Arnold Kling  

Average vs. Marginal

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In the Milken Institute Review, Kevin Lang writes,


Is teenage motherhood one of the means by which poverty is passed from generation to generation, or are both teenage motherhood and adult poverty consequences of the same childhood disadvantages? There are no conclusive answers. But there are better answers and worse ones, and the better answers point in the same direction: Preventing a teenager who would otherwise give birth from becoming pregnant and having a child has at most a very small beneficial effect on her future.

You ask, what about the child?

When we use sociodemographic variables to determine who is similar, we find that the differences in outcomes between children with teenage mothers and children with older mothers are substantially smaller than appears to be the case based on simple averages. In general, the results still suggest that children with teenage mothers suffer some disadvantages compared to other similar children.

Richard Posner wonders whether Gary Becker has also confused average and marginal effects when talking about the value of education.

Becker marshals convincing evidence that people who have more education have on average higher earnings and that the spread has been growing. But it is a bit of a leap to conclude that there are high (and increasing) returns to education...Suppose what are increasing are not the returns to education but the returns to intelligence, and suppose that people with high IQs both enjoy education more than other people do and are more likely to be admitted to college...

Most studies find that education has a substantial effect on earnings independent of native ability, and the convergence is impressive. However, the studies are convincing mainly about the benefits of precollege education.


To me, the moral of the story is that there is no single crowbar you can use to pry open the problem of poverty. You push on more education...and almost nothing happens. You push on less teenage pregancy...and almost nothing happens. Either there is something more fundamental at work, or you need multiple crowbars.



COMMENTS (7 to date)

Multiple crowbars - I like it.

This is the dynamic nature of modernity - multiple social systems (education, economics, health services, politics, law, defense, mass media etc.) - and they are mutually dependent.

Improving education depends on economic growth, which also requires improving education - they both require rule of law and this depends on the ability to replace dysfunctional government (= democracy) and so on.

Growth in all systems comes from competition and selection - so all this is another way of saying that the long term dynamic trend requires reducing the over-arching influence of government (although government grows too).

Growth everywhere is possible, because it depends *not* on continually increasing energy inputs (the key misunderstanding of the green movement), but on continually increasing efficiency by specialization and coordination.

This is how dynamic modernity works, but it is little understood - which is why we get the state planned, single crowbar policy solutions cropping-up again and again.

Floccina writes:

The flaws in thinking that lack of schooling is a cause of poverty that more schooling can help:

1. Modern schooling has become a long test. It tests not only IQ but diligence, willingness to delay gratification and submission (primarily to parents but also to teachers). All of these attributes will help one succeed in earning money and thus arising out of poverty.

2. People tend to look at things like poverty, crime and schooling in a snapshot in time, this gives that impression that lack of schooling causes poverty and crime but if you look back at history you get a very different story.

Just to through out a radical idea for discussion:
Better drugs may be the best hope for reducing poverty and crime. Examples: Ritalin helps some people stay on task this may lead to people staying on task not just in school but thought life. Anti depression drugs could help some people avoid crime.

SheetWise writes:

Looking for causes of poverty is as silly as looking for causes of darkness. Poverty, like darkness, is a natural state.

The "cause" of darkness is a lack of light. The "cause" of poverty is a lack of wealth. To escape darkness, generate light. To escape poverty, generate wealth.

Scoop writes:

Even if neither mother nor child benefits from delayed childbirth, a five-year delay may keep the same woman from having as many children as she otherwise would have. The cycle of poverty would not be broken, true, but fewer people would be born into it.

Over the generations, it could become a massive poverty-fighting tool. If you now expect any 100 poor women to have 4 kids at an average age of 20 and for those kids to be poor, you'd have a total of 136,400 poor descendants in 100 years. If you convinced women to have 2 children at an average age of 25, you'd only have 3,000 poor descendants in a century. Big difference.

Nathan Smith writes:

Why do you say "and almost nothing happens?" Haven't poverty rates been declining?

More to the point, how do you define poverty? Illiteracy, hunger, and premature death have certainly plummeted in the past century.

Scoop writes:

My apologies. I forgot to take into account that half of all children born are men and thus do not have kids of their own. A group of 100 women who had an average of four kids at an average age of 20 would have 12,600 descendants in 100 years (if their kids continued the pattern). A group of 100 women who averaged two kids at an average age of 25 would produce 800 descendants in a century. Not quite as eye-popping as the first calculation, but a massive difference in the number of people born into a horrendous life.

Fundamentalist writes:

We can gain some insight into poverty by looking at it backswards: why do the children of rich people become middle class or poorer? Dr. Tom Stanley answers that in his books on the wealthy. He writes that 90% of wealthy parents fail to pass on their values of frugality and hard work to their children. As a result, their children consume their wealth, leaving the grandchildren with little. If the problem with the children of wealthy parents is their lack of frugality and hard work, then maybe the same could be said of poor people's children.

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