Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, March 25, 2015

AI Summary. Critics call the SAT a measure of family affluence, but data indicate parental IQ accounts for much of the income-score relationship: moving from $20,000 to $200,000 in family income shifts scores from the 31st to the 74th percentile, but only from the 50th to the 76th percentile once a mother's IQ is controlled for, with minimal effect above $125,000.

Charles Murray Wall Street Journal
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The SAT is often criticized as a measure of student affluence, but data suggests that parental IQ, not income, plays a significant role in test outcomes.

Does family income or parental IQ explain SAT score gaps?

Core argument: Moving from a $20,000 to a $200,000 family income shifts SAT scores from the 31st to the 74th percentile, but controlling for the mother's IQ narrows the gain to the 50th to 76th percentile.

The SAT is often criticized as a measure of student affluence, but data suggests that parental IQ, not income, plays a significant role in test outcomes. For instance, moving from a $20,000 to $200,000 family income shifts SAT scores from the 31st to the 74th percentile, yet when controlling for a mother's IQ, the increase is only from the 50th to the 76th percentile. This indicates that beyond $125,000, income has minimal impact on scores. The correlation between income and IQ means affluent families often have higher IQs, not just more resources. Thus, elite colleges admitting students based on academic achievement will naturally favor children from upper-middle-class backgrounds due to inherited cognitive abilities rather than wealth alone. This challenges the notion that economic inequality solely drives academic disparities and suggests a need for educational systems that recognize diverse talents beyond academics.

Takeaways by Macro Roundup® AI

  1. Moving from a $20,000 to a $200,000 family income shifts SAT scores from the 31st to the 74th percentile, but controlling for the mother's IQ narrows the gain to the 50th to 76th percentile.
  2. Above $125,000 of family income, additional income has minimal impact on SAT scores, and the correlation between income and IQ suggests affluent families tend to have higher IQs rather than only more resources.
  3. Elite colleges admitting students on academic achievement will, by this argument, favor children from upper-middle-class backgrounds because of inherited cognitive abilities rather than wealth alone, challenging the view that economic inequality alone drives academic disparities.

Murray is always a joy to read
"...Now let’s look at the income effect in the PIAT when the mother’s IQ is statistically held constant at the national average of 100. Going to a $200,000 family income from a $1,000 family income raises the score only to the 76th percentile from the 50th—an increase of 26 percentiles. More important, almost all of the effect occurs for people making less than $125,000. Going to $200,000 from $125,000 moves the PIAT score only to the 76th percentile from the 73rd—a trivial change. Beyond $200,000, PIAT scores go down as income increases...people refuse to confront it because it exposes an unwelcome reality...more strictly that elite colleges admit students purely on the basis of academic accomplishment, the more their student bodies will be populated with the offspring of the upper-middle class and wealthy—not because their parents are rich, but because they are smart. No improvement in the SAT can do away with this underlying reality.I haven’t used the word “meritocracy” to describe this because it doesn’t apply. Merit has nothing to do with possessing a high IQ.It is pure luck. And that leads to my reason for writing this. As long as we insist on blaming inequality of academic outcomes on economic inequality, we will pursue policies that end up punishing children whose strengths do not lie in academics. We will continue to tell them that they will be second-class citizens if they don’t get a college degree; to encourage them to accumulate student debt only to drop out or obtain a worthless degree. Worse, we will prevent them from capitalizing on their other gifts of character, grit and the many skills that the SAT doesn’t test. What we need is an educational system that brings children with all combinations of assets and deficits to adulthood having identified things they enjoy doing and having learned how to do them well. What we need is a society that has valued places for people with all combinations of assets and deficits. Both goals call for completely different agendas than the ones that dominate today’s rhetoric about educational and economic inequality."Murray, Charles, "Why the SAT Isn’t a ‘Student Affluence Test’,"The Wall Street Journal, March 24, 2015. Available at:http://www.wsj.com/articles/charles-murray-why-the-sat-isnt-a-student-affluence-test-1427238664Why the SAT Isn’t a ‘Student Affluence Test’ A lot of the apparent income effect on standardized tests is owed to parental IQ—a fact that needs addressing. By Charles Murray March 24, 2015 7:11 p.m. ET Spring is here, which means it’s time for elite colleges to send out acceptance letters. Some will go to athletes, the children of influential alumni and those who round out the school’s diversity profile. But most will go to the offspring of the upper middle class. We all know why, right? Affluent parents get their kids into the best colleges by sending them to private schools or spending lots of money on test preparation courses. Either way, it perpetuates privilege from generation to generation. The College Board provides ammunition for this accusation every year when it shows average SAT scores by family income. The results are always the same: The richer the parents, the higher the children’s SAT scores. This has led some to view the SAT as merely another weapon in the inequality wars, and to suggest that SAT should actually stand for “Student Affluence Test.” It’s a bum rap. All high-quality academic tests look as if they’re affluence tests. It’s inevitable. Parental IQ is correlated with children’s IQ everywhere. In all advanced societies, income is correlated with IQ. Scores on academic achievement tests are always correlated with the test-takers’ IQ. Those three correlations guarantee that every standardized academic-achievement test shows higher average test scores as parental income increases. But those correlations also mean that a lot of the apparent income effect is actually owed to parental IQ. The SAT doesn’t have IQ information on the parents. But the widely used National Longitudinal Survey of Youth contains thousands of cases with data on family income, the mother’s IQ, and her children’s performance on the math and reading tests of the Peabody Individual Achievement Test battery, which test the same skills as the math and reading tests of the SAT. For the SAT, shifting to more than $200,000 of family income from less than $20,000 moved the average score on the combined math and reading tests to the 74th percentile from the 31st—a jump of 43 percentiles. The same income shift moved the average PIAT score to the 82nd percentile from the 30th—a jump of 52 percentiles. Now let’s look at the income effect in the PIAT when the mother’s IQ is statistically held constant at the national average of 100. Going to a $200,000 family income from a $1,000 family income raises the score only to the 76th percentile from the 50th—an increase of 26 percentiles. More important, almost all of the effect occurs for people making less than $125,000. Going to $200,000 from $125,000 moves the PIAT score only to the 76th percentile from the 73rd—a trivial change. Beyond $200,000, PIAT scores go down as income increases. In assessing the meaning of this, it is important to be realistic about the financial position of families making $125,000 who are also raising children. They were in the top quartile of income distribution in 2013, but they probably live in an unremarkable home in a middle-class neighborhood and send their children to public schools. And yet, given mothers with equal IQs, the child whose parents make $125,000 has only a trivial disadvantage, if any, when competing with children from families who are far more wealthy. Why should almost all of the income effect be concentrated in the first hundred thousand dollars or so? The money itself may help, but another plausible explanation is that the parents making, say, $60,000 are likely to be regularly employed, with all the things that regular employment says about a family. The parents are likely to be conveying advantages other than IQ such as self-discipline, determination and resilience—“grit,” as this cluster of hard-to-measure qualities is starting to be called in the technical literature. Families with an income of, say, $15,000 are much more likely to be irregularly employed or subsisting on welfare, with negative implications for that same bundle of attributes. Somewhere near $100,000 the marginal increments in grit associated with greater income taper off, and further increases in income make little difference. Let’s throw parental education into the analysis so that we can examine the classic indictment of the SAT: the advantage a child of a well-educated and wealthy family (Sebastian, I will call him) has over the child of a modestly educated working-class family (Jane). Sebastian’s parents are part of the fabled 1%, with $400,000 in income, and his mother has a college degree. But her IQ is only average. Jane’s family has an income of just $40,000 and mom has only a high-school diploma. But mom’s IQ is 135, putting her in the top 1% of the IQ distribution. Which child is likely to test higher? Sebastian is predicted to be at the 68th percentile on the PIAT. Jane is predicted to be at the 78th percentile. If you want high test scores, “choose” a smart but poor mother over a rich but dumb one—or over a rich and merely ungifted one. There is nothing new in this analysis. The relationship between IQ and income was first documented decades ago. But people refuse to confront it because it exposes an unwelcome reality: The Sebastians of contemporary America usually have smart parents as well as affluent, well-educated ones. The more strictly that elite colleges admit students purely on the basis of academic accomplishment, the more their student bodies will be populated with the offspring of the upper-middle class and wealthy—not because their parents are rich, but because they are smart. No improvement in the SAT can do away with this underlying reality. I haven’t used the word “meritocracy” to describe this because it doesn’t apply. Merit has nothing to do with possessing a high IQ. It is pure luck. And that leads to my reason for writing this. As long as we insist on blaming inequality of academic outcomes on economic inequality, we will pursue policies that end up punishing children whose strengths do not lie in academics. We will continue to tell them that they will be second-class citizens if they don’t get a college degree; to encourage them to accumulate student debt only to drop out or obtain a worthless degree. Worse, we will prevent them from capitalizing on their other gifts of character, grit and the many skills that the SAT doesn’t test. What we need is an educational system that brings children with all combinations of assets and deficits to adulthood having identified things they enjoy doing and having learned how to do them well. What we need is a society that has valued places for people with all combinations of assets and deficits. Both goals call for completely different agendas than the ones that dominate today’s rhetoric about educational and economic inequality. Mr. Murray is the W.H. Brady Scholar at the American Enterprise Institute.

Thursday, March 26, 2015

AI Summary. Parmenides' Fallacy is the error of evaluating a possible future by comparing it to present conditions rather than to other potential futures. Applied to assessments of Iraq, a sounder analysis would compare its prospects across alternative scenarios, such as differing levels of foreign investment or global oil demand.

Philip Bobbitt New York Times
Date Posted:
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Philip Bobbitt @nytimes The concept of Parmenides’ Fallacy highlights the flawed approach of evaluating future scenarios by comparing them to the present rather than other potential futures.

Should policy decisions compare possible futures rather than the present?

Core argument: Parmenides' Fallacy describes the error of judging a future scenario by comparing it to the present rather than to other possible futures, a flaw that recurs in economic and policy analysis.

The concept of Parmenides' Fallacy highlights the flawed approach of evaluating future scenarios by comparing them to the present rather than other potential futures. This is evident in economic and policy analysis, where decisions are often based on current conditions without considering alternative outcomes. For instance, assessing Iraq's future by its present state ignores potential developments influenced by geopolitical shifts, oil market fluctuations, and regional stability. A more comprehensive analysis would compare Iraq's future economic prospects under different scenarios, such as varying levels of foreign investment or changes in global oil demand. This approach provides a more nuanced understanding of potential economic trajectories, enabling policymakers to make informed decisions that account for a range of possible futures rather than a static present.

Takeaways by Macro Roundup® AI

  1. Parmenides' Fallacy describes the error of judging a future scenario by comparing it to the present rather than to other possible futures, a flaw that recurs in economic and policy analysis.
  2. Assessing Iraq's future by its present condition ignores potential developments influenced by geopolitical shifts, oil market fluctuations, and regional stability.
  3. Comparing Iraq's economic prospects across scenarios such as differing levels of foreign investment or changes in global oil demand gives policymakers a fuller view of potential trajectories than a static present does.

phrase you will like.

Bobbitt, Philip, "Today's War Is Against Tomorrow's Iraq" The New York Times, March 10, 2003. Available at:http://www.nytimes.com/2003/03/10/opinion/today-s-war-is-against-tomorrow-s-iraq.html

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"...a prime example in our public discourse of what might be called "Parmenides' Fallacy" named after the Greek philosopher who held that all change was illusion. This fallacy occurs when one tries to assess a future state of affairs by measuring it against the present, as opposed to comparing it to other possible futures. Let me give a famous example of Parmenides' Fallacy in operation. The turning point in the 1980 presidential race came in a debate when Ronald Reagan criticized President Jimmy Carter's record by asking the American people, "Are you better off today than you were four years ago?" While rhetorically devastating, this question is hardly the way to evaluate a presidency. After all, the state of the nation will never stay the same for four years, regardless of who is in office.A more relevant question to have asked would have been, "Are you better off now than you would have been if Gerald Ford had continued as president and if he had had to cope with rising oil prices, a revolution in Iran, a Russian invasion of Afghanistan and soaring interest rates?"...."