India’s long road to prosperity, by Martin Wolf
Martin Wolf is impressed by an analysis of what the world’s largest democracy must do in order to thriveFinancial Times, May 24, 2017
https://www.ft.com/content/d5cf8bb0-3fc3-11e7-9d56-25f963e998b2
India could do far better. That, in a sentence, is the conclusion of Vijay Joshi’s superb book. Joshi is an Indian economist who has spent most of his professional life at Oxford university. In this penetrating account of the past and present of Indian economic development, he casts a bright light on the prospects ahead. If India’s aim is to become a high-income country in the next generation, its economic, social and political performance needs to improve dramatically.
The good news is that there is room for improvement on many fronts. The bad news is that the obstacles to the needed improvement are huge. Worse, many emanate from the failures of the state and the political processes that guide it. Yet, as Joshi also notes, “The two fixed points in the socio-political setting of the Indian state’s development policies are that the country is a democracy, and an extremely diverse society.” The challenge is to improve performance within the constraints of these realities.
The success of Indian development matters, for at least three reasons: India will soon be the most populous country in the world; it is already far and away the largest democracy; and, above all, despite progress in the last three decades, between 270m and 360m Indians still lived in dire poverty (on slightly different definitions) in 2011 (that is, between 22 and 30 per cent of the population). If extreme poverty is to be eliminated from the world, it must be eliminated in India.
While the focus of India’s Long Road is on the economy, its analysis is appropriately comprehensive. It considers the post-independence growth record, the failure to create remunerative employment, the excessive role of publicly owned enterprises, the poor quality of Indian infrastructure and the inadequacy of environmental regulation. The book also analyses the successes and failures of macroeconomic management, the appalling quality of government-provided education and healthcare, the need for a better safety net for the poor, the long-term decay of the state, the prevalence of corruption and the role of India in the world economy.
In covering all these issues, Joshi combines enthusiastic engagement with the detachment of a scholar who has passed much of his life abroad. No better guide to India’s contemporary economy exists.
Over the past 70 years, India’s growth has shown two marked accelerations. The first followed independence in 1947. The second followed the economic liberalisation that began in the 1980s and accelerated dramatically after the balance of payments crisis of 1991. In the first period, growth averaged 3.5 per cent a year. In the second, it rose to 6 per cent (4 per cent per head). Unfortunately, after a further acceleration in the first decade of the 2000s, growth has slowed once again. The principal explanation for this recent slowdown is a marked weakening of investment by an over-indebted private sector.
"Joshi argues that India could provide a basic income to all by diverting resources wasted on subsidies"
So what should be the goal for the decades ahead? Joshi describes it simply as “rapid, inclusive, stable, and sustainable growth . . . within a political framework of liberal democracy”. More precisely, if incomes per head could grow at 7 per cent a year, India would achieve high-income status, at the level of Portugal, within a quarter of a century.
Only three economies have achieved something close to this in the past: Taiwan, South Korea and China. It represents an enormous challenge that cannot be met with the current “partial reform model”. The basic flaw of that model, argues Joshi, “is a failure to put the role of the state, and the relation between the state, the market, and the private sector, on the right footing”. The state, in brief, does what it does not need to do and fails to do what it does need to do.
It is no longer enough for the state merely to get out of the way, important though that still is in crucial areas. Among these is the labour market, whose huge distortions and inefficiencies have turned the demographic dividend into a demographic disaster.
Thus, in the 10 years from 1999 to 2009, India’s workforce increased by 63m. “Of these, 44 million joined the unorganized sector, 22 million became informal workers in the organized sector, and the number of formal workers in the organized sector fell by 3 million.” This is a social catastrophe. It is due not only to labour-market distortions, but to a host of constraints on the creation, operation and, not least, closure of organised and large-scale businesses.
Yet India also needs an effective state able to supply the public goods, public services and competent regulation on which an efficient economy depends. Unfortunately, that is not what now exists. All international surveys give India a very low rank for the efficiency and honesty of the state and the ease of doing business. Joshi argues that while the economy is more dynamic and the quality of policy has indeed improved since the 1980s, the quality of the state has deteriorated in many respects.
Among the many failures is the waste of state resources on inefficient subsidies that, though often given in the name of the poor, actually go to the better off. Indeed, one of the most original and persuasive aspects of the book is the argument that it would in principle be possible to provide a basic income to all Indians sufficient to lift everybody out of extreme poverty merely by diverting resources wasted on grotesquely costly subsidies. Yet, to take just one example, state governments continue to bribe farmers with free power, at the expense of a reliable electricity supply.
Will prime minister Narendra Modi be the new broom that sweeps all these cobwebs away? Alas no. His government’s performance is “mixed at best”. It has some achievements. But it has shown insufficient energy in tackling both the immediate problems of inadequate private investment, excessive debt and feeble banks, and the longer-term problems of dreadful education, lousy healthcare, weak infrastructure, corruption, regulatory incompetence, excessive interference and government waste.
A great opportunity for radically improved performance is being missed. This is not bad just for the Indian economy. There is a real danger that if the economy fails to perform as needed and desired, the governing Bharatiya Janata party will find itself increasingly attracted to its “dark side” of communal and caste division. That way lies not just economic failure, but possibly the destabilisation of Indian democracy, one of the great political achievements of the post-second world war era.
Those who care about the future of this remarkable country and indeed the future of democracy itself must hope that Modi gets this right. If they want to understand what he needs to do and why, they should first read this book.
India’s Long Road: The Search for Prosperity, by Vijay Joshi, Oxford University Press, RRP£22.99, 360 pages
Martin Wolf is the FT’s chief economics commentator
Saturday, June 3, 2017
Determinants of financial outcomes and choices: the role of noncognitive abilities
Understanding the determinants of financial outcomes and choices: the
role of noncognitive abilities, Gianpaolo Parise and Kim Peijnenburg
BIS Working Papers No 640. May 2017
http://www.bis.org/publ/work64
We explore how financial distress and choices are affected by noncognitive abilities. Our measures stem from research in psychology and economics. In a representative panel of households, we find that people in the bottom decile of noncognitive abilities are five times more likely to experience financial distress compared to those in the top decile. Relatedly, individuals with lower noncognitive abilities make financial choices that increase their likelihood of distress: They are less likely to plan for retirement and save, and more likely to buy impulsively and to have unsecured debt. Causality is shown using childhood trauma as an instrument.
BIS Working Papers No 640. May 2017
http://www.bis.org/publ/work64
We explore how financial distress and choices are affected by noncognitive abilities. Our measures stem from research in psychology and economics. In a representative panel of households, we find that people in the bottom decile of noncognitive abilities are five times more likely to experience financial distress compared to those in the top decile. Relatedly, individuals with lower noncognitive abilities make financial choices that increase their likelihood of distress: They are less likely to plan for retirement and save, and more likely to buy impulsively and to have unsecured debt. Causality is shown using childhood trauma as an instrument.
Our social evaluation of other people is influenced by their faces and their voices. How?
Audiovisual Integration in Social Evaluation. By Mila Mileva et al.
Journal of Experimental Psychology: Human Perception and Performance, in press
http://eprints.whiterose.ac.uk
Abstract: Our social evaluation of other people is influenced by their faces and their voices. However, rather little is known about how these channels combine in forming “first impressions.” Over 5 experiments, we investigate the relative contributions of facial and vocal information for social judgments: dominance and trustworthiness. The experiments manipulate each of these sources of information within-person, combining faces and voices giving rise to different social attributions. We report that vocal pitch is a reliable source of information for judgments of dominance (Study 1), but not trustworthiness (Study 4). Faces and voices make reliable, but independent, contributions to social evaluation. However, voices have the larger influence in judgments of dominance (Study 2), whereas faces have the larger influence in judgments of trustworthiness (Study 5). The independent contribution of the 2 sources appears to be mandatory, as instructions to ignore 1 channel do not eliminate its influence (Study 3). Our results show that information contained in both the face and the voice contributes to first impression formation. This combination is, to some degree, outside conscious control, and the weighting of channel contribution varies according the trait being perceived.
Keywords: First impressions; social evaluation; audio-visual integration; faces; voices
Journal of Experimental Psychology: Human Perception and Performance, in press
http://eprints.whiterose.ac.uk
Abstract: Our social evaluation of other people is influenced by their faces and their voices. However, rather little is known about how these channels combine in forming “first impressions.” Over 5 experiments, we investigate the relative contributions of facial and vocal information for social judgments: dominance and trustworthiness. The experiments manipulate each of these sources of information within-person, combining faces and voices giving rise to different social attributions. We report that vocal pitch is a reliable source of information for judgments of dominance (Study 1), but not trustworthiness (Study 4). Faces and voices make reliable, but independent, contributions to social evaluation. However, voices have the larger influence in judgments of dominance (Study 2), whereas faces have the larger influence in judgments of trustworthiness (Study 5). The independent contribution of the 2 sources appears to be mandatory, as instructions to ignore 1 channel do not eliminate its influence (Study 3). Our results show that information contained in both the face and the voice contributes to first impression formation. This combination is, to some degree, outside conscious control, and the weighting of channel contribution varies according the trait being perceived.
Keywords: First impressions; social evaluation; audio-visual integration; faces; voices
Independent of concealment frequency, frequency of mind-wandering to own secrets predicts lower well-being
J Pers Soc Psychol. 2017 May 8. doi: 10.1037/pspa0000085. [Epub ahead of print]
The Experience of Secrecy.
Abstract
The
concept of secrecy calls to mind a dyadic interaction: one person
hiding a secret from another during a conversation or social
interaction. The current work, however, demonstrates that this aspect of
secrecy is rather rare. Taking a broader view of secrecy as the intent
to conceal information, which only sometimes necessitates concealment,
yields a new psychology of secrecy. Ten studies demonstrate the secrets
people have, what it is like to have a secret, and what about secrecy is
related to lower well-being. We demonstrate that people catch
themselves spontaneously thinking about their secrets-they mind-wander
to them-far more frequently than they encounter social situations that
require active concealment of those secrets. Moreover, independent of
concealment frequency, the frequency of mind-wandering to secrets
predicts lower well-being (whereas the converse was not the case). We
explore the diversity of secrets people have and the harmful effects of
spontaneously thinking about those secrets in both recall tasks and in
longitudinal designs, analyzing more than 13,000 secrets across our
participant samples, with outcomes for relationship satisfaction,
authenticity, well-being, and physical health. These results demonstrate
that secrecy can be studied by having people think about their secrets,
and have implications for designing interventions to help people cope
with secrecy. (PsycINFO Database Record (c) 2017 APA, all rights reserved).
Patients treated by older physicians die more than patients cared for by younger ones, except those docs treating high volumes of patients
BMJ. 2017 May 16;357:j1797. doi: 10.1136/bmj.j1797.
Physician age and outcomes in elderly patients in hospital in the US: observational study.
https://doi.org/10.1136/bmj.jAbstract
Objectives To investigate whether outcomes of patients who were admitted to hospital differ between those treated by younger and older physicians.
Design: Observational study.
Setting: US acute care hospitals.
Participants: 20% random sample of Medicare fee-for-service beneficiaries aged ≥65 admitted to hospital with a medical condition in 2011-14 and treated by hospitalist physicians to whom they were assigned based on scheduled work shifts. To assess the generalizability of findings, analyses also included patients treated by general internists including both hospitalists and non-hospitalists.
Main outcome measures 30 day mortality and readmissions and costs of care.
Results: 736 537 admissions managed by 18 854 hospitalist physicians (median age 41) were included. Patients’ characteristics were similar across physician ages. After adjustment for characteristics of patients and physicians and hospital fixed effects (effectively comparing physicians within the same hospital), patients’ adjusted 30 day mortality rates were 10.8% for physicians aged <40 10.7="" 10.9="" 11.1="" 11.3="" 11.5="" 12.1="" 12.5="" 40-49="" 40="" 50-59="" a="" age="" aged="" among="" analyses.="" and="" association="" between="" br="" care="" confidence="" costs="" did="" for="" general="" high="" higher="" however="" in="" internists="" interval="" mortality.="" no="" not="" observed="" of="" older="" patient="" patients="" patterns="" physician="" physicians.="" physicians="" readmissions="" sensitivity="" several="" similar="" slightly="" there="" to="" vary="" volume="" was="" were="" while="" with="">
<40 10.7="" 10.9="" 11.1="" 11.3="" 11.5="" 12.1="" 12.5="" 40-49="" 50-59="" a="" age="" aged="" among="" analyses.="" and="" association="" between="" br="" care="" confidence="" costs="" did="" for="" general="" high="" higher="" however="" in="" internists="" interval="" mortality.="" no="" not="" observed="" of="" older="" patient="" patients="" patterns="" physician="" physicians.="" physicians="" readmissions="" sensitivity="" several="" similar="" slightly="" there="" to="" vary="" volume="" was="" were="" while="" with="">Conclusions: Within the same hospital, patients treated by older physicians had higher mortality than patients cared for by younger physicians, except those physicians treating high volumes of patients.
Ethnic and linguistic fractionalization contributes to poverty levels
Ethnic Diversity and Poverty. By Sefa Awawory Churchill, Russell Smyth
https://doi.org/10.1016/j.worl
Highlights
. We examine the relationship between ethnic diversity and poverty.
. We measure poverty using a wide range of indicators from the World Bank and UNDP. Ethnic diversity is measured by both fractionalization and polarization.
. Ethnic diversity increases poverty.
Summary: We examine the relationship between ethnic diversity and poverty for a cross-sectional sample of developing countries. We measure diversity using indices of ethnic and linguistic fractionalization, and measure poverty using the multidimensional poverty index (MPI), multidimensional poverty headcount (MPH), intensity of deprivation, poverty gap, and poverty headcount ratio. We find that ethnic and linguistic fractionalization contributes to poverty levels. Specifically, after controlling for endogeneity, we find that a standard deviation increase in ethnic fractionalization is associated with a 0.32-, 0.44- and 0.53-standard deviation increase in the MPI, MPH and the intensity of deprivation, respectively. Moreover, a standard deviation increase in ethnic fractionalization is associated with between a 0.34- and 0.63-standard deviation increase in the population living below $1.90 and $3.10, the poverty gap at $1.90 and $3.10 a day and the headcount ratio at $1.90 and $3.10 a day. Similar results are also observed for linguistic fractionalization with standardized coefficients between 0.53 and 0.93. We find that our results are robust to alternative ways to measure poverty and ethnic diversity including ethnic polarization as well as alternative approaches to address endogeneity.
Key words: ethnic diversity; poverty; fractionalization; polarization
https://doi.org/10.1016/j.worl
World Development, Volume 95, July 2017, Pages 285–302
Highlights
. We examine the relationship between ethnic diversity and poverty.
. We measure poverty using a wide range of indicators from the World Bank and UNDP. Ethnic diversity is measured by both fractionalization and polarization.
. Ethnic diversity increases poverty.
Summary: We examine the relationship between ethnic diversity and poverty for a cross-sectional sample of developing countries. We measure diversity using indices of ethnic and linguistic fractionalization, and measure poverty using the multidimensional poverty index (MPI), multidimensional poverty headcount (MPH), intensity of deprivation, poverty gap, and poverty headcount ratio. We find that ethnic and linguistic fractionalization contributes to poverty levels. Specifically, after controlling for endogeneity, we find that a standard deviation increase in ethnic fractionalization is associated with a 0.32-, 0.44- and 0.53-standard deviation increase in the MPI, MPH and the intensity of deprivation, respectively. Moreover, a standard deviation increase in ethnic fractionalization is associated with between a 0.34- and 0.63-standard deviation increase in the population living below $1.90 and $3.10, the poverty gap at $1.90 and $3.10 a day and the headcount ratio at $1.90 and $3.10 a day. Similar results are also observed for linguistic fractionalization with standardized coefficients between 0.53 and 0.93. We find that our results are robust to alternative ways to measure poverty and ethnic diversity including ethnic polarization as well as alternative approaches to address endogeneity.
Key words: ethnic diversity; poverty; fractionalization; polarization
The Effect of Income on Subjective Well-Being: Evidence from the 2008 Economic Stimulus Tax Rebates
The Effect of Income on Subjective Well-Being: Evidence from the 2008 Economic Stimulus Tax Rebates. By Marta Lachowska. In Journal of Human Resources, Oct 2015
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2682543##
Abstract: This paper uses tax rebate payments from the 2008 economic stimulus to estimate the effect of a one-time change in income on three measures of subjective well-being: life satisfaction, health satisfaction, and affect. The income effect is identified by exploiting the plausibly exogenous variation in the payment schedule of the rebates. Using both ordinary least squares and two-stage least squares estimators, I find that the rebates had a large and positive impact on affect, which is explained by a reduction in feelings of stress and worry. For life satisfaction and health satisfaction, there is weaker evidence of a positive impact. Overall, the results show that a temporary increase in liquidity may enhance emotional well-being and that this effect is relatively stronger for low-income respondents.
Keywords: Subjective well-being, affect, income effect, quasi-experiment, instrumental variable
JEL Classification: I31, H31, E62
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2682543##
Abstract: This paper uses tax rebate payments from the 2008 economic stimulus to estimate the effect of a one-time change in income on three measures of subjective well-being: life satisfaction, health satisfaction, and affect. The income effect is identified by exploiting the plausibly exogenous variation in the payment schedule of the rebates. Using both ordinary least squares and two-stage least squares estimators, I find that the rebates had a large and positive impact on affect, which is explained by a reduction in feelings of stress and worry. For life satisfaction and health satisfaction, there is weaker evidence of a positive impact. Overall, the results show that a temporary increase in liquidity may enhance emotional well-being and that this effect is relatively stronger for low-income respondents.
Keywords: Subjective well-being, affect, income effect, quasi-experiment, instrumental variable
JEL Classification: I31, H31, E62
On the Size of the Gender Difference in Competitiveness
On the Size of the Gender Difference in Competitiveness. By Silvia
Saccardo, Aniela Pietrasz, Uri Gneezy. In Management Science, http://dx.doi.org/10.1287/mnsc
Abstract: We design a new procedure for measuring competitiveness and use it to estimate the magnitude of the gender gap in competitiveness. Before working on a task, participants choose what percentage of their payoffs will be based on a piece-rate compensation scheme; the rest of their payoff is allocated to a competitive compensation scheme. This novel procedure allows us to distinguish between 101 levels of competitiveness, as opposed to the binary measure used in the literature. Whereas the binary measure allows researchers to conclude that about twice as many men as women choose to compete (typically two-thirds versus one-third), the new procedure sheds light on the intensive margin. We find that the intensity of the preference is more extreme than the binary measure could detect. For example, we find that only one-fifth of the most competitive 25% of our participants are women, and the most competitive 10% of our participants are all men. The new procedure also allows us to study the correlation between competitiveness and parameters such as overconfidence, attitudes toward risk, and ambiguity.
Data and the online appendix are available at https://doi.org/10.1287/mnsc.2
Keywords: gender; competitiveness; behavioral economics
Abstract: We design a new procedure for measuring competitiveness and use it to estimate the magnitude of the gender gap in competitiveness. Before working on a task, participants choose what percentage of their payoffs will be based on a piece-rate compensation scheme; the rest of their payoff is allocated to a competitive compensation scheme. This novel procedure allows us to distinguish between 101 levels of competitiveness, as opposed to the binary measure used in the literature. Whereas the binary measure allows researchers to conclude that about twice as many men as women choose to compete (typically two-thirds versus one-third), the new procedure sheds light on the intensive margin. We find that the intensity of the preference is more extreme than the binary measure could detect. For example, we find that only one-fifth of the most competitive 25% of our participants are women, and the most competitive 10% of our participants are all men. The new procedure also allows us to study the correlation between competitiveness and parameters such as overconfidence, attitudes toward risk, and ambiguity.
Data and the online appendix are available at https://doi.org/10.1287/mnsc.2
Keywords: gender; competitiveness; behavioral economics
Perceived warmth and competence of others shape voluntary deceptive behaviour
Perceived warmth and competence of others shape voluntary deceptive
behaviour in a morally relevant setting. Br J Psychol. 2017 Mar 9. doi:
10.1111/bjop.12245. By Azevedo RT, Panasiti MS, Maglio R, Aglioti SM.
https://www.ncbi.nlm.nih.gov/p
Abstract: The temptation to deceive others compares to a moral dilemma: it involves a conflict between the temptation to obtain some benefit and the desire to conform to personal and social moral norms or avoid aversive social consequences. Thus, people might feel different levels of emotional and moral conflict depending on the target of the deception. Here we explored, in a morally relevant setting, how social judgements based on two fundamental dimensions of human social cognition - 'warmth' and 'competence' - impact on the decision to deceive others. Results revealed independent effects for warmth and competence. Specifically, while people are less inclined to deceive for self-gain those individuals they perceive as warm, they also tend to lie more to highly competent others. Furthermore, the perceived warmth and competence modulated the general tendency to reduce deceptive behaviour when there was a risk of disclosure compared to when the lying was anonymous, highlighting the importance of these judgements in social evaluation processes. Together, our results demonstrate that the emotional costs and personal moral standards that inhibit engagement in deceptive behaviour are not stable but rather malleable according to the target and the consequences of the deception.
© 2017 The British Psychological Society.
KEYWORDS: bias; deception; guilt; lie; moral; stereotype content model
https://www.ncbi.nlm.nih.gov/p
Abstract: The temptation to deceive others compares to a moral dilemma: it involves a conflict between the temptation to obtain some benefit and the desire to conform to personal and social moral norms or avoid aversive social consequences. Thus, people might feel different levels of emotional and moral conflict depending on the target of the deception. Here we explored, in a morally relevant setting, how social judgements based on two fundamental dimensions of human social cognition - 'warmth' and 'competence' - impact on the decision to deceive others. Results revealed independent effects for warmth and competence. Specifically, while people are less inclined to deceive for self-gain those individuals they perceive as warm, they also tend to lie more to highly competent others. Furthermore, the perceived warmth and competence modulated the general tendency to reduce deceptive behaviour when there was a risk of disclosure compared to when the lying was anonymous, highlighting the importance of these judgements in social evaluation processes. Together, our results demonstrate that the emotional costs and personal moral standards that inhibit engagement in deceptive behaviour are not stable but rather malleable according to the target and the consequences of the deception.
© 2017 The British Psychological Society.
KEYWORDS: bias; deception; guilt; lie; moral; stereotype content model
Do Globalization and Free Markets Drive Obesity among Children and Youth? An Empirical Analysis, 1990–2013
Do Globalization and Free Markets Drive Obesity among Children and Youth? An Empirical Analysis, 1990–2013
http://www.tandfonline.com/doi
ABSTRACT: Scholars of public health identify globalization as a major cause of obesity. Free markets are blamed for spreading high calorie, nutrient-poor diets, and sedentary lifestyles across the globe. Global trade and investment agreements apparently curtail government action in the interest of public health. Globalization is also blamed for raising income inequality and social insecurities, which contribute to “obesogenic” environments. Contrary to recent empirical studies, this study demonstrates that globalization and several component parts, such as trade openness, FDI flows, and an index of economic freedom, reduce weight gain and obesity among children and youth, the most likely age cohort to be affected by the past three decades of globalization and attendant lifestyle changes. The results suggest strongly that local-level factors possibly matter much more than do global-level factors for explaining why some people remain thin and others put on weight. The proposition that globalization is homogenizing cultures across the globe in terms of diets and lifestyles is possibly exaggerated. The results support the proposition that globalized countries prioritize health because of the importance of labor productivity and human capital due to heightened market competition, ceteris paribus, even if rising incomes might drive high consumption.
KEYWORDS: Globalization, obesity, trade and FDI, economic freedom
http://www.tandfonline.com/doi
ABSTRACT: Scholars of public health identify globalization as a major cause of obesity. Free markets are blamed for spreading high calorie, nutrient-poor diets, and sedentary lifestyles across the globe. Global trade and investment agreements apparently curtail government action in the interest of public health. Globalization is also blamed for raising income inequality and social insecurities, which contribute to “obesogenic” environments. Contrary to recent empirical studies, this study demonstrates that globalization and several component parts, such as trade openness, FDI flows, and an index of economic freedom, reduce weight gain and obesity among children and youth, the most likely age cohort to be affected by the past three decades of globalization and attendant lifestyle changes. The results suggest strongly that local-level factors possibly matter much more than do global-level factors for explaining why some people remain thin and others put on weight. The proposition that globalization is homogenizing cultures across the globe in terms of diets and lifestyles is possibly exaggerated. The results support the proposition that globalized countries prioritize health because of the importance of labor productivity and human capital due to heightened market competition, ceteris paribus, even if rising incomes might drive high consumption.
KEYWORDS: Globalization, obesity, trade and FDI, economic freedom
Small association between socioeconomic status and adult fast-food consumption in US
The association between socioeconomic status and adult fast-food
consumption in the U.S. By Jay L. Zagorsky , Patricia K. Smith. Economics & Human Biology
http://www.sciencedirect.com/s
Highlights
• Fast-food consumption among adults varies little across SES, measured as income and wealth.
• Descriptive analyses indicate a weak, inverted U-shaped association between fast-food and SES.
• Checking nutrition labels frequently and drinking less soda predict less adult fast-food intake.
• More work hours predict greater fast-food intake.
Abstract: Health follows a socioeconomic status (SES) gradient in developed countries, with disease prevalence falling as SES rises. This pattern is partially attributed to differences in nutritional intake, with the poor eating the least healthy diets. This paper examines whether there is an SES gradient in one specific aspect of nutrition: fast-food consumption. Fast food is generally high in calories and low in nutrients. We use data from the 2008, 2010, and 2012 waves of the National Longitudinal Survey of Youth (NLSY79) to test whether adult fast-food consumption in the United States falls as monetary resources rise (n = 8136). This research uses more recent data than previous fast-food studies and includes a comprehensive measure of wealth in addition to income to measure SES.
http://www.sciencedirect.com/s
Highlights
• Fast-food consumption among adults varies little across SES, measured as income and wealth.
• Descriptive analyses indicate a weak, inverted U-shaped association between fast-food and SES.
• Checking nutrition labels frequently and drinking less soda predict less adult fast-food intake.
• More work hours predict greater fast-food intake.
Abstract: Health follows a socioeconomic status (SES) gradient in developed countries, with disease prevalence falling as SES rises. This pattern is partially attributed to differences in nutritional intake, with the poor eating the least healthy diets. This paper examines whether there is an SES gradient in one specific aspect of nutrition: fast-food consumption. Fast food is generally high in calories and low in nutrients. We use data from the 2008, 2010, and 2012 waves of the National Longitudinal Survey of Youth (NLSY79) to test whether adult fast-food consumption in the United States falls as monetary resources rise (n = 8136). This research uses more recent data than previous fast-food studies and includes a comprehensive measure of wealth in addition to income to measure SES.
Protestant Ethic and Entrepreneurship: Religious Minorities in the Holy Roman Empire
The Protestant Ethic and Entrepreneurship: Evidence from Religious
Minorities in the Former Holy Roman Empire. By Luca Nunziata, Lorenzo
Rocco. European Journal of Political Economy
https://doi.org/10.1016/j.ejpo
Abstract: We investigate the effect of Protestantism versus Catholicism on the decision to become an entrepreneur in former Holy Roman Empire regions. Our research design exploits religious minorities' strong attachment to religious ethic and the predetermined historical determination of religious minorities' geographical distribution in the 1500 s as a result of the “cuius regio eius religio” (whose realm, his religion) rule. We find that today Protestantism increases the probability to be an entrepreneur by around 5 percentage points with respect to Catholicism, a result that survives to a battery of robustness checks. We explicit the assumptions underlying the identification strategy and provide an extensive testing of their validity by making use of several European datasets.
JEL classification: J24; Z12; J21; Z13
Keywords: Entrepreneurship; Religion; Culture; Protestantism; Catholicism
https://doi.org/10.1016/j.ejpo
Abstract: We investigate the effect of Protestantism versus Catholicism on the decision to become an entrepreneur in former Holy Roman Empire regions. Our research design exploits religious minorities' strong attachment to religious ethic and the predetermined historical determination of religious minorities' geographical distribution in the 1500 s as a result of the “cuius regio eius religio” (whose realm, his religion) rule. We find that today Protestantism increases the probability to be an entrepreneur by around 5 percentage points with respect to Catholicism, a result that survives to a battery of robustness checks. We explicit the assumptions underlying the identification strategy and provide an extensive testing of their validity by making use of several European datasets.
JEL classification: J24; Z12; J21; Z13
Keywords: Entrepreneurship; Religion; Culture; Protestantism; Catholicism
Socially excluded consumers tend to rely on affect to process information, and prefer persuasive messages based on feelings
Speaking to the heart: Social exclusion and reliance on feelings versus reasons in persuasion. By Fang-Chi Lu , Jayati Sinh
http://www.sciencedirect.com/s
Abstract: The authors of this study identify an alternative frame of communication for persuading people who feel socially excluded to behave in ways that benefit individual and social well-being, regardless of future connection possibilities. The authors suggest that socially excluded (included) consumers tend to rely on affect (cognition) in processing information, and to consequently prefer persuasive messages based on feelings (reasons). The effect occurs because people tend to ruminate about exclusionary events, which depletes self-regulatory resources. Thus, distraction that interferes with rumination can mitigate the social exclusion effect on affective processing. The authors present findings from five studies across various paradigms promoting personal and social well-being (i.e., donating blood, recycling, and consuming healthful foods) and discuss the theoretical and policy implications.
Keywords: Distraction intervention; Emotional versus rational appeals; Persuasion; Social exclusion
http://www.sciencedirect.com/s
Abstract: The authors of this study identify an alternative frame of communication for persuading people who feel socially excluded to behave in ways that benefit individual and social well-being, regardless of future connection possibilities. The authors suggest that socially excluded (included) consumers tend to rely on affect (cognition) in processing information, and to consequently prefer persuasive messages based on feelings (reasons). The effect occurs because people tend to ruminate about exclusionary events, which depletes self-regulatory resources. Thus, distraction that interferes with rumination can mitigate the social exclusion effect on affective processing. The authors present findings from five studies across various paradigms promoting personal and social well-being (i.e., donating blood, recycling, and consuming healthful foods) and discuss the theoretical and policy implications.
Keywords: Distraction intervention; Emotional versus rational appeals; Persuasion; Social exclusion
Expert ability can actually impair the accuracy of expert perception when judging others' performance
Larson, J. S., & Billeter, D. M. (2017). Adaptation and fallibility
in experts' judgments of novice performers. Journal of Experimental
Psychology: Learning, Memory, and Cognition, 43(2), 271–288. http://dx.doi.org/10.1037/xlm0
These authors show that expert ability can actually impair the accuracy of expert perception in the context of judging the performance of others.
They had individuals with a range of singing experience rank-order recordings of different vocalists singing "Let it Go" from best to worst. The true quality of each vocalist was assessed by applying a Bayesian model to the ranking data, and then judgment accuracy was assessed by comparing these "true" rankings to those given by the judges.
Expert singers were less accurate than intermediate singers at determining the relative quality of low-quality vocalists. A subsequent experiment showed that experts notice more mistakes than intermediate or novice judges, and judge these mistakes more harshly.
The authors interpret these results in terms of adaptation level theory, which suggests that people are better able to discriminate at their own adaptation level. Thus, performance expertise increases the ability to discriminate among top performers, but this reduces the ability to discriminate among lower-level performers.
These authors show that expert ability can actually impair the accuracy of expert perception in the context of judging the performance of others.
They had individuals with a range of singing experience rank-order recordings of different vocalists singing "Let it Go" from best to worst. The true quality of each vocalist was assessed by applying a Bayesian model to the ranking data, and then judgment accuracy was assessed by comparing these "true" rankings to those given by the judges.
Expert singers were less accurate than intermediate singers at determining the relative quality of low-quality vocalists. A subsequent experiment showed that experts notice more mistakes than intermediate or novice judges, and judge these mistakes more harshly.
The authors interpret these results in terms of adaptation level theory, which suggests that people are better able to discriminate at their own adaptation level. Thus, performance expertise increases the ability to discriminate among top performers, but this reduces the ability to discriminate among lower-level performers.
Complex trauma in childhood, a psychiatric diagnosis in adulthood: Making meaning of a double-edged phenomenon
Complex trauma in childhood, a psychiatric diagnosis in adulthood:
Making meaning of a double-edged phenomenon. By McCormack, Lynne;
Thomson, Sherilyn. In Psychological Trauma: Theory, Research, Practice,
and Policy, Vol 9(2), Mar 2017, 156-165.
Abstract: Objective: No known research explores the double-edged phenomenon of childhood trauma/adult mental health consumer. Therefore, whether receiving a psychiatric diagnosis in light of childhood trauma supports or impedes psychological wellbeing in adult life, is unknown. Method: Interpretative phenomenological analysis (IPA) provided the methodological framework. Data were collected through the use of semistructured interviews. Analysis sought thematic representation from subjective interpretations of the experienced phenomenon: childhood trauma survivor/mental health consumer. Results: Data revealed 1 superordinate theme, Childhood Betrayal, Identity, and Worthiness, that overarched 5 subordinate themes a) legacies, (b) the label, (c) putting the jigsaw together, (d) stigma, and (e) better than good enough self. Legacies of doubt that perpetuated “not good enough” delayed the development of an adult identity of worthiness in these participants. Importantly, the right diagnosis separated self as worthy-adult from self as traumatized child and facilitated positive change for breaking harmful cycles, self-valuing, and increased empathy, wisdom, and patience. Conclusions: Findings inform future research and therapeutic practice in regards to adult help seeking behaviors in light of childhood trauma, often postponed through fear of stigma associated with mental health diagnoses and services. Similarly, findings suggest that ameliorating wellbeing may be dependent on a therapeutic relationship in which accuracy or right fit of diagnosis provides a conduit for the client to disengage from self-blame, unworthiness, and “not good enough.”
Abstract: Objective: No known research explores the double-edged phenomenon of childhood trauma/adult mental health consumer. Therefore, whether receiving a psychiatric diagnosis in light of childhood trauma supports or impedes psychological wellbeing in adult life, is unknown. Method: Interpretative phenomenological analysis (IPA) provided the methodological framework. Data were collected through the use of semistructured interviews. Analysis sought thematic representation from subjective interpretations of the experienced phenomenon: childhood trauma survivor/mental health consumer. Results: Data revealed 1 superordinate theme, Childhood Betrayal, Identity, and Worthiness, that overarched 5 subordinate themes a) legacies, (b) the label, (c) putting the jigsaw together, (d) stigma, and (e) better than good enough self. Legacies of doubt that perpetuated “not good enough” delayed the development of an adult identity of worthiness in these participants. Importantly, the right diagnosis separated self as worthy-adult from self as traumatized child and facilitated positive change for breaking harmful cycles, self-valuing, and increased empathy, wisdom, and patience. Conclusions: Findings inform future research and therapeutic practice in regards to adult help seeking behaviors in light of childhood trauma, often postponed through fear of stigma associated with mental health diagnoses and services. Similarly, findings suggest that ameliorating wellbeing may be dependent on a therapeutic relationship in which accuracy or right fit of diagnosis provides a conduit for the client to disengage from self-blame, unworthiness, and “not good enough.”
Friday, June 2, 2017
Alemania reinventa la crisis energética. Por Holman W. Jenkins, Jr.
Alemania reinventa la crisis energética. Por Holman W. Jenkins, Jr.
http://online.wsj.com/news/articles/SB100014240527023044482045791857 20802195590
Wall Street Journal, Nov. 8, 2013 6:28 p.m. ET
ObamaCare no es el único tren en camino de descarrilar que tenemos ahora. Como Mao apremiando a los campesinos para que fundieran sus cacharros, sartenes y útiles de labranza para convertir a China en un coloso del acero de la noche a la mañana, Alemania repartÃa alegremente subsidios para alentar a los ciudadanos y granjeros a instalar paneles solares y molinos de viento para luego vender la energÃa resultante a las compañÃas eléctricas a precios inflados. El éxito —Alemania obtiene un 25% de su energÃa de las renovables— ha resultado ser un desastre.
Mientras los alemanes se apresuran a hacerse con su dinero fácil, la producción de dióxido de carbono ha aumentado, no disminuido, porque las compañÃas, privadas de capital, han pasado a quemar carbón americano barato para proveer de la necesaria energÃa cuando el viento y el sol nos fallan.
Debido a que sol y viento son intermitentes y la red eléctrica está pobremente preparada para acomodar estas fuentes, los apagones y las reducciones de suministro amenazan en este invierno.
Como las facturas las pagan hogares y empresas, los precios de la electricidad son el triple que en los EE UU. Un pánico apremiante es el del empleo, ya que industrias de gran aportación se dirigen a EE UU para aprovechar la energÃa barata que ha producido la revolución de las arenas bituminosas y los esquistos. El máximo responsable energético de Europa habla ya francamente de la "desindustrialización de Alemania".
En UK, donde la polÃtica pública ha sido casi tan generosa con las renovables, "Está bien ser muy, muy verde, pero no si estás interesado en la fabricación", según queja de un prominente CEO.
La gran virtud de la democracia es que no sigue con ciertos planes hasta el precipicio, pero los mecanismos normales de ajuste están agarrotados por el hecho de que el desastre energético de Europa implica al entero espectro polÃtico.
Ed Miliband, lÃder del Partido Laborista de UK, ha fijado el tema de las elecciones del próximo año cuando prometió recientemente congelar los precios de la energÃa si se le elegÃa. Pero los laboristas no van a abandonar los subsidios solares y eólicos que crearon ellos mismos. Quieren dejarlos grabados en piedra, pasando los costes a las empresas. En Alemania, la conservadora Angela Merkel se adhirió completamente a las posiciones económicas sobre energÃa de la oposición tras Fukushima, dejando a los electores alarmados sobre los precios de la energÃa sin lugar al que tornar en las elecciones de septiembre excepto a Angela Merkel, quien de forma vaga mostró alguna moderación sobre la energiewende (revolución energética) que lanzó y continúa liderando.
Un infrecuente destello de raciocinio ha partido en realidad del probable socio de coalición de Angela Merkel, el SPD, autor de la ley original sobre energÃas verdes, cuyo portavoz dice ahora: "Necesitamos asegurar que la energÃa renovable es asequible. Y necesitamos terminar con la idea de que podemos salirnos simultáneamente de nucleares y el carbón. No va a funcionar."
Es tentador asumir que los polÃticos europeos eran feligreses de la iglesia del calentamiento global. Pero más importante es su apego a la ideologÃa del agotamiento de recursos, que les convenció de haber elegido un ganador en esta idea porque estaba garantizado que los precios de los combustibles fósiles harÃan parecer baratos a los de la energÃa verde.
"Cuanta más gente consuma petróleo y carbón, más subirá el precio, pero cuanta más gente consuma energÃas renovables, más bajará su precio", explicó el asesor energético de Angela Merkel.
He aquà una idea que parece ser impermeable a la experiencia y que es parte del bagaje de todo polÃtico que pudiera ser elegido en nuestro mundo. "Es absolutamente cierto que la demanda [de energÃas fósiles] subirá mucho más rápido que el suministro. Ese es un hecho", explicó el presidente Obama en 2011. Los EE UU "no pueden permitirse apostar nuestra prosperidad a largo plazo a un recurso que con el tiempo se agotará."
El Sr. Obama mencionó los fósiles no convencionales exactamente una vez en su discurso — y solo para decir que también se agotarÃan.
Si todo esto fuera cierto, Europa no habrÃa llegado a sus presentes trabajos. Esta es la realidad: la revolución de los fósiles no convencionales es menos revolucionaria de lo que parece. Ha sacudido los errores comunes solo porque ha sucedido en las mismas narices de los americanos, en áreas pobladas en que se asumÃa que los "recursos" se habÃan extraÃdo y transportado hace mucho.
De hecho, los depósitos de hidrocarburos que hay en el mundo son verdaderamente vastos, incluyendo entre ellos cantidades inimaginables de hidratos de metano . El desafÃo es el tecnológico y económico de buscar el acceso a un determinado recurso a un precio asequible — un desafÃo desde que se usaban trapos para empaparlos en petróleo de manantiales naturales. Durante ciento cincuenta años, el precio del barril de petróleo ha fluctuado entre $10 y $100 (en dólares de 2011), un rango suficiente para encontrar nuevas reservas cada vez que se querÃa requerÃan con objeto de mantener a los hidrocarburos como fuente de energÃa de precio competitivo.
La crisis energética europea es muy parecida a la nuestra de hace 40 años — autoinfligida. El sueño de Europa dejó de ser sostenible al minuto de que los precios de la energÃa empezaran a caer en un competidor comercial importante como los EE UU. LA gran pregunta ahora es cuán lejos irá la secudida polÃtica cuando toda la élite está implicada en un insatisfactorio experimento energético, que inevitablemente se ha visto envuelta en el desencanto del público con otro projecto fracasado de la élite, la Unión Europea.
Va a ser fascinante también la suerte de los shales europeos. En Europa, el gobierno, no los propietarios, controla y se beneficia de los recursos minerales, creando la polÃtica de suma zero en lo referente a recusos que han hecho al Oriente Medio un parangón de estabilidad y progreso. ¿Y el calentamiento global? Por suerte la respuesta es fácil. Los votantes europeos se van a acercar al punto en que están los americanos, dándose cuenta de que abjurar de la energÃa barata no hará nada por los niveles de CO2 (y aun menos por el clima) mientras otros no abjuren de la energÃa barata también.
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Germany Reinvents the Energy Crisis
A love affair with renewables brings high prices, potential blackouts and worries about 'deindustrialization.'
By Holman W. Jenkins, Jr.
http://online.wsj.com/news/articles/SB100014240527023044482045791857 20802195590
Wall Street Journal, Nov. 8, 2013 6:28 p.m. ET
ObamaCare isn't the only policy train wreck in progress. Like Mao urging peasants to melt down their pots, pans and farm tools to turn China into a steel-producing superpower overnight, Germany dished out subsidies to encourage homeowners and farmers to install solar panels and windmills and sell energy back to the power company at inflated prices. Success—Germany now gets 25% of its power from renewables—has turned out to be a disaster.
As Germans rush to grab this easy money, carbon dioxide output has risen, not fallen, because money-strapped utilities have switched to burning cheap American coal to provide the necessary standby power when wind and sun fail.
Because the sun and wind are intermittent and the power grid is poorly arranged to accommodate them, brownouts and blackouts threaten this winter.
Because the bills are paid by households and businesses, electricity rates are triple those in the United States. An immediate panic is jobs, as prized industries head to the U.S. for cheaper energy unleashed by the shale revolution. Europe's top energy official now speaks frankly of the "deindustrialization in Germany."
In Britain, where policy has been nearly as generous to renewables, "It's fine being very, very green, but not if you're interested in manufacturing," complains a prominent CEO.
Enlarge Image
Wind turbines stand behind a solar power park near Werder, Germany. Getty Images
Democracy's great virtue is that it doesn't follow schemes off a cliff, but the normal adjustment mechanisms are hampered by the fact that Europe's energy disaster implicates the entire political spectrum.
Ed Miliband, leader of Britain's Labour Party, set the theme for next year's British election when he recently promised to freeze energy prices if elected. But Labour isn't about to disown the solar and wind subsidies it created. It wants to soldier on, shifting the cost to business. In Germany, conservative Angela Merkel embraced the opposition's energy economics wholesale after Fukushima, leaving voters who are alarmed about energy prices no place to turn in September's election except Angela Merkel, who vaguely indicated some moderation of the energiewende (energy revolution) she launched and continues to champion.
An unwonted glimmer of reason has actually come from Mrs. Merkel's likely Social Democrat coalition partner, author of Germany's original green energy law, whose spokesman now says: "We need to ensure that renewable energy is affordable. And we need to put an end to the idea that we can pull out of nuclear and coal simultaneously. This won't work."
It's tempting to assume Europe's politicians were praying in the church of global warming. But more important is their subscription to resource-depletion ideology, which convinced them they'd picked a political winner because rising fossil fuel prices were guaranteed to make green energy look cheap in comparison.
"When more people consume oil and coal, the price will go up, but when more people consume renewable energy, the price of it will go down," explained Ms. Merkel's top energy adviser.
We have here an idea seemingly impervious to experience and part of the mental baggage of every politician likely to get elected in our world. "It is absolutely certain that [fossil energy] demand will go up a lot faster than supply. It's just a fact," President Obama explained in 2011. The U.S. "cannot afford to bet our long-term prosperity on a resource that will eventually run out."
Mr. Obama mentioned shale exactly once in his speech—and only to say shale would run out too.
If all this were true, Europe wouldn't be in its present fix. Here's the real truth: The shale revolution is less revolutionary than it seems. It has shocked settled misconceptions only because it happened under the noses of Americans, in populated areas where the casual assumption was that "resources" would long ago have been dug out and carted away.
In fact, the world's store of fossil hydrocarbons is truly vast, including almost unimaginable quantities of methane hydrates. The challenge is the technological and economic one of getting access to a given resource at an affordable price—a challenge ever since men used rags to soak up oil from natural seeps. For 150 years, the price of a barrel of oil has fluctuated between $10 and $100 (in 2011 dollars), a range that has been sufficient to call forth new reserves and feedstocks whenever needed to maintain hydrocarbons as a source of competitively priced energy.
Europe's energy crisis is a lot like ours of 40 years ago—self- inflicted. Europe's dream was untenable the minute energy prices began falling in a major trade competitor like the United States. The big question now is how far will the political upheaval go when an entire elite is implicated in an unsatisfactory energy experiment, which inevitably has become wrapped up in public disappointment with another failed elite project, the European Union itself.
Fascinating too will be the fate of Europe's shale. In Europe, government, not landowners, controls and benefits from mineral resources, creating the zero-sum resource politics that have made the Mideast a paragon of stability and civil progress. What about global warming? At least that answer is easier. European voters are coming out where Americans have, realizing that foreswearing cheap energy will do nothing for CO2 levels (and even less for climate) as long as others aren't foreswearing cheap energy too.
Rules of Thumb for Bank Solvency Stress Testing. By Daniel C. Hardy and Christian Schmieder
IMF Working Paper No. 13/232
November 11, 2013
http://www.imf.org/external/pubs/cat/longres.aspx?sk=41047.0
Summary: Rules of thumb can be useful in undertaking quick, robust, and readily interpretable bank stress tests. Such rules of thumb are proposed for the behavior of banks’ capital ratios and key drivers thereof—primarily credit losses, income, credit growth, and risk weights—in advanced and emerging economies, under more or less severe stress conditions. The proposed rules imply disproportionate responses to large shocks, and can be used to quantify the cyclical behaviour of capital ratios under various regulatory approaches.
Motivated by the usefulness of rules of thumb,
this paper concentrates on the formulation of rules of thumb for key factors affecting bank solvency, namely credit losses, pre-impairment income and credit growth during crises, and illustrates their use in the simulation of the evolution of capital ratios under stress.4 We thereby seek to provide answers to the following common questions in stress testing:
How much do credit losses usually increase in case of a moderate, medium and severe macroeconomic downturn and/or financial stress event, e.g., if cumulative real GDP growth turns out to be, say, 4 or 8 percentage points below potential (or average or previous years') growth?
How typically do other major factors that affect capital ratios, such as profitability, credit growth, and risk-weighted assets (RWA), react under these circumstances?
Taking these considerations together, how does moderate, medium, or severe macro-financial stress translate into (a decrease in) bank capital, and thus, how much capital do banks need to cope with different levels of stress?
IMF Working Paper No. 13/232
November 11, 2013
http://www.imf.org/external/pubs/cat/longres.aspx?sk=41047.0
Summary: Rules of thumb can be useful in undertaking quick, robust, and readily interpretable bank stress tests. Such rules of thumb are proposed for the behavior of banks’ capital ratios and key drivers thereof—primarily credit losses, income, credit growth, and risk weights—in advanced and emerging economies, under more or less severe stress conditions. The proposed rules imply disproportionate responses to large shocks, and can be used to quantify the cyclical behaviour of capital ratios under various regulatory approaches.
Motivated by the usefulness of rules of thumb,
this paper concentrates on the formulation of rules of thumb for key factors affecting bank solvency, namely credit losses, pre-impairment income and credit growth during crises, and illustrates their use in the simulation of the evolution of capital ratios under stress.4 We thereby seek to provide answers to the following common questions in stress testing:
How much do credit losses usually increase in case of a moderate, medium and severe macroeconomic downturn and/or financial stress event, e.g., if cumulative real GDP growth turns out to be, say, 4 or 8 percentage points below potential (or average or previous years') growth?
How typically do other major factors that affect capital ratios, such as profitability, credit growth, and risk-weighted assets (RWA), react under these circumstances?
Taking these considerations together, how does moderate, medium, or severe macro-financial stress translate into (a decrease in) bank capital, and thus, how much capital do banks need to cope with different levels of stress?
Sunday, May 7, 2017
Macroprudential Liquidity Stress Testing in FSAPs for Systemically Important Financial Systems
Author/Editor: Andreas A. Jobst ; Christian Schmieder ; Li Lian Ong
http://www.imf.org/en/Publications/WP/Issues/2017/05/01/Macroprudential-Liquidity-Stress-Testing-in-FSAPs-for-Systemically-Important-Financial-44873?cid=em-COM-123-35149Summary:Bank liquidity stress testing, which has become de rigueur following the costly lessons of the global financial crisis, remains underdeveloped compared to solvency stress testing. The ability to adequately identify, model and assess the impact of liquidity shocks, which are infrequent but can have a severe impact on affected banks and financial systems, is complicated not only by data limitations but also by interactions among multiple factors. This paper provides a conceptual overview of liquidity stress testing approaches for banks and discusses their implementation by IMF staff in the Financial Sector Assessment Program (FSAP) for countries with systemically important financial sectors over the last six years.
Series:Working Paper No. 17/102
Publication Date: May 1, 2017
ISBN/ISSN: 9781475597240/1018-5941
Stock No: WPIEA2017102
Pages: 56Monday, January 9, 2017
A way to market to conservatives the science behind climate change more effectively
Past-focused environmental comparisons promote pro-environmental outcomes for conservatives. By Matthew Baldwin and Joris Lammers
http://www.pnas.org/content/113/52/14953.abstract
Significance
Political polarization on important issues can have dire consequences for society, and divisions regarding the issue of climate change could be particularly catastrophic. Building on research in social cognition and psychology, we show that temporal comparison processes largely explain the political gap in respondents’ attitudes towards and behaviors regarding climate change. We found that conservatives’ proenvironmental attitudes and behaviors improved consistently and drastically when we presented messages that compared the environment today with that of the past. This research shows how ideological differences can arise from basic psychological processes, demonstrates how such differences can be overcome by framing a message consistent with these basic processes, and provides a way to market the science behind climate change more effectively.
Abstract
Conservatives appear more skeptical about climate change and global warming and less willing to act against it than liberals. We propose that this unwillingness could result from fundamental differences in conservatives’ and liberals’ temporal focus. Conservatives tend to focus more on the past than do liberals. Across six studies, we rely on this notion to demonstrate that conservatives are positively affected by past- but not by future-focused environmental comparisons. Past comparisons largely eliminated the political divide that separated liberal and conservative respondents’ attitudes toward and behavior regarding climate change, so that across these studies conservatives and liberals were nearly equally likely to fight climate change. This research demonstrates how psychological processes, such as temporal comparison, underlie the prevalent ideological gap in addressing climate change. It opens up a promising avenue to convince conservatives effectively of the need to address climate change and global warming.
http://www.pnas.org/content/113/52/14953.abstract
Significance
Political polarization on important issues can have dire consequences for society, and divisions regarding the issue of climate change could be particularly catastrophic. Building on research in social cognition and psychology, we show that temporal comparison processes largely explain the political gap in respondents’ attitudes towards and behaviors regarding climate change. We found that conservatives’ proenvironmental attitudes and behaviors improved consistently and drastically when we presented messages that compared the environment today with that of the past. This research shows how ideological differences can arise from basic psychological processes, demonstrates how such differences can be overcome by framing a message consistent with these basic processes, and provides a way to market the science behind climate change more effectively.
Abstract
Conservatives appear more skeptical about climate change and global warming and less willing to act against it than liberals. We propose that this unwillingness could result from fundamental differences in conservatives’ and liberals’ temporal focus. Conservatives tend to focus more on the past than do liberals. Across six studies, we rely on this notion to demonstrate that conservatives are positively affected by past- but not by future-focused environmental comparisons. Past comparisons largely eliminated the political divide that separated liberal and conservative respondents’ attitudes toward and behavior regarding climate change, so that across these studies conservatives and liberals were nearly equally likely to fight climate change. This research demonstrates how psychological processes, such as temporal comparison, underlie the prevalent ideological gap in addressing climate change. It opens up a promising avenue to convince conservatives effectively of the need to address climate change and global warming.
Monday, December 26, 2016
What scientists think of themselves, other scientists and the population at large
Who Believes in the Storybook Image of the Scientist?
http://www.tandfonline.com/doi/full/10.1080/08989621.2016.1268922
Dec 2016
Abstract: Do lay people and scientists themselves recognize that scientists are human and therefore prone to human fallibilities such as error, bias, and even dishonesty? In a series of three experimental studies and one correlational study (total N = 3,278) we found that the ‘storybook image of the scientist’ is pervasive: American lay people and scientists from over 60 countries attributed considerably more objectivity, rationality, open-mindedness, intelligence, integrity, and communality to scientists than other highly-educated people. Moreover, scientists perceived even larger differences than lay people did. Some groups of scientists also differentiated between different categories of scientists: established scientists attributed higher levels of the scientific traits to established scientists than to early-career scientists and PhD students, and higher levels to PhD students than to early-career scientists. Female scientists attributed considerably higher levels of the scientific traits to female scientists than to male scientists. A strong belief in the storybook image and the (human) tendency to attribute higher levels of desirable traits to people in one’s own group than to people in other groups may decrease scientists’ willingness to adopt recently proposed practices to reduce error, bias and dishonesty in science.
http://www.tandfonline.com/doi/full/10.1080/08989621.2016.1268922
Dec 2016
Abstract: Do lay people and scientists themselves recognize that scientists are human and therefore prone to human fallibilities such as error, bias, and even dishonesty? In a series of three experimental studies and one correlational study (total N = 3,278) we found that the ‘storybook image of the scientist’ is pervasive: American lay people and scientists from over 60 countries attributed considerably more objectivity, rationality, open-mindedness, intelligence, integrity, and communality to scientists than other highly-educated people. Moreover, scientists perceived even larger differences than lay people did. Some groups of scientists also differentiated between different categories of scientists: established scientists attributed higher levels of the scientific traits to established scientists than to early-career scientists and PhD students, and higher levels to PhD students than to early-career scientists. Female scientists attributed considerably higher levels of the scientific traits to female scientists than to male scientists. A strong belief in the storybook image and the (human) tendency to attribute higher levels of desirable traits to people in one’s own group than to people in other groups may decrease scientists’ willingness to adopt recently proposed practices to reduce error, bias and dishonesty in science.
Tuesday, December 6, 2016
My Unhappy Life as a Climate Heretic. By Roger Pielke Jr.
My Unhappy Life as a Climate Heretic. By Roger Pielke Jr.
My research was attacked by thought police in journalism, activist groups funded by billionaires and even the White House.http://www.wsj.com/articles/my-unhappy-life-as-a-climate-heretic-1480723518
Updated Dec. 2, 2016 7:04 p.m. ET
Much to my surprise, I showed up in the WikiLeaks releases before the election. In a 2014 email, a staffer at the Center for American Progress, founded by John Podesta in 2003, took credit for a campaign to have me eliminated as a writer for Nate Silver’s FiveThirtyEight website. In the email, the editor of the think tank’s climate blog bragged to one of its billionaire donors, Tom Steyer: “I think it’s fair [to] say that, without Climate Progress, Pielke would still be writing on climate change for 538.”
WikiLeaks provides a window into a world I’ve seen up close for decades: the debate over what to do about climate change, and the role of science in that argument. Although it is too soon to tell how the Trump administration will engage the scientific community, my long experience shows what can happen when politicians and media turn against inconvenient research—which we’ve seen under Republican and Democratic presidents.
I understand why Mr. Podesta—most recently Hillary Clinton’s campaign chairman—wanted to drive me out of the climate-change discussion. When substantively countering an academic’s research proves difficult, other techniques are needed to banish it. That is how politics sometimes works, and professors need to understand this if we want to participate in that arena.
More troubling is the degree to which journalists and other academics joined the campaign against me. What sort of responsibility do scientists and the media have to defend the ability to share research, on any subject, that might be inconvenient to political interests—even our own?
I believe climate change is real and that human emissions of greenhouse gases risk justifying action, including a carbon tax. But my research led me to a conclusion that many climate campaigners find unacceptable: There is scant evidence to indicate that hurricanes, floods, tornadoes or drought have become more frequent or intense in the U.S. or globally. In fact we are in an era of good fortune when it comes to extreme weather. This is a topic I’ve studied and published on as much as anyone over two decades. My conclusion might be wrong, but I think I’ve earned the right to share this research without risk to my career.
Instead, my research was under constant attack for years by activists, journalists and politicians. In 2011 writers in the journal Foreign Policy signaled that some accused me of being a “climate-change denier.” I earned the title, the authors explained, by “questioning certain graphs presented in IPCC reports.” That an academic who raised questions about the Intergovernmental Panel on Climate Change in an area of his expertise was tarred as a denier reveals the groupthink at work.
Yet I was right to question the IPCC’s 2007 report, which included a graph purporting to show that disaster costs were rising due to global temperature increases. The graph was later revealed to have been based on invented and inaccurate information, as I documented in my book “The Climate Fix.” The insurance industry scientist Robert-Muir Wood of Risk Management Solutions had smuggled the graph into the IPCC report. He explained in a public debate with me in London in 2010 that he had included the graph and misreferenced it because he expected future research to show a relationship between increasing disaster costs and rising temperatures.
When his research was eventually published in 2008, well after the IPCC report, it concluded the opposite: “We find insufficient evidence to claim a statistical relationship between global temperature increase and normalized catastrophe losses.” Whoops.
The IPCC never acknowledged the snafu, but subsequent reports got the science right: There is not a strong basis for connecting weather disasters with human-caused climate change.
Yes, storms and other extremes still occur, with devastating human consequences, but history shows they could be far worse. No Category 3, 4 or 5 hurricane has made landfall in the U.S. since Hurricane Wilma in 2005, by far the longest such period on record. This means that cumulative economic damage from hurricanes over the past decade is some $70 billion less than the long-term average would lead us to expect, based on my research with colleagues. This is good news, and it should be OK to say so. Yet in today’s hyper-partisan climate debate, every instance of extreme weather becomes a political talking point.
For a time I called out politicians and reporters who went beyond what science can support, but some journalists won’t hear of this. In 2011 and 2012, I pointed out on my blog and social media that the lead climate reporter at the New York Times,Justin Gillis, had mischaracterized the relationship of climate change and food shortages, and the relationship of climate change and disasters. His reporting wasn’t consistent with most expert views, or the evidence. In response he promptly blocked me from his Twitter feed. Other reporters did the same.
In August this year on Twitter, I criticized poor reporting on the website Mashable about a supposed coming hurricane apocalypse—including a bad misquote of me in the cartoon role of climate skeptic. (The misquote was later removed.) The publication’s lead science editor, Andrew Freedman, helpfully explained via Twitter that this sort of behavior “is why you’re on many reporters’ ‘do not call’ lists despite your expertise.”
I didn’t know reporters had such lists. But I get it. No one likes being told that he misreported scientific research, especially on climate change. Some believe that connecting extreme weather with greenhouse gases helps to advance the cause of climate policy. Plus, bad news gets clicks.
Yet more is going on here than thin-skinned reporters responding petulantly to a vocal professor. In 2015 I was quoted in the Los Angeles Times, by Pulitzer Prize-winning reporter Paige St. John, making the rather obvious point that politicians use the weather-of-the-moment to make the case for action on climate change, even if the scientific basis is thin or contested.
Ms. St. John was pilloried by her peers in the media. Shortly thereafter, she emailed me what she had learned: “You should come with a warning label: Quoting Roger Pielke will bring a hailstorm down on your work from the London Guardian, Mother Jones, and Media Matters.”
Or look at the journalists who helped push me out of FiveThirtyEight. My first article there, in 2014, was based on the consensus of the IPCC and peer-reviewed research. I pointed out that the global cost of disasters was increasing at a rate slower than GDP growth, which is very good news. Disasters still occur, but their economic and human effect is smaller than in the past. It’s not terribly complicated.
That article prompted an intense media campaign to have me fired. Writers at Slate, Salon, the New Republic, the New York Times, the Guardian and others piled on.
In March of 2014, FiveThirtyEight editor Mike Wilson demoted me from staff writer to freelancer. A few months later I chose to leave the site after it became clear it wouldn’t publish me. The mob celebrated. ClimateTruth.org, founded by former Center for American Progress staffer Brad Johnson, and advised by Penn State’s Michael Mann, called my departure a “victory for climate truth.” The Center for American Progress promised its donor Mr. Steyer more of the same.
Yet the climate thought police still weren’t done. In 2013 committees in the House and Senate invited me to a several hearings to summarize the science on disasters and climate change. As a professor at a public university, I was happy to do so. My testimony was strong, and it was well aligned with the conclusions of the IPCC and the U.S. government’s climate-science program. Those conclusions indicate no overall increasing trend in hurricanes, floods, tornadoes or droughts—in the U.S. or globally.
In early 2014, not long after I appeared before Congress, President Obama’s science adviser John Holdren testified before the same Senate Environment and Public Works Committee. He was asked about his public statements that appeared to contradict the scientific consensus on extreme weather events that I had earlier presented. Mr. Holdren responded with the all-too-common approach of attacking the messenger, telling the senators incorrectly that my views were “not representative of the mainstream scientific opinion.” Mr. Holdren followed up by posting a strange essay, of nearly 3,000 words, on the White House website under the heading, “An Analysis of Statements by Roger Pielke Jr.,” where it remains today.
I suppose it is a distinction of a sort to be singled out in this manner by the president’s science adviser. Yet Mr. Holdren’s screed reads more like a dashed-off blog post from the nutty wings of the online climate debate, chock-full of errors and misstatements.
But when the White House puts a target on your back on its website, people notice. Almost a year later Mr. Holdren’s missive was the basis for an investigation of me by Arizona Rep. Raul Grijalva, the ranking Democrat on the House Natural Resources Committee. Rep. Grijalva explained in a letter to my university’s president that I was being investigated because Mr. Holdren had “highlighted what he believes were serious misstatements by Prof. Pielke of the scientific consensus on climate change.” He made the letter public.
The “investigation” turned out to be a farce. In the letter, Rep. Grijalva suggested that I—and six other academics with apparently heretical views—might be on the payroll of Exxon Mobil (or perhaps the Illuminati, I forget). He asked for records detailing my research funding, emails and so on. After some well-deserved criticism from the American Meteorological Society and the American Geophysical Union, Rep. Grijalva deleted the letter from his website. The University of Colorado complied with Rep. Grijalva’s request and responded that I have never received funding from fossil-fuel companies. My heretical views can be traced to research support from the U.S. government.
But the damage to my reputation had been done, and perhaps that was the point. Studying and engaging on climate change had become decidedly less fun. So I started researching and teaching other topics and have found the change in direction refreshing. Don’t worry about me: I have tenure and supportive campus leaders and regents. No one is trying to get me fired for my new scholarly pursuits.
But the lesson is that a lone academic is no match for billionaires, well-funded advocacy groups, the media, Congress and the White House. If academics—in any subject—are to play a meaningful role in public debate, the country will have to do a better job supporting good-faith researchers, even when their results are unwelcome. This goes for Republicans and Democrats alike, and to the administration of President-elect Trump.
Academics and the media in particular should support viewpoint diversity instead of serving as the handmaidens of political expediency by trying to exclude voices or damage reputations and careers. If academics and the media won’t support open debate, who will?
---
Mr. Pielke is a professor and director of the Sports Governance Center at the University of Colorado, Boulder. His most recent book is “The Edge: The Wars Against Cheating and Corruption in the Cutthroat World of Elite Sports” (Roaring Forties Press, 2016).
My research was attacked by thought police in journalism, activist groups funded by billionaires and even the White House.http://www.wsj.com/articles/my-unhappy-life-as-a-climate-heretic-1480723518
Updated Dec. 2, 2016 7:04 p.m. ET
Much to my surprise, I showed up in the WikiLeaks releases before the election. In a 2014 email, a staffer at the Center for American Progress, founded by John Podesta in 2003, took credit for a campaign to have me eliminated as a writer for Nate Silver’s FiveThirtyEight website. In the email, the editor of the think tank’s climate blog bragged to one of its billionaire donors, Tom Steyer: “I think it’s fair [to] say that, without Climate Progress, Pielke would still be writing on climate change for 538.”
WikiLeaks provides a window into a world I’ve seen up close for decades: the debate over what to do about climate change, and the role of science in that argument. Although it is too soon to tell how the Trump administration will engage the scientific community, my long experience shows what can happen when politicians and media turn against inconvenient research—which we’ve seen under Republican and Democratic presidents.
I understand why Mr. Podesta—most recently Hillary Clinton’s campaign chairman—wanted to drive me out of the climate-change discussion. When substantively countering an academic’s research proves difficult, other techniques are needed to banish it. That is how politics sometimes works, and professors need to understand this if we want to participate in that arena.
More troubling is the degree to which journalists and other academics joined the campaign against me. What sort of responsibility do scientists and the media have to defend the ability to share research, on any subject, that might be inconvenient to political interests—even our own?
I believe climate change is real and that human emissions of greenhouse gases risk justifying action, including a carbon tax. But my research led me to a conclusion that many climate campaigners find unacceptable: There is scant evidence to indicate that hurricanes, floods, tornadoes or drought have become more frequent or intense in the U.S. or globally. In fact we are in an era of good fortune when it comes to extreme weather. This is a topic I’ve studied and published on as much as anyone over two decades. My conclusion might be wrong, but I think I’ve earned the right to share this research without risk to my career.
Instead, my research was under constant attack for years by activists, journalists and politicians. In 2011 writers in the journal Foreign Policy signaled that some accused me of being a “climate-change denier.” I earned the title, the authors explained, by “questioning certain graphs presented in IPCC reports.” That an academic who raised questions about the Intergovernmental Panel on Climate Change in an area of his expertise was tarred as a denier reveals the groupthink at work.
Yet I was right to question the IPCC’s 2007 report, which included a graph purporting to show that disaster costs were rising due to global temperature increases. The graph was later revealed to have been based on invented and inaccurate information, as I documented in my book “The Climate Fix.” The insurance industry scientist Robert-Muir Wood of Risk Management Solutions had smuggled the graph into the IPCC report. He explained in a public debate with me in London in 2010 that he had included the graph and misreferenced it because he expected future research to show a relationship between increasing disaster costs and rising temperatures.
When his research was eventually published in 2008, well after the IPCC report, it concluded the opposite: “We find insufficient evidence to claim a statistical relationship between global temperature increase and normalized catastrophe losses.” Whoops.
The IPCC never acknowledged the snafu, but subsequent reports got the science right: There is not a strong basis for connecting weather disasters with human-caused climate change.
Yes, storms and other extremes still occur, with devastating human consequences, but history shows they could be far worse. No Category 3, 4 or 5 hurricane has made landfall in the U.S. since Hurricane Wilma in 2005, by far the longest such period on record. This means that cumulative economic damage from hurricanes over the past decade is some $70 billion less than the long-term average would lead us to expect, based on my research with colleagues. This is good news, and it should be OK to say so. Yet in today’s hyper-partisan climate debate, every instance of extreme weather becomes a political talking point.
For a time I called out politicians and reporters who went beyond what science can support, but some journalists won’t hear of this. In 2011 and 2012, I pointed out on my blog and social media that the lead climate reporter at the New York Times,Justin Gillis, had mischaracterized the relationship of climate change and food shortages, and the relationship of climate change and disasters. His reporting wasn’t consistent with most expert views, or the evidence. In response he promptly blocked me from his Twitter feed. Other reporters did the same.
In August this year on Twitter, I criticized poor reporting on the website Mashable about a supposed coming hurricane apocalypse—including a bad misquote of me in the cartoon role of climate skeptic. (The misquote was later removed.) The publication’s lead science editor, Andrew Freedman, helpfully explained via Twitter that this sort of behavior “is why you’re on many reporters’ ‘do not call’ lists despite your expertise.”
I didn’t know reporters had such lists. But I get it. No one likes being told that he misreported scientific research, especially on climate change. Some believe that connecting extreme weather with greenhouse gases helps to advance the cause of climate policy. Plus, bad news gets clicks.
Yet more is going on here than thin-skinned reporters responding petulantly to a vocal professor. In 2015 I was quoted in the Los Angeles Times, by Pulitzer Prize-winning reporter Paige St. John, making the rather obvious point that politicians use the weather-of-the-moment to make the case for action on climate change, even if the scientific basis is thin or contested.
Ms. St. John was pilloried by her peers in the media. Shortly thereafter, she emailed me what she had learned: “You should come with a warning label: Quoting Roger Pielke will bring a hailstorm down on your work from the London Guardian, Mother Jones, and Media Matters.”
Or look at the journalists who helped push me out of FiveThirtyEight. My first article there, in 2014, was based on the consensus of the IPCC and peer-reviewed research. I pointed out that the global cost of disasters was increasing at a rate slower than GDP growth, which is very good news. Disasters still occur, but their economic and human effect is smaller than in the past. It’s not terribly complicated.
That article prompted an intense media campaign to have me fired. Writers at Slate, Salon, the New Republic, the New York Times, the Guardian and others piled on.
In March of 2014, FiveThirtyEight editor Mike Wilson demoted me from staff writer to freelancer. A few months later I chose to leave the site after it became clear it wouldn’t publish me. The mob celebrated. ClimateTruth.org, founded by former Center for American Progress staffer Brad Johnson, and advised by Penn State’s Michael Mann, called my departure a “victory for climate truth.” The Center for American Progress promised its donor Mr. Steyer more of the same.
Yet the climate thought police still weren’t done. In 2013 committees in the House and Senate invited me to a several hearings to summarize the science on disasters and climate change. As a professor at a public university, I was happy to do so. My testimony was strong, and it was well aligned with the conclusions of the IPCC and the U.S. government’s climate-science program. Those conclusions indicate no overall increasing trend in hurricanes, floods, tornadoes or droughts—in the U.S. or globally.
In early 2014, not long after I appeared before Congress, President Obama’s science adviser John Holdren testified before the same Senate Environment and Public Works Committee. He was asked about his public statements that appeared to contradict the scientific consensus on extreme weather events that I had earlier presented. Mr. Holdren responded with the all-too-common approach of attacking the messenger, telling the senators incorrectly that my views were “not representative of the mainstream scientific opinion.” Mr. Holdren followed up by posting a strange essay, of nearly 3,000 words, on the White House website under the heading, “An Analysis of Statements by Roger Pielke Jr.,” where it remains today.
I suppose it is a distinction of a sort to be singled out in this manner by the president’s science adviser. Yet Mr. Holdren’s screed reads more like a dashed-off blog post from the nutty wings of the online climate debate, chock-full of errors and misstatements.
But when the White House puts a target on your back on its website, people notice. Almost a year later Mr. Holdren’s missive was the basis for an investigation of me by Arizona Rep. Raul Grijalva, the ranking Democrat on the House Natural Resources Committee. Rep. Grijalva explained in a letter to my university’s president that I was being investigated because Mr. Holdren had “highlighted what he believes were serious misstatements by Prof. Pielke of the scientific consensus on climate change.” He made the letter public.
The “investigation” turned out to be a farce. In the letter, Rep. Grijalva suggested that I—and six other academics with apparently heretical views—might be on the payroll of Exxon Mobil (or perhaps the Illuminati, I forget). He asked for records detailing my research funding, emails and so on. After some well-deserved criticism from the American Meteorological Society and the American Geophysical Union, Rep. Grijalva deleted the letter from his website. The University of Colorado complied with Rep. Grijalva’s request and responded that I have never received funding from fossil-fuel companies. My heretical views can be traced to research support from the U.S. government.
But the damage to my reputation had been done, and perhaps that was the point. Studying and engaging on climate change had become decidedly less fun. So I started researching and teaching other topics and have found the change in direction refreshing. Don’t worry about me: I have tenure and supportive campus leaders and regents. No one is trying to get me fired for my new scholarly pursuits.
But the lesson is that a lone academic is no match for billionaires, well-funded advocacy groups, the media, Congress and the White House. If academics—in any subject—are to play a meaningful role in public debate, the country will have to do a better job supporting good-faith researchers, even when their results are unwelcome. This goes for Republicans and Democrats alike, and to the administration of President-elect Trump.
Academics and the media in particular should support viewpoint diversity instead of serving as the handmaidens of political expediency by trying to exclude voices or damage reputations and careers. If academics and the media won’t support open debate, who will?
---
Mr. Pielke is a professor and director of the Sports Governance Center at the University of Colorado, Boulder. His most recent book is “The Edge: The Wars Against Cheating and Corruption in the Cutthroat World of Elite Sports” (Roaring Forties Press, 2016).
Sunday, September 25, 2016
The Value of Prospective Reasoning for Close Relationships
this is not only useful for close relationships:
The Value of Prospective Reasoning for Close Relationships
- 1Department of Psychology, University of Waterloo, Waterloo, Ontario, Canada
- 2Child Study Center, Yale University, New Haven, CT, USA
- Alex C. Huynh or Igor Grossmann, Department of Psychology, University of Waterloo, 200 University Avenue West, Waterloo, Ontario, Canada N2L 3G1. Emails: alex.huynh@uwaterloo.ca; igrossma@uwaterloo.ca
Abstract
http://spp.sagepub.com/content/early/2016/07/27/1948550616660591.abstract
We examined how adopting a future (vs. present)-oriented perspective when reflecting on a relationship conflict impacts the process of reasoning and relationship well-being. Across two studies, participants instructed to think about how they would feel in the future (vs. present) expressed more adaptive reasoning over a relationship conflict—low partner blame, greater insight, and greater forgiveness, which was then associated with greater relationship well-being—for example, more positive versus negative emotions about the relationship and expectations that the relationship will grow. These findings were driven by a decrease in person-centered language when reflecting on the conflict. Implications for understanding how tempoSunday, April 17, 2016
The Great Recession Blame Game - Banks took the heat, but it was Washington that propped up subprime debt and then stymied recovery
The Great Recession Blame Game
Banks took the heat, but it was Washington that propped up subprime debt and then stymied recovery.
By Phil Gramm and Michael SolonWSJ, April 15, 2016 6:09 p.m. ET
When the subprime crisis broke in the 2008 presidential election year, there was little chance for a serious discussion of its root causes. Candidate Barack Obama weaponized the crisis by blaming greedy bankers, unleashed when financial regulations were “simply dismantled.” He would go on to blame them for taking “huge, reckless risks in pursuit of quick profits and massive bonuses.”
That mistaken diagnosis was the justification for the Dodd-Frank Act and the stifling regulations that shackled the financial system, stunted the recovery and diminished the American dream.
In fact, when the crisis struck, banks were better capitalized and less leveraged than they had been in the previous 30 years. The FDIC’s reported capital-to-asset ratio for insured commercial banks in 2007 was 10.2%—76% higher than it was in 1978. Federal Reserve data on all insured financial institutions show the capital-to-asset ratio was 10.3% in 2007, almost double its 1984 level, and the biggest banks doubled their capitalization ratios. On Sept. 30, 2008, the month Lehman failed, the FDIC found that 98% of all FDIC institutions with 99% of all bank assets were “well capitalized,” and only 43 smaller institutions were undercapitalized.
In addition, U.S. banks were by far the best-capitalized banks in the world. While the collapse of 31 million subprime mortgages fractured financial capital, the banking system in the 30 years before 2007 would have fared even worse under such massive stress.
Virtually all of the undercapitalization, overleveraging and “reckless risks” flowed from government policies and institutions. Federal regulators followed international banking standards that treated most subprime-mortgage-backed securities as low-risk, with lower capital requirements that gave banks the incentive to hold them. Government quotas forced Fannie Mae and Freddie Mac to hold ever larger volumes of subprime mortgages, and politicians rolled the dice by letting them operate with a leverage ratio of 75 to one—compared with Lehman’s leverage ratio of 29 to one.
Regulators also eroded the safety of the financial system by pressuring banks to make subprime loans in order to increase homeownership. After eight years of vilification and government extortion of bank assets, often for carrying out government mandates, it is increasingly clear that banks were more scapegoats than villains in the subprime crisis.
Similarly, the charge that banks had been deregulated before the crisis is a myth. From 1980 to 2007 four major banking laws—the Competitive Equality Banking Act (1987), the Financial Institutions, Reform, Recovery and Enforcement Act (1989), the Federal Deposit Insurance Corporation Improvement Act (1991), and Sarbanes-Oxley (2002)—undeniably increased bank regulations and reporting requirements. The charge that financial regulation had been dismantled rests almost solely on the disputed effects of the 1999 Gramm-Leach-Bliley Act (GLBA).
Prior to GLBA, the decades-old Glass-Steagall Act prohibited deposit-taking, commercial banks from engaging in securities trading. GLBA, which was signed into law by President Bill Clinton, allowed highly regulated financial-services holding companies to compete in banking, insurance and the securities business. But each activity was still required to operate separately and remained subject to the regulations and capital requirements that existed before GLBA. A bank operating within a holding company was still subject to Glass-Steagall (which was not repealed by GLBA)—but Glass-Steagall never banned banks from holding mortgages or mortgage-backed securities in the first place.
GLBA loosened federal regulations only in the narrow sense that it promoted more competition across financial services and lowered prices. When he signed the law, President Clinton said that “removal of barriers to competition will enhance the stability of our financial system, diversify their product offerings and thus their sources of revenue.” The financial crisis proved his point. Financial institutions that had used GLBA provisions to diversify fared better than those that didn’t.
Mr. Clinton has always insisted that “there is not a single solitary example that [GLBA] had anything to do with the financial crisis,” a conclusion that has never been refuted. When asked by the New York Times in 2012, Sen. Elizabeth Warren agreed that the financial crisis would not have been avoided had GLBA never been adopted. And President Obama effectively exonerated GLBA from any culpability in the financial crisis when, with massive majorities in both Houses of Congress, he chose not to repeal GLBA. In fact, Dodd-Frank expanded GLBA by using its holding-company structure to impose new regulations on systemically important financial institutions.
Another myth of the financial crisis is that the bailout was required because some banks were too big to fail. Had the government’s massive injection of capital—the Troubled Asset Relief Program, or TARP—been only about bailing out too-big-to-fail financial institutions, at most a dozen institutions might have received aid. Instead, 954 financial institutions received assistance, with more than half the money going to small banks.
Many of the largest banks did not want or need aid—and Lehman’s collapse was not a case of a too-big-to-fail institution spreading the crisis. The entire financial sector was already poisoned by the same subprime assets that felled Lehman. The subprime bailout occurred because the U.S. financial sector was, and always should be, too important to be allowed to fail.
Consider that, according to the Congressional Budget Office, bailing out the depositors of insolvent S&Ls in the 1980s on net cost taxpayers $258 billion in real 2009 dollars. By contrast, of the $245 billion disbursed by TARP to banks, 67% was repaid within 14 months, 81% within two years and the final totals show that taxpayers earned $24 billion on the banking component of TARP. The rapid and complete payback of TARP funds by banks strongly suggests that the financial crisis was more a liquidity crisis than a solvency crisis.
What turned the subprime crisis and ensuing recession into the “Great Recession” was not a failure of policies that addressed the financial crisis. Instead, it was the failure of subsequent economic policies that impeded the recovery.
The subprime crisis was largely the product of government policy to promote housing ownership and regulators who chose to promote that social policy over their traditional mission of guaranteeing safety and soundness. But blaming the financial crisis on reckless bankers and deregulation made it possible for the Obama administration to seize effective control of the financial system and put government bureaucrats in the corporate boardrooms of many of the most significant U.S. banks and insurance companies.
Suffocating under Dodd-Frank’s “enhanced supervision,” banks now focus on passing stress tests, writing living wills, parking capital at the Federal Reserve, and knowing their regulators better than they know their customers. But their ability to help the U.S. economy turn dreams into businesses and jobs has suffered.
In postwar America, it took on average just 2 1/4 years to regain in each succeeding recovery all of the real per capita income that had been lost in the previous recession. At the current rate of the Obama recovery, it will take six more years, 14 years in all, for the average American just to earn back what he lost in the last recession. Mr. Obama’s policies in banking, health care, power generation, the Internet and so much else have Europeanized America and American exceptionalism has waned—sadly proving that collectivism does not work any better in America than it has ever worked anywhere else.
Mr. Gramm, a former chairman of the Senate Banking Committee, is a visiting scholar at the American Enterprise Institute. Mr. Solon is a partner of US Policy Metrics.
Saturday, March 12, 2016
A New Tool for Avoiding Big-Bank Failures: ‘Chapter 14.’ By Emily C. Kapur and John B. Taylor
A New Tool for Avoiding Big-Bank Failures: ‘Chapter 14.’ By Emily C. Kapur and John B. Taylor
Bernie Sanders is right, Dodd-Frank doesn’t work, but his solution is wrong. Here’s what would work.
WSJ, Mar 11, 2016
For months Democratic presidential hopeful Bernie Sanders has been telling Americans that the government must “break up the banks” because they are “too big to fail.” This is the wrong role for government, but Sen. Sanders and others on both sides of the aisle have a point. The 2010 Dodd-Frank financial law, which was supposed to end too big to fail, has not.
Dodd-Frank gave the Federal Deposit Insurance Corp. authority to take over and oversee the reorganization of so-called systemically important financial institutions whose failure could pose a risk to the economy. But no one can be sure the FDIC will follow its resolution strategy, which leads many to believe Dodd-Frank will be bypassed in a crisis.
Reflecting on his own experience as overseer of the U.S. Treasury’s bailout program in 2008-09, Neel Kashkari, now president of the Federal Reserve Bank of Minneapolis, says government officials are once again likely to bail out big banks and their creditors rather than “trigger many trillions of additional costs to society.”
The solution is not to break up the banks or turn them into public utilities. Instead, we should do what Dodd-Frank failed to do: Make big-bank failures feasible without tanking the economy by writing a process to do so into the bankruptcy code through a new amendment—a “chapter 14.”
Chapter 14 would impose losses on shareholders and creditors while preventing the collapse of one firm from spreading to others. It could be initiated by the lead regulatory agency and would begin with an over-the-weekend bankruptcy hearing before a pre-selected U.S. district judge. After the hearing, the court would convert the bank’s eligible long-term debt into equity, reorganizing the bankrupt bank’s balance sheet without restructuring its operations.
A new non-bankrupt company, owned by the bankruptcy estate (the temporary legal owner of a failed company’s assets and property), would assume the recapitalized balance sheet of the failed bank, including all obligations to its short-term creditors. But the failed bank’s shareholders and long-term bondholders would have claims only against the estate, not the new company.
The new firm would take over the bank’s business and be led by the bankruptcy estate’s chosen private-sector managers. With regulations requiring minimum long-term debt levels, the new firm would be solvent. The bankruptcy would be entirely contained, both because the new bank would keep operating and paying its debts, and because losses would be allocated entirely to the old bank’s shareholders and long-term bondholders.
An examination by one of us (Emily Kapur) of previously unexplored discovery and court documents from Lehman Brothers’ September 2008 bankruptcy shows that chapter 14 would have worked especially well for that firm, without adverse effects on the financial system.
Here is how Lehman under chapter 14 would have played out. The process would start with a single, brief hearing for the parent company to facilitate the creation of a new recapitalized company—a hearing in which the judge would have minimal discretion. By contrast, Lehman’s actual bankruptcy involved dozens of complex proceedings in the U.S. and abroad, creating huge uncertainty and making it impossible for even part of the firm to remain in business.
When Lehman went under it had $20 billion of book equity and $96 billion of long-term debt, while its perceived losses were around $54 billion. If the costs of a chapter 14 proceeding amounted to an additional (and conservative) $10 billion, then the new company would be well capitalized with around $52 billion of equity.
The new parent company would take over Lehman’s subsidiaries, all of which would continue in business, outside of bankruptcy. And the new company would honor all obligations to short-term creditors, such as repurchase agreement and commercial paper lenders.
The result: Short-term creditors would have no reason to run on the bank before the bankruptcy proceeding, knowing they would be protected. And they would have no reason to run afterward, because the new firm would be solvent.
Without a run, Lehman would have $30 billion more liquidity after resolution than it had in 2008, easing subsequent operational challenges. In the broader marketplace, money-market funds would have no reason to curtail lending to corporations, hedge funds would not flee so readily from prime brokers, and investment banks would be less likely to turn to the government for financing.
Eventually, the new company would make a public stock offering to value the bankruptcy estate’s ownership interest, and the estate would distribute its assets according to statutory priority rules. If the valuation came in at $52 billion, Lehman shareholders would be wiped out, as they were in 2008. Long-term debtholders, with $96 billion in claims, would recover 54 cents on the dollar, more than the 37 cents they did receive. All other creditors—the large majority—would be paid in full at maturity.
Other reforms, such as higher capital requirements, may yet be needed to reduce risk and lessen the chance of financial failure. But that is no reason to wait on bankruptcy reform. A bill along the lines of the chapter 14 that we advocate passed the House Judiciary Committee on Feb. 11. Two versions await action in the Senate. Let’s end too big to fail, once and for all.
Ms. Kapur is an attorney and economics Ph.D. candidate at Stanford University. Mr. Taylor, a professor of economics at Stanford, co-edited “Making Failure Feasible” (Hoover, 2015) with Kenneth Scott and Thomas Jackson, which includes Ms. Kapur’s study.
Sunday, January 17, 2016
The Secret of Immigrant Genius - Having your world turned upside down sparks creative thinking
The Secret of Immigrant Genius. By Eric Weiner
Having your world turned upside down sparks creative thinking
Wall Street Journal, Jan 16, 2016
http://www.wsj.com/articles/the-secret-of-immigrant-genius-1452875951
Scan the roster of history’s intellectual and artistic giants, and you quickly notice something remarkable: Many were immigrants or refugees, from Victor Hugo, W.H. Auden and Vladimir Nabokov to Nikolas Tesla, Marie Curie and Sigmund Freud. At the top of this pantheon sits the genius’s genius: Einstein. His “miracle year” of 1905, when he published no fewer than four groundbreaking scientific papers, occurred after he had emigrated from Germany to Switzerland.Lost in today’s immigration debate is this unavoidable fact: An awful lot of brilliant minds blossomed in alien soil. That is especially true of the U.S., a nation defined by the creative zeal of the newcomer. Today, foreign-born residents account for only 13% of the U.S. population but hold nearly a third of all patents and a quarter of all Nobel Prizes awarded to Americans.
But why? What is it about the act of relocating to distant shores—voluntarily or not—that sparks creative genius?
When pressed to explain, we usually turn to a tidy narrative: Scruffy but determined immigrant, hungry for success, arrives on distant shores. Immigrant works hard. Immigrant is bolstered by a supportive family, as well as a wider network from the old country. Immigrant succeeds, buys flashy new threads.
It is an inspiring narrative—but it is also misleading. That fierce drive might explain why immigrants and refugees succeed in their chosen fields, but it fails to explain their exceptional creativity. It fails to explain their genius.
Recent research points to an intriguing explanation. Several studies have shed light on the role of “schema violations” in intellectual development. A schema violation occurs when our world is turned upside-down, when temporal and spatial cues are off-kilter.
In a 2011 study led by the Dutch psychologist Simone Ritter and published in the Journal of Experimental Social Psychology, researchers asked some subjects to make breakfast in the “wrong” order and others to perform the task in the conventional manner. Those in the first group—the ones engaged in a schema violation—consistently demonstrated more “cognitive flexibility,” a prerequisite for creative thinking.
This suggests that it isn’t the immigrant’s ambition that explains her creativity but her marginality. Many immigrants possess what the psychologist Nigel Barber calls “oblique perspective.” Uprooted from the familiar, they see the world at an angle, and this fresh perspective enables them to surpass the merely talented. To paraphrase the philosopher Schopenhauer: Talent hits a target no one else can hit. Genius hits a target no one else can see.
Freud is a classic case. As a little boy, he and his family joined a flood of immigrants from the fringes of the Austro-Hungarian empire to Vienna, a city where, by 1913, less than half the population was native-born. Freud tried to fit in. He wore lederhosen and played a local card game called tarock, but as a Jew and an immigrant, he was never fully accepted. He was an insider-outsider, residing far enough beyond the mainstream to see the world through fresh eyes yet close enough to propagate his ideas.
Marie Curie, born and raised in Poland, was frustrated by the lack of academic opportunities in her homeland. In 1891, at age 24, she immigrated to Paris. Life was difficult at first; she studied during the day and tutored in the evenings. Two years later, though, she earned a degree in physics, launching a stellar career that culminated with two Nobel prizes.
Exceptionally creative people such as Curie and Freud possess many traits, of course, but their “openness to experience” is the most important, says the cognitive psychologist Scott Barry Kaufman of the University of Pennsylvania. That seems to hold for entire societies as well.
Consider a country like Japan, which has historically been among the world’s most closed societies. Examining the long stretch of time from 580 to 1939, Dean Simonton of the University of California, writing in the Journal of Personality and Social Psychology, compared Japan’s “extra cultural influx” (from immigration, travel abroad, etc.) in different eras with its output in such fields as medicine, philosophy, painting and literature. Dr. Simonton found a consistent correlation: the greater Japan’s openness, the greater its achievements.
It isn’t necessarily new ideas from the outside that directly drive innovation, Dr. Simonton argues. It’s simply their presence as a goad. Some people start to see the arbitrary nature of many of their own cultural habits and open their minds to new possibilities. Once you recognize that there is another way of doing X or thinking about Y, all sorts of new channels open to you, he says. “The awareness of cultural variety helps set the mind free,” he concludes.
History bears this out. In ancient Athens, foreigners known as metics (today we’d call them resident aliens) contributed mightily to the city-state’s brilliance. Renaissance Florence recruited the best and brightest from the crumbling Byzantine Empire. Even when the “extra cultural influx” arrives uninvited, as it did in India during the British Raj, creativity sometimes results. The intermingling of cultures sparked the “Bengal Renaissance” of the late 19th century.
In a 2014 study published in the Creativity Research Journal, Dr. Ritter and her colleagues found that people did not need to participate directly in a schema violation in order to boost their own creative thinking. Merely watching an actor perform an “upside-down” task did the trick, provided that the participants identified with the actor. This suggests that even non-immigrants benefit from the otherness of the newcomer.
Not all cultural collisions end happily, of course, and not all immigrants become geniuses. The adversity that spurs some to greatness sends others into despair. But as we wrestle with our own immigration and refugee policies, we would be wise to view the welcome mat not as charity but, rather, as enlightened self-interest. Once creativity is in the air, we all breathe a more stimulating air.
—Mr. Weiner is the author of “The Geography of Genius: A Search for the World’s Most Creative Places, From Ancient Athens to Silicon Valley,” just published by Simon & Schuster
Sunday, November 29, 2015
The Fed: shortcomings in policies & procedures, insufficient model testing & incomplete structures & information flows for proper oversight
The Fed Is Stressed Out. A WSJ Editorial
www.wsj.com/articles/the-fed-is-stressed-out-1448574493
What if a bank had the same problem the regulators have?Wall Street Journal, Nov 28, 2015
Almost nobody in Washington cares, and most of the financial media haven’t noticed. But the inspector general’s office at the Federal Reserve recently reported the disturbing results of an internal investigation. Last December the central bank internally identified “fundamental weaknesses in key areas” related to the Fed’s own governance of the stress testing it conducts of financial firms.
The Fed’s stress tests theoretically judge whether the country’s largest banks can withstand economic downturns. So the Fed identifying a problem with its own management of the stress tests is akin to an energy company noticing that something is not right at one of its nuclear reactors.
According to the inspector general, “The governance review findings include, among other items, a shortcoming in policies and procedures, insufficient model testing” and “incomplete structures and information flows to ensure proper oversight of model risk management.” These Fed models are essentially a black box to the public, so there’s no way to tell from the outside how large a problem this is.
The Fed’s ability to construct and maintain financial and economic models is much more than a subject of intellectual curiosity. Given that Fed-approved models at the heart of the so-called Basel capital standards proved to be spectacularly wrong in the run-up to the last financial crisis, the new report is more reason to wonder why anyone should expect them to be more accurate the next time.
The Fed’s IG adds that last year’s internal review “notes that similar findings identified at institutions supervised by the Federal Reserve have typically been characterized as matters requiring immediate attention or as matters requiring attention.”
That’s for sure. Receiving a “matters requiring immediate attention” letter from the Fed is a big deal at a bank. The Journal reported last year that after the Fed used this language in a letter to Credit Suisse castigating the bank’s work in the market for leveraged loans, the bank chose not to participate in the financing of several buy-out deals.
But it’s hard to tell if anything will come from this report that seems to have fallen deep in a Beltway forest. The IG office’s report says that the Fed is taking a number of steps to correct its shortcomings, and that the Fed’s reform plans “appear to be responsive to our recommendations.”
The Fed wields enormous power with little democratic accountability and transparency. This was tolerable when the Fed’s main job was monetary, but its vast new regulatory authority requires more scrutiny. Congress should add the Fed’s stressed-out standards for stress tests to its oversight list.
www.wsj.com/articles/the-fed-is-stressed-out-1448574493
What if a bank had the same problem the regulators have?Wall Street Journal, Nov 28, 2015
Almost nobody in Washington cares, and most of the financial media haven’t noticed. But the inspector general’s office at the Federal Reserve recently reported the disturbing results of an internal investigation. Last December the central bank internally identified “fundamental weaknesses in key areas” related to the Fed’s own governance of the stress testing it conducts of financial firms.
The Fed’s stress tests theoretically judge whether the country’s largest banks can withstand economic downturns. So the Fed identifying a problem with its own management of the stress tests is akin to an energy company noticing that something is not right at one of its nuclear reactors.
According to the inspector general, “The governance review findings include, among other items, a shortcoming in policies and procedures, insufficient model testing” and “incomplete structures and information flows to ensure proper oversight of model risk management.” These Fed models are essentially a black box to the public, so there’s no way to tell from the outside how large a problem this is.
The Fed’s ability to construct and maintain financial and economic models is much more than a subject of intellectual curiosity. Given that Fed-approved models at the heart of the so-called Basel capital standards proved to be spectacularly wrong in the run-up to the last financial crisis, the new report is more reason to wonder why anyone should expect them to be more accurate the next time.
The Fed’s IG adds that last year’s internal review “notes that similar findings identified at institutions supervised by the Federal Reserve have typically been characterized as matters requiring immediate attention or as matters requiring attention.”
That’s for sure. Receiving a “matters requiring immediate attention” letter from the Fed is a big deal at a bank. The Journal reported last year that after the Fed used this language in a letter to Credit Suisse castigating the bank’s work in the market for leveraged loans, the bank chose not to participate in the financing of several buy-out deals.
But it’s hard to tell if anything will come from this report that seems to have fallen deep in a Beltway forest. The IG office’s report says that the Fed is taking a number of steps to correct its shortcomings, and that the Fed’s reform plans “appear to be responsive to our recommendations.”
The Fed wields enormous power with little democratic accountability and transparency. This was tolerable when the Fed’s main job was monetary, but its vast new regulatory authority requires more scrutiny. Congress should add the Fed’s stressed-out standards for stress tests to its oversight list.
Tuesday, November 10, 2015
Yale's Little Robespierres - Students berate faculty who try to defend free speech
Yale's Little Robespierres. WSJ Editorial
http://www.wsj.com/articles/yales-little-robespierres-1447115476
Students berate faculty who try to defend free speech.WSJ, Nov. 9, 2015 7:31 p.m. ET
Someone at Yale University should have dressed up as Robespierre for Halloween, as its students seem to have lost their minds over what constitutes a culturally appropriate costume. Identity and grievance politics keeps hitting new lows on campus, and now even liberal professors are being consumed by the revolution.
On Oct. 28 Yale Dean Burgwell Howard and Yale’s Intercultural Affairs Committee blasted out an email advising students against “culturally unaware” Halloween costumes, with self-help questions such as: “If this costume is meant to be historical, does it further misinformation or historical and cultural inaccuracies?” Watch out for insensitivity toward “religious beliefs, Native American/Indigenous people, Socio-economic strata, Asians, Hispanic/Latino, Women, Muslims, etc.” In short, everyone.
Who knew Yale still employed anyone willing to doubt the costume wardens? But in response to the dean’s email, lecturer in early childhood education Erika Christakis mused to the student residential community she oversees with her husband, Nicholas, a Yale sociologist and physician: “I don’t wish to trivialize genuine concerns,” but she wondered if colleges had morphed into “places of censure and prohibition.”
And: “Nicholas says, if you don’t like a costume someone is wearing, look away, or tell them you are offended. Talk to each other. Free speech and the ability to tolerate offence are the hallmarks of a free and open society.”
Some 750 Yale students, faculty, alumni and others signed a letter saying Ms. Christakis’s “jarring” email served to “further degrade marginalized people,” as though someone with a Yale degree could be marginalized in America. Students culturally appropriated a Puritan shaming trial and encircled Mr. Christakis on a lawn, cursing and heckling him to quit. “I stand behind free speech,” he told the mob.
Hundreds of protesters also turned on Jonathan Holloway, Yale’s black dean, demanding to know why the school hadn’t addressed allegations that a black woman had been kept out of a fraternity party. Fragile scholars also melted down over a visiting speaker who made a joke about Yale’s fracas while talking at a conference sponsored by the school’s William F. Buckley, Jr. program focused on . . . the future of free speech.
The episode reminds us of when Yale alumnus Lee Bass in 1995 asked the university to return his $20 million donation. Mr. Bass had hoped to seed a curriculum in Western civilization, but Yale’s faculty ripped the idea as white imperialism, and he requested a refund. Two decades later the alternative to Western civilization is on display, and it seems to be censorship.
According to a student reporting for the Washington Post, Yale president Peter Salovey told minority students in response to the episode that “we failed you.” That’s true, though not how he means it. The failure is that elite colleges are turning out ostensible leaders who seem to have no idea why America’s Founders risked extreme discomfort—that is, death—for the right to speak freely.
http://www.wsj.com/articles/yales-little-robespierres-1447115476
Students berate faculty who try to defend free speech.WSJ, Nov. 9, 2015 7:31 p.m. ET
Someone at Yale University should have dressed up as Robespierre for Halloween, as its students seem to have lost their minds over what constitutes a culturally appropriate costume. Identity and grievance politics keeps hitting new lows on campus, and now even liberal professors are being consumed by the revolution.
On Oct. 28 Yale Dean Burgwell Howard and Yale’s Intercultural Affairs Committee blasted out an email advising students against “culturally unaware” Halloween costumes, with self-help questions such as: “If this costume is meant to be historical, does it further misinformation or historical and cultural inaccuracies?” Watch out for insensitivity toward “religious beliefs, Native American/Indigenous people, Socio-economic strata, Asians, Hispanic/Latino, Women, Muslims, etc.” In short, everyone.
Who knew Yale still employed anyone willing to doubt the costume wardens? But in response to the dean’s email, lecturer in early childhood education Erika Christakis mused to the student residential community she oversees with her husband, Nicholas, a Yale sociologist and physician: “I don’t wish to trivialize genuine concerns,” but she wondered if colleges had morphed into “places of censure and prohibition.”
And: “Nicholas says, if you don’t like a costume someone is wearing, look away, or tell them you are offended. Talk to each other. Free speech and the ability to tolerate offence are the hallmarks of a free and open society.”
Some 750 Yale students, faculty, alumni and others signed a letter saying Ms. Christakis’s “jarring” email served to “further degrade marginalized people,” as though someone with a Yale degree could be marginalized in America. Students culturally appropriated a Puritan shaming trial and encircled Mr. Christakis on a lawn, cursing and heckling him to quit. “I stand behind free speech,” he told the mob.
Hundreds of protesters also turned on Jonathan Holloway, Yale’s black dean, demanding to know why the school hadn’t addressed allegations that a black woman had been kept out of a fraternity party. Fragile scholars also melted down over a visiting speaker who made a joke about Yale’s fracas while talking at a conference sponsored by the school’s William F. Buckley, Jr. program focused on . . . the future of free speech.
The episode reminds us of when Yale alumnus Lee Bass in 1995 asked the university to return his $20 million donation. Mr. Bass had hoped to seed a curriculum in Western civilization, but Yale’s faculty ripped the idea as white imperialism, and he requested a refund. Two decades later the alternative to Western civilization is on display, and it seems to be censorship.
According to a student reporting for the Washington Post, Yale president Peter Salovey told minority students in response to the episode that “we failed you.” That’s true, though not how he means it. The failure is that elite colleges are turning out ostensible leaders who seem to have no idea why America’s Founders risked extreme discomfort—that is, death—for the right to speak freely.
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