Paycheck Fairness Act is anti-womens' employment

Scheduled to come to a vote in Congress tomorrow, the Paycheck Fairness Act is a bad solution to a statistically trumped-up problem.

The most frequently cited statistic is that women earn 77 cents for every dollar a man makes. However, not all of that gap can be attributed to discrimination.

The Bureau of Labor Statistics reports that comparing male and female full-time workers, men work more hours: 8.2 versus 7.8 hours per day, on average. Just assuming an exactly even hourly rate, we'd expect women to earn 95% of men's total on a yearly basis; however, there are also more women working part-time than men, widening the gap further. Men are also disproportionately likely to die from an injury on the job, as this chart shows.

Source: US Department of Labor, Bureau of Labor Statistics, Current Population Survey, and Census of Fatal Occupational Injuries, 2012.

But put aside those statistical details. A gap in male-female wages undoubtedly remains, and some of it is probably due to gender-bias and discrimination. What does the Paycheck Fairness Act do to fix that?

The Act would strengthen the Equal Pay Act of 1963, which already requires similar workers be paid the same. The new legislation would expand the damages that women can claim in court, and give women more tools to sue their employers if discrimination is suspected.

The new law would result in effectively unlimited liability for a business sued for giving unequal pay. Put yourself in the shoes of a small business owner. Suppose you are considering hiring either a male or female employee for an entry-level position. Suddenly knowing that your business could be shut down if a court decides your payment to the woman is unfair, who would you be more inclined to hire?

Let's think of another group that has been "protected" by sweeping federal legislation. Persons with physical disabilities are given additional tort resources by the Americans with Disabilities Act if it's found that they were treated unfairly. A paper by Acemoglu and Angrist (2001), using reliable econometric techniques, found that employment of disabled people dropped substantially following the ADA's passage. Now, twenty years later, physically disabled persons are unemployed at record levels.

There are obvious weaknesses in the analogy between the Paycheck Fairness Act and Americans with Disabilities Act - women are a larger segment of the population, and aren't physically limited from doing most jobs - but a lesson remains. Creating new protected classes of workers is not always to that group's overall benefit.

Even well-intentioned laws may end up punishing businesses for hiring certain workers, which hurts both individuals and the economy as a whole. The Paycheck Fairness Act is almost certainly dead in the water; even without passage, its political purpose will have been achieved. But, if President Obama and the Democrats want to show they are helping women, a first step is to not shut them out of the labor market.

Zoos and Endangered Species -- trade-offs in everything

Take a look at this article by Leslie Kaufman for the New York Times, "Zoos’ Bitter Choice: To Save Some Species, Letting Others Die." An excerpt:

As the number of species at risk of extinction soars, zoos are increasingly being called upon to rescue and sustain animals, and not just for marquee breeds like pandas and rhinos but also for all manner of mammals, frogs, birds and insects whose populations are suddenly crashing.
To conserve animals effectively, however, zoo officials have concluded that they must winnow species in their care and devote more resources to a chosen few. The result is that zookeepers, usually animal lovers to the core, are increasingly being pressed into making cold calculations about which animals are the most crucial to save. Some days, the burden feels less like Noah building an ark and more like Schindler making a list.

A core dilemma is whether zoos should be more focused on entertainment, which people are more willing to pay for, or on preserving biological diversity for the "public good."

In some cases, it seems like advocates in the latter camp are more concerned with shaping public preferences than responding to them. The article continues:

Zoos are essentially given a menu of endangered species that the association is trying to maintain and can then choose according to their particular needs. But final decisions are often as much about heart as logic.
St. Louis, for example, has committed $20 million — or the equivalent of 40 percent of its annual operating budget — to building an enormous exhibit for polar bears — complete with a fake ice floe — even though its last polar bear died in 2009 and the Marine Mammal Protection Act makes it illegal to remove or rescue the bears from the wild. The zoo hopes that in the five years needed to open the exhibit, it can argue for an exemption, import orphaned bears from Canada or perhaps secure the cubs of captive bears.
Dr. Bonner acknowledges that the polar bear project runs counter to many of his more practical convictions on the role of the modern zoo. He has insisted that his keepers spend what limited field conservation dollars they raise on threatened animals that are most likely to make a comeback in the wild. With sea ice disappearing at an alarming rate, polar bears do not fit the profile.
But he justifies the exemption as a lesson for zoo visitors: “I want people to see this beautiful creature and ask, ‘How could we have let this happen?’ ”

Personally, if I went to a public zoo and saw nearly half of its operating budget spent on an object lesson in how difficult it is to preserve polar bears, collective guilt over habitat loss would not be the first thought to cross my mind.

There is a valid argument to be made for preserving biological diversity. Fear of a catastrophic breakdown, expressed through a variety of vivid analogies, is one of the more popular arguments, although perhaps one of the less valid. This "invisible threshold" argument has become a rationale for preserving species within even the most marginal ecological niches.

Several large buckets of dirt are now home to the threatened American burying beetle, so named because it buries the corpses of small animals, like birds and squirrels, and lays its eggs around them. Once, the beetles, with their brilliant red markings, ranged over 35 states. By the time the United States Fish and Wildlife Service listed them as endangered in 1989, there was one known population left, in Rhode Island.
At the government’s behest, the St. Louis Zoo, in conjunction with a zoo in Rhode Island, has been successfully breeding them and returning them to the wild.
Mr. Merz says the effort was worthwhile because the beetle might play an irreplaceable role in the ecological web. He considers picking species worth saving akin to life-or-death gambling. “It is like looking out the window of an airplane and seeing the rivets in the wing,” he said. “You can probably lose a few, but you don’t know how many, and you really don’t want to find out.”

One has to wonder, if burying beetles and partula snails are so crucial to the ecosystem, why are they only surviving in the back closet of a zoo? The burying beetle has functionally vanished from the North American ecosystem for over twenty years. Why haven't we seen any consequences yet?

Of course maybe this is just one more "rivet in the airplane's wing", the loss of which pushes us imperceptibly closer to global disaster. But, when you have to compare the costs of saving potentially millions of different endangered species, it helps to have an idea of the probabilities, rather than saying they are all equally unknown and potentially deadly.

What is the chance that any one particular species is completely irreplaceable? It is incumbent on the defenders of biodiversity to make these estimations, instead of demanding that every species must be saved, regardless of the cost. Even zoo-keepers can't live up to such an unattainable goal.

Fish and Game Dept. targets Asian Supermarket - Flawed Economics in Action

A daring sting operation has brought down another set of dangerous criminals in our midst. The proprietors of Great Wall supermarket (located about 20 minutes from where I live) have been arrested for selling "wild" sea animals including live frogs, crayfish, turtles, eels, and more. The store owners say that all of their stock comes from farmed sources, but that does not appear to be convincing the crusading Commonwealth bureaucrats.

Officer Rich Landers, of the Virginia Department of Game and Inland Fisheries, had this to say:

“History has show when wildlife becomes commercialized, the population dwindles,” Landers said. “Whether it’s elephant tusks or whales, we are trying to reduce the chances that wildlife becomes commercialized.”

Lets take a moment and think of a heavily commercialized animal population, like cows. We may have another disaster on our hands: the cow population is down to the lowest level since 1958, with only 92.6 million in the United States! An estimated 25 million cows are slaughtered each year. That means that in less than four years, there won't be any cows left in the United States. Savor your steaks while you can!

See what's wrong with this story? While commercialization allows animals to be consumed, it also creates strong incentives to rebuild the population for future consumption as well. That's why the decline in the cow population has been in response to reduced profitability of cattle ranching... not an ecological shortfall. Why would this be any different for farmed eels, turtles, or fish?

The historical examples that Landers uses are all cases where no one had ownership rights over the stock of animals being hunted, and therefore no reason to maintain sustainable population levels. That is clearly not the case here when we are discussing farmed seafood.

If anything, the proprietors of Great Wall should be applauded, for meeting consumer demand for uncommon (by American standards) foodstuffs. That way, Asian families can eat farmed eels etc. and do not have to catch them wild or import from abroad, potentially bringing exotic animal diseases to afflict U.S. ecosystems.

I won't go so far as to accuse the Department of Game and Inland Fisheries of racism or xenophobia, as I'm sure they'd be just as happy to apply their short-sighted and fallacious brand of reasoning to a predominantly-American grocery store as well. But, charging honest business owners with felonies, for selling live turtles and bass, does not inspire much confidence in either the agency's competence or its underlying motives.

Light bulbs and implied discount rates

What does your choice in light bulbs say about your attitude toward the future? In terms of discount rates, quite a lot.

An incandescent 60W bulb costs around 50 cents to buy, while a 15W CFL costs about $9. The government estimates that an incandescent bulb will cost $4.80 in electricity annually, while the CFL will cost $1.20 if used an equal amount.

Assuming a five year time span - roughly how long a CFL bulb is expected to last, and during which a new incandescent bulb will have to be purchased every year - if you just add up the costs, the incandescent will cost $12 more. Why would anyone buy an incandescent bulb? The answer is time preference.

Plugging the numbers above into Excel and using "Goal Seek" finds an implied discount rate of 39%. That is, someone would have to value one dollar a year from now 39 cents less than a dollar today in order to be indifferent between an incandescent and CFL light bulb.

People discount the future when making decisions, and the discount rate is not always consistent between all activities. Few people would want to pay a 39% rate on a credit card, but some are willing to do the equivalent when the cost is on the electric bill instead of the credit report.

There are a number of other potential explanations: maybe some renters don't expect to stay a full five years or have electricity included with the rent; some consumers might be cash-constrained and can't afford the pricey bulbs; or there could be some cognitive bias or plain lack of information about electricity costs. But, given the plenitude of "green" or energy conservation campaigns and general worry about global warming, behavioral factors might also push in the other direction.

If varying discount rates are distributed throughout the population, there may be enough people in the "tail" - with extremely high discount rates - to keep incandescent bulbs on the shelves for some time to come.

Productivity is bad for job growth?

Scanning the news feed for something worthy of being shared with Twitter, I happened across this good news/bad news article from USA Today: Unemployment benefit claims, worker productivity fall. Less benefit claims is a sign that more people are going back to work, although drops in productivity temper optimism about the speed of economic recovery.

Instead, apparently the author of this piece took it be good news/good news, claiming

Weaker productivity growth can help boost hiring if economic growth picks up.

This argument is motivated by the lump of labor fallacy (the idea that there are only so many jobs to be done, so higher productivity will leave more out of work) and a preoccupation with firms as purveyors of jobs rather than producers of products. Both of these ideas are largely discredited among economists.

In reality, productivity growth is the driving factor behind economic expansion. For economic growth to pick up, we need the inputs of production (labor, capital, etc.) to become more productive, not slow down! This allows us to both become richer and create more jobs as a society.

At the micro-level, theory predicts that a firm will not pay a worker more than their marginal product; i.e. if a machinist can produce $50 worth of goods in an hour, a company that pays him/her $51 per hour will be losing money. USA Today misses the irony when going on to claim

consumers have been weighed down by wages that haven't kept pace with inflation.

If that is occurring, it's because worker productivity hasn't kept pace with other factors in the economy. This argument is made in more detail by several recent books: Race Against the Machine by Erik Brynjolfsson and Andrew McAfee, and The Great Stagnation by Tyler Cowen both explore the phenomenon of declining worker productivity, and neither are excited about that decline as a source of new jobs.

Lower productivity means reduced living standards for future Americans. It doesn't even rise to the level of a placebo for our current unemployment woes; generally, placebos are expected to do nothing, not make the problem worse.

Paper books are a depreciating asset

...at least for a grad student.

Why? Any time I move, I have to pay to transport them. Shipping fees aren't cheap, plus packing and carrying books is a lot of work. Given that I will definitely be leaving Fairfax after graduating (cost of living is too high to stay permanently) and will likely end up moving several times after that before settling down, that's a lot of money and effort that might go into lugging paper around with me.

At first, I was hesitant about e-books. The feel of a good book in the hands is hard to replace. But, a Kindle (or other e-reader) with a cheap cover is a decent imitation, and a lot more convenient. The only real downside is inability to re-sell the book when I'm done reading.

Basically, it's time to go digital.

My new policy is to only buy paper books when (a) there's a chance I might be able to sell it later for a decent amount of cash, as is the case with a textbook or (b) the paper copy is much, much cheaper than the electronic version.

It'll be a few years before I'm moving again, but there's no time like the present to start downsizing (just don't take me out of context on that line). Right now I have around a hundred books and several years worth of National Geographic magazine. It's a paltry collection compared to some of my professors, but still more than the average person needs.

The punchline: if you want any of my books, I'll sell them cheap. Check out My Bookcase and make an offer. Even if it's low, I won't be insulted - cover the cost of shipping plus a little bit more and I'm satisfied. If you're already settled in and won't be moving soon, or don't find hauling paper to be as much of a hassle as me, then an exchange can make us both happy!

Shirking, Malingering, and other Unpopular Terms regarding the American labor force

So, the title might be overly sensational.

For an outside observer, finding measures of low conscientiousness on the job (shirking) or active deception to evade work (malingering) is a bit of a challenge, because workers have an incentive to conceal that sort of activity.

This rough study addresses worker injury on the job and attempts to determine whether outside incentives motivate changes in sick time and injury rates. Using some unsophisticated econometric techniques, surprising results are found. Surprising if you think unemployment levels and interest rates will not influence worker absences, anyway.

The paper:

Don't recycle your green glass, plastic or paper. That's right, trash it for the planet.

Recently in the news, the Mayor of New York expanded the state's recycling program to encompass more plastics; supposedly, this will divert 8,000 tons of plastic from landfills each year. My question is, what's so bad about throwing garbage in the trash?

With all our trash in the Dakotas, as it should be.

Maybe this makes sense to New Yorkers -- their state did birth the "trash crisis" myth which has followed American politics home like a stinky dog. However, recycling has remained a national craze, even though landfills are generally cheap and available across the country. Fun fact: If all American trash were brought to one huge landfill, and "you keep filling up this landfill for 100 years, and if you assume that during this time the populations of the United States doubles, then the landfill will cover about 160,000 acres, or 250 or so square miles, with trash 400 feet deep." Source. That may seem like a lot, so to put it in perspective, see the attached diagram which compares the 3,717,813 square miles of the lower 48 to this hypothetical landfill. Doesn't look so big now, does it?

Recycling colored glass, paper and plastic isn't just unnecessary; it's also inefficient. Let's count the ways: