to some social or intellectual group which one does not have to take too serious anyway. That's a concenvient way to avoid engaging the argument, but is really not much more than applied cognitive dissonnance.

Arnold Kling writes:

I think that the fact that Levitt was awarded the Clark Medal indicates that his work is highly respected by his peers.

I don't think that anyone is for "big government" just for big government's sake. People on the left tend to assume that more tax revenue will be used to increase the output of "public goods."

Some of the right-left disagreement is over what constitutes a public good--someone on the right might not consider income redistribution a public good.

That is not my objection to the left. I might be ok with income redistribution from the rich to the poor in theory. In practice, income redistribution means pulling money out of one middle-class pocket (i.e., young workers) and putting it into another's (retirees, wealthy farm-owners, administrative featherbedding in public schools, etc.).

What frustrates me about the left is their insistence that government is a public-good-producing machine in the face of evidence to the contrary. I don't base my policy preferences on the assumption of perfect markets. Why do they base their policy preferences on the assumption of perfect government?

Roger McKinney writes:

Amen on the "big gov" thing, Arnold! You're absolutely correct that people who espouse big gov are leftist. Of course, if you took a poll, no one in the country would admit to being a lefty; it's considered so sixties! And none would claim to advocate government ownership of property. But if you visit the web sites of the major socialist parties, you'll find that they recognize their lack of popularity with the masses, so they've settled for incremental advances in governmental power, all the while trumpeting their "good intentions" to help the oppressed. Scratch their surface arguments, and you'll find beneath them a hatred for capitalism and individual freedom.

Comments for this entry have been closed
Return to top