DESCRIPTION
|
WAGE RATE EX ANTE
|
WAGE RATE EX POST*
|
HOURS WORKED
|
INCOME
|
A Talented, lucky, hard-working
|
100
|
150
|
40
|
6,000
|
B Talented, unlucky, hard-working
|
100
|
50
|
40
|
2,000
|
C Talented, lucky, lazy
|
100
|
150
|
4
|
600
|
D Talented, unlucky, lazy
|
100
|
50
|
4
|
200
|
E Low-talent, lucky, hard-working
|
10
|
15
|
40
|
600
|
F Low-talent, unlucky, hard-working
|
10
|
5
|
40
|
200
|
G Low-talent, lucky, lazy
|
10
|
15
|
4
|
60
|
H Low-talent, unlucky, lazy
|
10
|
5
|
4
|
20
|
Category Archives: Default
Progress on literature book
The current working title, which could change again, is Literature and Inequality: Nine Perspectives from the Age of Napoleon Through the First Gilded Age.
An earlier draft was 110,000 words. It’s now down to less than 92,000 words. I think a key reason that it was previously longer was that my writing in what was a new area for me caused me initially to be a bit too prolix, just as early-career academics can sometimes be. I feel that I’ve been able to add discipline and focus. And there are certainly, at a minimum, some well-written bits, if I do say so myself.
I really had to teach myself a new genre in doing this, without much in the way of role models. And at some point I’ll have to ask myself the question: Do I now do this again by writing Part 2? (1920s through the present.) It’s hard to imagine now feeling sufficiently motivated, as it wouldn’t be an easy project to plan, research, and write. But never say never.
My current next project, other than finalizing my recently posted draft on digital services taxes et al, is to write a short (50,000 to 60,000 word) sequel to my earlier book on international tax policy. I think there’s room for and a point to writing such a book, and it’s also way easier than writing a literature book sequel. It would also probably have a higher floor, albeit a lower ceiling, on public success than writing a literature book sequel.
Sufficient public success of the literature book would certainly push me towards greater likelihood of writing its sequel. But I know from this biz (and from books by friends that have fallen short commercially of meeting their perhaps too-high hopes and expectations) that breaking through isn’t easy.
NYU Tax Policy Colloquium, week 9 – paper by John Friedman on colleges and intergenerational mobility
Friedman et al have access to data (not to put it passively – they’ve done a great deal of work to create usable data) that permits them to link (1) college admissions, (2) the applicants’ parental / household income, (3) the applicants’ test scores, (4) where they ended up going to college, and (5) their labor income (for people born in 1980-82) thirty to thirty-two years out.
The U.S. is a big country, so there’s a lot of information here that can be analyzed in various ways. For example, they can look at such questions as how people with different parental incomes and the same test scores differentially attended colleges in particular tiers, how people with the same parental incomes and test scores but who went to colleges in different tiers ended up doing in the labor market at age 30 to 32, etc.
A lot of interesting information can come out of this. For example, what sort of “value add” if any do top tier schools appear to have, in terms of subsequent labor income? Are colleges differentially picking more high income, middle income, or low income students with the same test scores? Do kids from lower income households but with good test scores end up doing better or worse in the labor market than peers from higher income households, if they go to the same schools or to different tier schools? Etcetera; you can add your own questions to this as you like.
Without reporting here on any preliminary results, let me say this. If high-tier colleges have significant value-add, as defined above, and this value-add applies to both lower-income and higher-income applicants, then they have the power to increase intergenerational mobility by tilting towards the lower income in admissions, or to reduce it by tilting towards the higher income. From a structural standpoint, they may have a lot of incentives to do the latter – that is, to offer what is in effect affirmative action for the rich, not limited to “legacies” (children of alums) or to athletes in the specialized types of sports that tend to require rich parents. That would be very unfortunate, as it would mean they were both reducing intergenerational mobility relative to the case where they were neutrally meritocratic (defining meritocracy as rewarding high test scores), and also increasing income segregation at high-tier colleges relative to what would happen if they neutrally applied such a benchmark. We will have to wait and see what the data shows, when final versions of the papers are released.
Suppose top tier colleges have a significant value-add but fewer slots than there are qualified applicants who could take advantage of it. Then there would be an analogy between top tier college admission and allocating scarce kidneys or livers to sick people in acute care wards. In each case:
1) There are more people who could derive full benefit from the scarce resource (restored health, or higher career earnings) than there are available resources. The winners will therefore discontinuously be better-off than the losers, as between people who could have made comparably productive use of the scarce resource.
2) We may be reluctant to allow use of the price mechanism to allocate the scarce resource. We don’t put kidneys and livers up to auction so the richest people will get them all. In college admissions, there is obviously more opportunity for the price mechanism to operate, but we may tend not to like the idea of allowing rich kids to buy more slots by having their parents pay more.
To the extent that use of the price mechanism to allocate the scarce resources is restricted, other metrics are going to have to be used. In the case of college admissions, a strong argument could be made for favoring lower-income over higher-income applicants with close or similar test scores, especially if it’s shown that the former can at least comparably benefit from the value-add. Specifically, there are two positive externalities to keep in mind. The first is reducing income segregation in top schools, so that richer, middle, and poorer kids mingle more than they would under a caste-like system. The second is increasing intergenerational income mobility, which may have broader social benefits, again in reducing the extent to which we have a hereditary caste system in our society.
If richer kids with the same test scores were disfavored, they could make arguments based on meritocratic desert to the effect that they were being treated unfairly. But this might be at least partly rebutted by noting the advantages they may have had, such as greater tutoring, in getting the same test scores.
If intergenerational mobility is low enough, we also know that it’s unlikely to be as truly meritocratic as it appears to be. Income-earning “ability” seems unlikely to be sufficiently inheritable that there wouldn’t be more movement up and down, in a legitimately meritocratic process, than we appear to be observing lately.
But of course, while mobility sounds good as an aim (and is good, if we dislike hereditary castes), it does mean people are moving down as well as up. Those who move down, or see their kids moving down, are not going to be made happy by it. And if they’re powerful, they may be likely to resist.
I suspect that very wealthy people are more determined to ensure that their kids be the most successful ones in the next generation, whether meritocratically or not, than they are to avoid, say, paying wealth taxes. So the political playout of college admissions over time could end up being interesting and fraught.
Strange musical dream last night
I know the notes, but would need a piano to identify them. I don’t remember the lead melody, if indeed there was one. And again it was fluid whether I was watching or participating. But anyway then the alarm went off.
Certainly better than dreaming about current U.S. politics.
NYU Tax Policy Colloquium, week 8 – paper by Oei and Ring
The particular angle they explore here is that technological shifts may reduce the “fall-short spaces” that people have long had as a practical matter. Here’s an example that I find convenient for purposes of thinking about what they have in mind, although it isn’t actually mentioned in the paper. In New York, jaywalking, while illegal, is the norm. This isn’t rulelessness – there is a rule, although not everyone always follows it. The rule is that a red light is a yield sign. (I would say check-and-yield, but given how bicyclists operate in NYC you must always check in all directions even if the light is in your favor, and indeed even if you’re crossing a one-way street in which no one is coming from the mandated direction.)
This is more than just a fall-short space, in the sense that New Yorkers jaywalk right in front of police who don’t enforce the rule. But suppose that – at least in places where jaywalking violates norms as well as laws – there were facial recognition cameras at every corner, so that if you jaywalked you’d get a ticket, levying a fine, by mail (just as can happen when you go through a toll plaza without EZ Pass, & they photograph your license plate).
The issue that would arise then isn’t (mainly) that people would be getting fined all the time. Rather, they would stop jaywalking, which would be somewhat good and somewhat bad. (The NYC norm for jaywalking is superior to the blind-obedience norm when properly executed by everyone, but it also invites greater, and potentially costly, errors in applying it.) Plus, we would have the other issues around cameras everywhere telling whomever had access to the footage where one was going all the time.
One could enrich this little example’s capacity to stand in for the broader set of problems that the paper discusses by adding in discriminatory enforcement. E.g., suppose Attorney General Barr gets to decide who does and doesn’t get a jaywalking ticket.
The paper has laudably broad ambitions, which combine devising a general compendium of issues and categories, with offering a couple of broad takeaways, e.g., (1) space to “fall short” of honoring all of the legal commands one faces is shrinking and this isn’t all good, (2) more sophisticated and well-financed players will be especially well-equipped to take advantage of new high-data environments (although that’s also likely to be true in other environments). I look forward to seeing the final version.
Most wanted
Based on character and propensity evidence that might not be admissible in a court of law, here is our chief suspect: Gary, aka the Silly Bandit.
I’d say: Butter wouldn’t melt in his mouth, except I’m fairly confident that it would.
Talk at University of Toronto Law School on my new international tax paper
The slides are available here. I’ll soon be posting a revised version of the paper on SSRN; the currently posted version is a bit out of date.
It was very nice seeing the folks there. But if you do enough travel, you have to take the rough with the smooth occasionally. Yesterday’s fun was having a flight delay of nearly 2 hours when I had only 90 or so minutes of margin built in (due to the previous day’s tax policy colloquium at NYU). By running through the airport etc. I managed to get there only 10 to 15 minutes late.
Today was almost even more fun, as the person at the hotel front desk simply forgot to make the wake-up call that they had in their book. Since it was at 4:45 am, the omission could have been rather consequential, had I not also set my phone.
Tax policy colloquium, week 7: Zach Liscow, part 2
Either way, they’re still a .500 team over the long run. But they’re one game ahead if he gets a game-winning hit, relative to the case where he makes the third out. And there’s no particular reason to think that this will be automatically offset. A win today doesn’t, at least inherently, make a loss tomorrow more likely than it would otherwise have been.
Tax policy colloquium week 7: Zach Liscow paper, part 1
NYU Tax Policy Colloquium, week 6: Katherine Pratt’s “The Curious State of Tax Deductions for Fertility Treatment Costs”
Let’s switch from statutory interpretation to policy – since, whether Morrissey is right or wrong as to the former, rejecting it as to the latter would call for legal change. I would argue that there is a compelling case for mandatory government-provided insurance coverage for ART for dysfertility, as well as infertility.
This obviously starts from mid-conversation, so far as government-provided health insurance coverage is concerned. I state it as generally as that to extend the sphere past income tax deductions for medical expenses to the realm of Medicare, Medicaid, single-payer, the mandated scope of universal health insurance coverage, etcetera.
I’d put the starting point for the argument as follows. From behind the veil regarding one’s own particular identity within our society, one should recognize that it’s very common to have a very strong desire for a biological child, or as close to it as possible, as a joint project with one’s partner . One should further recognize that, again from behind the veil, one doesn’t know whether one will be one of the people for whom this turns out to be relatively easy – i.e., a fertile heterosexual individual with a fertile heterosexual partner. From this perspective, both infertility and dysfertility are risks – partly converted by modern technology into financial risks, insofar as one can pay a lot of money for workarounds that did not always exist – against which it is rational to want to insure.
But why mandatory government insurance? This requires a market failure that the government can address better than private insurance firms. The most obviously relevant one here is adverse selection – widely recognized now as a key reason for favoring government provision in the healthcare arena, whether it be via the current ramshackle U.S. methods, single payer, or something else. It’s very plausible that the government’s superior ability to address adverse selection with respect to dysfertility – the risk of which gets affected by knowing one’s own sexual orientation and partner preferences – creates a strong enough case to support the intervention.
The other classic issue in government vs. private insurance analyses is moral hazard. Here there is a difference as well. From the perspective of a private insurer, moral hazard is at work if people use ART coverage to do things that they wouldn’t have done if forced to bear the full freight financially. But for the government this is not so clear. To a benign government, it’s not just financial “waste” if motivated prospective parents get to have children with a particular desired relationship to themselves. (Yes, the fate of children in need of adoption is also part of the larger policy picture, but it’s not clear that shutting off other routes to raising a child is part of the optimal response to that.)
2) Beyond dysfertility? – What about ART expenses incurred, say, by heterosexual couples that are neither infertile nor dysfertile? An administrative advantage of not requiring infertility or dysfertility is that one need not demand an inquiry into either when people incurred ART expenses. But this admittedly would come at a fiscal cost that would raise issues of moral hazard, insofar as one thinks these expenses might have been incurred out of a preference for neither going through pregnancy (even when feasible) nor adopting. But I’d be inclined to say the expenses should be covered even without either infertility or dysfertility. Going through pregnancy is a pretty huge thing, with significant potential health costs, impact on one’s career and long-term earnings, etc. But I am leaving aside here questions of whether we are uneasy (e.g., for Handmaid’s Tale-type reasons) about the extent to which surrogacy becomes a go-to. These are certainly beyond the scope of my expertise.
3) Why run ART expenses through section 213? – As a long literature discusses, income tax deductions for medical expenses are a bizarre way to increase overall government health insurance coverage, relative to what it would be if one simply repealed the provision without changing anything else in the legal and policy landscape. Medical deductions come with an adjusted gross-income related deductible, followed by a marginal tax rate-related co-pay, without its being obvious why this form of government insurance is being interacted with the income tax’s general provision of ability insurance / under-diversified human capital insurance.
Even taking the use of section 213 as given, I suppose one might want to treat ART and adoption expenses in the same bucket, although to really do this right one might also want to throw in the marginal healthcare expenses that result from being pregnant, if these could be separately identified. And conceivably one would treat things in this bucket differently than other stuff, just as a well-designed health insurance schemes might vary the deductible, the co-pay, the cap if any on covered outlays, etc., based on the characteristics of particular areas.
4) The paper’s proposed solution – Rather than discussing statutory changes that might directly address ART expenses, the paper proposes modifying section 213 in more general terms, so that it focuses on “inherently medical services” and on allowing taxpayers to “restore or approximate typical human functioning.” This raises further interesting issues, although I won’t explore them here, regarding, for example, the technology-driven rise of “inherently medical” procedures that might allow people to go way above the median (a la the use of human growth hormone by someone of average height who wants to become 6’5″).