Friday, April 24, 2020

Heckman Haiku

Jim Heckman's interview with Gonazlo Schwartz at the Archbridge Institute is making the rounds of economists. I admire it for how much the interviewer and Heckman pack in so little space, so pithy, well expressed, and so happy to trounce on today's pieties. (As blog readers will have noticed, short does not come easily to me.) It's hard to summarize a Haiku -- go read the whole thing. But I'll try.
Gonzalo Schwarz: Many commentators have said that it is not possible to achieve the American Dream any more in the United States. Do you think the American Dream is alive and well?
Dr. James Heckman: Ask any immigrant. They are grateful for the chances that America has given them. Many came with nothing. They live in decent neighborhoods and their families have better lives than they could have before coming here. Their children go to college and integrate into American society. The progress of African Americans over the past century is staggering. Many have shaken off the legacies of poverty and discrimination....
Social mobility:
G: ...what do you think are the main barriers to income or social mobility?...
H: The main barriers to developing effective policies for income and social mobility is fear of honest engagement in the changes in the American family and the consequences it has wrought. It is politically incorrect to express the truth and go to the source of problems.... Powerful censorship is at play across the entire society....The family is the source of life and growth. Families build values, encourage (or discourage) their children in school and out. Families — far more than schools — create or inhibit life opportunities. A huge body of evidence shows the powerful role of families in shaping the lives of their children. Dysfunctional families produce dysfunctional children. Schools can only partially compensate for the damage done to the children by dysfunctional families.
He is right on the fact, how blissfully it is ignored by those wishing more "policies" to address inequality and other social programs, and censorship against those who say it.

On "current academic and policy discussion on income mobility and inequality, "

The current research in the field is shoddy. It has gained traction because it appeals to the negative image of American society held by leading opinion makers like the New York Times and the Atlantic. In truth, the evidence based on the IRS data is deeply flawed and has been incorrectly analyzed. ... The same can be said of the academics who write about the growth of the Top 1%. Careful studies show much less growth in disparity than what is picked up in the popular press and by populist politicians. 
Economists thrill to "shoddy",  one-big-star-disparages-other-big-stars inside baseball. But the fact is true -- inequality statistics are horrendously badly calculated, and are often used and abused even in academic circles to push a political agenda.
A new “wisdom” has emerged: large samples more than compensate for faulty or missing data. The wisdom of this crowd is that sample size trumps careful data analysis.
Again roman-a-clef if you care to know who he is talking about. And they might answer that identification is hard in small samples too, and that they acknowledge the limits of what one can infer from well estimated correlations, so  "wisdom" is a bit of straw man. A precisely estimated correlation is also an interesting stylized fact. But putting aside inside baseball, it is an important point for everyone to remember in the big-data age.

I attended Jim's econometrics PhD class when I was an assistant professor at Chicago. He started with this: What are the three most important issues in Econometrics? 1) Identification 2) Identification 3) Identification.


  1. That's impressive. I had no idea of Heckman's social views.

  2. : Ask any immigrant. They are grateful for the chances that America has given them.

    OK, let's ask:

    The coronavirus pandemic has slowed migration to the U.S. to a trickle, according to new figures released by the Trump administration on Thursday.

    The reason, say human smugglers, migrant advocates and analysts is the global health crisis that has knocked the world economy flat, led the U.S. to close its southern border to migrants and forced countries around the world—including the Central American nations many of the migrants are coming from—to close borders and implement draconian domestic curfews, making movement near...

  3. There seems to be some conflation of censorship with people not liking ideas. A Nobel laureate on stage saying his piece is not being censored, he's just upset that many in his circle would disagree with him.

  4. “Families build values, encourage (or discourage) their children in school and out. Families — far more than schools — create or inhibit life opportunities.”

    I’ve seen economists make statements like this one before. I don’t know what data Heckman is referring to, but for decades developmental psychologists have been telling us community matters far more than family — exactly the reverse of Heckman’s statement. Steven Pinker details, at great length in his book, The Blank Slate, that parental influence over life outcomes, once you control for genetics, is extremely small. Bad communities and bad schools drown out the influence of the parents. You can see how strong the influence of peer groups are with children by looking at how immigrant children change: they acquire American accents, not the accent of their parents, and they adopt the customs and behaviours of their friends regardless of how hard the parents try to stop it. Developmental psychologists have a wealth of evidence that show parents – when controlling for genetic inheritance – have far less influence over life outcomes than imagined. The evidence suggests (see The Blank Slate) that life outcomes are 50% to 70% genetics, 30% to 50% community, 0% to 5% parents.

    Of course family dysfunction leads to poor communities, nothing happens in isolation, but bad communities almost always destroy the efforts of the best intentioned parents. That observation has policy implications.

    If you have to make a Faustian bargain at birth, as Steven Pinker points out, take the bad family in a good community over the good family in a bad community.

  5. American (and the world over-) families are in decline due to millenia of gender discrimination (started with agriculture that led to patriarchy that led to women as baby factories due to high childbirth deaths of women etc). For the first time in history, due to family planning and advances in cooking, cleaning, refrigeration women got liberated and they don't want to live with men forever until death to just raise kids as the only thing in life (ask any well educated daughter). Decline in american families is highly correlated with women's freedom and lowering of abuse. Please Dr. Cochran, look back at history and tell me when were women more free until now? What we call broken families are also places with lower abuse and more freedom.

  6. I often cited Heckman’s work in my policy-advising days. His work on early childhood intervention was often misused by those with particular agendas. For example, the benefits that he found from early childhood education related only to those in very dysfunctional families. The main benefits in later life were a lower likelihood of going to jail, more chance of showing up for work and less chance of bearing children as a single parent. The gains to society included lower incarceration rates. His work was used, inter alia, to justify support through massive largesse to parents of all young children in Australia (my old boss PM Kevin Rudd was a major offender), although it in no way supported it - so we now have very expensive and heavily-subsidised pre-schools in Oz, for little or no societal gain.

  7. Heckman's comments in the interview are a wonderful summary of his presentation as a discussant of Neighborhood Effects paper, from back in 2018. Video is available, well worth the watch.


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