Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason 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
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, June 2, 2020

AI Summary. The authors estimate that while 3.6m non-homeless US households report cash income below $2 per person per day, over 90% are not in extreme poverty once in-kind transfers and administrative records are used, with errors or omissions in reported cash income accounting for nearly 80% of misclassifications. Among those still classified as extremely poor, 90% are single individuals.

Bruce Meyer National Bureau of Economic Research
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@BruceMeyer Analysis reveals that while 3.6m non-homeless households report cash income below $2/person/day, over 90% are not in extreme poverty after accounting for in-kind transfers & correcting survey data with administrative records.

Does survey income data overstate extreme poverty in America?

Core argument: Of the 3.6m non-homeless U.S. households reporting cash income below $2/person/day, over 90% are not in extreme poverty once in-kind transfers are counted and survey data are corrected with administrative records, the analysis finds.

Analysis reveals that while 3.6m non-homeless households report cash income below $2/person/day, over 90% are not in extreme poverty after accounting for in-kind transfers and correcting survey data with administrative records. More than half of these households have incomes above the poverty line when considering administrative data, and many are at least middle class based on material well-being. Errors or omissions in cash income reports lead to nearly 80% of misclassifications. Among those still classified as extremely poor, 90% are single individuals. This suggests that the current low rate of extreme poverty is not significantly impacted by welfare reform, contrary to some claims.

Takeaways by Macro Roundup® AI

  1. Of the 3.6m non-homeless U.S. households reporting cash income below $2/person/day, over 90% are not in extreme poverty once in-kind transfers are counted and survey data are corrected with administrative records, the analysis finds.
  2. Errors or omissions in cash income reports account for nearly 80% of misclassifications of extreme poverty, and more than half of these households have incomes above the poverty line using administrative data, with many at least middle class on material well-being measures.
  3. Among households still classified as extremely poor, 90% are single individuals, and the analysis suggests the low rate of extreme poverty is not significantly affected by welfare reform, contrary to some claims.

“….Recent research suggests that rates of extreme poverty, commonly defined as living on less than $2/person/day, are high and rising in the United States. We re-examine the rate of extreme poverty by linking 2011 data from the Survey of Income and Program Participation and Current Population Survey, the sources of recent extreme poverty estimates, to administrative tax and program data. Of the 3.6 million non-homeless households with survey-reported cash income below $2/person/day, we find that more than 90% are not in extreme poverty once we include in-kind transfers, replace survey reports of earnings and transfer receipt with administrative records, and account for the ownership of substantial assets. More than half of all misclassified households have incomes from the administrative data above the poverty line, and several of the largest misclassified groups appear to be at least middle class based on measures of material well-being. In contrast, the households kept from extreme poverty by in-kind transfers appear to be among the most materially deprived Americans. Nearly 80% of all misclassified households are initially categorized as extreme poor due to errors or omissions in reports of cash income. Of the households remaining in extreme poverty, 90% consist of a single individual. An implication of the low recent extreme poverty rate is that it cannot be substantially higher now due to welfare reform, as many commentators have claimed….”

Bruce Meyer, Derek Wu, Victoria Mooers, Carla Medalia, "The Use and Misuse of Income Data and Extreme Poverty in the United States," National Bureau Of Economic Research, May 2019, https://www.nber.org/papers/w25907

Wednesday, June 3, 2020

AI Summary. Median earnings four years after graduation were $46,000 for graduates of open-admission, minimally selective, and moderately selective colleges, versus $51,000 for very selective schools — a premium of under 10%. The early-career earnings gap across selectivity levels has narrowed, with median pay rising 4% at very selective schools and 7% at less selective ones.

Frederick Hess American Enterprise Institute
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Btw 1993 and 2008, median earnings for graduates from very selective schools increased by 4%, while those from less selective schools rose by 7%.

Does attending a more selective college raise early-career earnings much?

Core argument: Graduates of very selective colleges earned a median $51,000 four years after graduation in 2008, less than a 10% premium over the $46,000 earned by graduates of open admission, minimally selective, and moderately selective institutions.

Between 1993 and 2008, median earnings for graduates from very selective schools increased by 4%, while those from less selective schools rose by 7%. Four years post-graduation, earnings for graduates from open admission and minimally selective institutions in 2008 were similar to those from moderately selective schools, with all earning a median of $46,000 annually. Graduates from very selective schools earned $51,000, reflecting less than a 10% premium over open admission institutions. Despite the modest earnings advantage for very selective school graduates, the gap in early career earnings between graduates of different selectivity levels has narrowed over time. This suggests that while attending a more selective college may offer some initial financial benefits, the economic advantage is not as pronounced as it once was, highlighting the importance of degree completion regardless of institutional selectivity.

Takeaways by Macro Roundup® AI

  1. Graduates of very selective colleges earned a median $51,000 four years after graduation in 2008, less than a 10% premium over the $46,000 earned by graduates of open admission, minimally selective, and moderately selective institutions.
  2. Median earnings for graduates of very selective schools rose 4% between 1993 and 2008, while earnings for graduates of less selective schools rose 7%, narrowing the early career earnings gap across selectivity levels.

“…As shown in Figure 1, four years after graduation, earnings for those who graduated from open admission and minimally selective institutions in 2008 were about the same as for graduates from moderately selective schools, with all three groups earning a median of $46,000 a year. Graduates from very selective schools did maintain a modest earnings advantage, with graduates earning $51,000 four years after graduation—amounting to less than a 10 percent premium over open admission institutions. These findings are consistent with existing work that demonstrates a significant earnings advantage for graduates from the most selective schools. Of course, as noted above, earnings over a longer span could well show more separation based on selectivity. What we are particularly interested in, however, is whether the earnings accruing to graduates of more and less selective institutions may have changed over time. Between 1993 and 2008, median earnings for graduates from very selective schools increased by $2,000, those of graduates from moderately selective schools decreased $1,000, and those of graduates from less selective and open admission schools may have risen $3,000. In other words, very selective institutions saw an increase in median early career earnings of around 4 percent compared to past graduate cohorts, while less selective institutions saw an increase closer to 7 percent….students who complete their degree at less selective institutions could wind up earning nearly as much in their early years as their peers at the nation’s most prestigious schools do, but the likelihood that they will actually complete their degree is dramatically lower…”

Joseph Fuller and Frederick Hess, “Does Attending A More Selective College Equal A Bigger Paycheck,” American Enterprise Institute, June 2, 2020, https://www.aei.org/research-products/report/does-attending-a-more-selective-college-equal-a-bigger-paycheck/

AI Summary. The author argues that arrest, prosecution, and sentencing data show no structural racial bias in the U.S. criminal-justice system, citing 375m annual police-civilian contacts and 1,004 fatal police shootings in one year. African-Americans made up 13% of the population and 25% of those killed by police, but 53% of known homicide offenders and 60% of robberies.

Heather MacDonald Wall Street Journal
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Data suggests no structural bias in the US criminal-justice system. In 2019, police officers had 375m annual contacts with civilians, resulting in 1,004 fatal shootings.

Do policing data show structural racial bias in criminal justice?

Core argument: African-Americans made up 13% of the U.S. population and 25% of those killed by police, while accounting for 53% of known homicide offenders and 60% of robberies.

Despite the distressing nature of certain high-profile incidents, data suggests no structural bias in the criminal-justice system regarding arrests, prosecution, or sentencing. In 2019, police officers had 375m annual contacts with civilians, resulting in 1,004 fatal shootings. African-Americans, who constitute 13% of the U.S. population, accounted for 25% of those killed by police but also represented 53% of known homicide offenders and committed 60% of robberies. The police fatally shot nine unarmed blacks and 19 unarmed whites in 2019. A police officer is 18.5 times more likely to be killed by a black male than an unarmed black male is to be killed by a police officer. In 2018, there were 7,407 black homicide victims, with unarmed black victims of police shootings representing just 0.1% of all African-Americans killed in 2019. These statistics highlight the complexity of crime dynamics beyond racial narratives.

Takeaways by Macro Roundup® AI

  1. African-Americans made up 13% of the U.S. population and 25% of those killed by police, while accounting for 53% of known homicide offenders and 60% of robberies.
  2. Police fatally shot nine unarmed blacks and 19 unarmed whites in 2019, and a police officer is 18.5 times more likely to be killed by a black male than an unarmed black male is to be killed by a police officer.

“….However sickening the video of Floyd’s arrest, it isn’t representative of the 375 million annual contacts that police officers have with civilians. A solid body of evidence finds no structural bias in the criminal-justice system with regard to arrests, prosecution or sentencing. Crime and suspect behavior, not race, determine most police actions….In 2019, police officers fatally shot 1,004 people. African-Americans were about a quarter of those killed by police last year (235), African-Americans making up 53% of known homicide offenders in the U.S. and committing about 60% of robberies, though they are 13% of the population…The police fatally shot nine unarmed blacks and 19 unarmed whites in 2019, according to a Washington Post database. The Post defines “unarmed” broadly to include such cases as a suspect in Newark, N.J., who had a loaded handgun in his car during a police chase. A police officer is 18½ times more likely to be killed by a black male than an unarmed black male is to be killed by a police officer…In 2018 there were 7,407 black homicide victims. Assuming a comparable number of victims last year, those nine unarmed black victims of police shootings represent 0.1% of all African-Americans killed in 2019. …”

Heather MacDonald, "The Myth of Systemic Police Racism,"Wall Street Journal, June 2, 2020, https://www.wsj.com/articles/the-myth-of-systemic-police-racism-11591119883

AI Summary. A forthcoming study estimates that after federal investigations of entire police departments following viral incidents of deadly force, police-civilian contacts fell by as much as 90% in cities including Chicago and Baltimore, accompanied by roughly 1,000 additional homicides, predominantly of Black victims. The author argues investigations should target individual officers rather than whole departments.

Jason L. Riley Wall Street Journal
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New study by Harvard economist Roland Fryer shows police-civilian contacts dropped by up to 90% post-investigation, leading to 1,000 additional Black lives lost.

Do department-wide police investigations reduce policing and raise homicides?

Core argument: Harvard economist Roland Fryer's forthcoming study finds police-civilian contacts fell by up to 90% in cities including Chicago and Baltimore after investigations into their police departments following viral incidents of deadly force.

The forthcoming study by Harvard economist Roland Fryer highlights the unintended consequences of investigations into police departments following viral incidents of deadly force. Data shows that in cities like Chicago and Baltimore, police-civilian contacts dropped by up to 90% post-investigation, leading to a significant rise in homicides, with an estimated 1,000 additional lives lost, predominantly Black. This suggests that while scrutiny is necessary, the manner and timing of investigations can inadvertently harm vulnerable communities. Fryer advocates for targeted investigations on individual officers rather than entire departments to mitigate these adverse effects. The study underscores the importance of balancing police accountability with proactive policing to protect Black lives.

Takeaways by Macro Roundup® AI

  1. Harvard economist Roland Fryer's forthcoming study finds police-civilian contacts fell by up to 90% in cities including Chicago and Baltimore after investigations into their police departments following viral incidents of deadly force.
  2. Fryer estimates that the rise in homicides following department-wide investigations cost roughly 1,000 additional lives, predominantly Black.
  3. Fryer advocates targeting investigations at individual officers rather than entire departments to mitigate these adverse effects.

Jason L. Riley, "Good Policing Saves Black Lives,"Wall Street Journal, June 1, 2020, https://www.wsj.com/articles/good-policing-saves-black-lives-11591052916

Good Policing Saves Black Lives

How do you root out bad cops without changing the behavior of good cops?

That’s a question explored in a forthcoming academic paper on policing the police by Harvard economist Roland Fryer and co-author Tanaya Devi. Given the current nationwide protests and mob violence ignited by the death of George Floyd in Minneapolis, it’s a subject on the minds of many.

In 2016 Mr. Fryer released a study of racial differences in police use of deadly force. To the surprise of the author, as well as many in the media and on the left who take racist law enforcement as a given, he found no evidence of bias in police shootings. His conclusions have been echoed by researchers at the University of Maryland and Michigan State University, who in a paper released last year wrote: “We didn’t find evidence for anti-Black or anti-Hispanic disparity in police use of force across all shootings, and, if anything, found anti-White disparities when controlling for race-specific crime.”

Mr. Fryer said in an interview that the new paper is an extension of his earlier research. Although it seemed clear to him that racial disparities in police shootings stemmed primarily from racial disparities in criminal behavior, police departments continued to be investigated, and he suspected these investigations weren’t having the intended effect. In fact, he noticed what he suspected was a pattern that warranted further study. After surveying more than two dozen federal and state probes of police departments across the country, the pattern became clear. When police were investigated following incidents of deadly force that had gone viral, police activity declined and violent crime spiked. It happened in Ferguson, Mo., after Michael Brown was shot by an officer. It happened in Chicago after a cop gunned down Laquan McDonald. And it occurred in Baltimore after Freddie Gray died in police custody.

Mr. Fryer stressed that it isn’t the investigations themselves that are the problem so much as the circumstances under which they are launched. Investigations that weren’t prompted by well-publicized events resulted in little change in police behavior and violent crime. “But when I look at cities in which the investigation was preceded by a viral event,” he said, “homicide goes up considerably. Total crime goes up considerably.” What happens, he said, is that police effectively pull back. They don’t stop doing their jobs, but they become less proactive and curb their interactions with civilians.

In Chicago, there was a 90% drop in police-civilian contacts immediately after the announcement of an investigation, and “Baltimore literally went to zero” after a probe was announced there, he said. In cities where these contacts fell the most, homicides increased the most. Sadly, the decision to launch departmentwide state and federal inquiries into the deaths of Brown, McDonald and Gray resulted in numerous additional deaths. Mr. Fryer said that because of changes in police behavior following investigations in these and other cities, “my estimates show that we lost a thousand more lives, most of them black as well, because of an increase in homicides.” The protesters and their political allies insist that policing is the problem, but when police pull back, black communities are hit hardest.

“This is not to say that police departments shouldn’t be investigated,” Mr. Fryer added. “But to quote Rahm Emanuel in Chicago, ‘investigations have to be done with police, not to police.’” One alternative is to target individual officers for wrongdoing rather than putting entire departments under a cloud. Federal officials also could be more patient in letting local investigations run their course before Washington gets involved. Mr. Fryer hopes his results will “encourage introspection on the trade-offs involved when we increase scrutiny on police departments.” At the moment there’s a lot more venting and posturing than introspection.

Protesters have decided to vilify the police. Rioters have decided to take advantage of the protests. And the media have expressed little interest in putting this tragedy in context. The activists tell us that what happened to George Floyd is commonplace and racially motivated, but the empirical evidence points in the opposite direction. Camera phones and social media may give fatal encounters between cops and black suspects more attention, but anecdotes are no substitute for hard data.

And now we know how scapegoating law enforcement can backfire in ways that do the most harm to our most vulnerable communities. “I never would have guessed that if police stopped putting in the effort, that homicides would change like this,” said Mr. Fryer. “You hear some people say ‘Oh, we want to police our own neighborhoods, get out.’ No, you don’t want that. I guess I always knew it was a foolish idea, but I didn’t realize it was this deadly.”

AI Summary. The total number of US startups has declined while the number of high-potential startups has approached its prior peak, indicating a shift in entrepreneurial quality rather than quantity. Quality-adjusted measures of entrepreneurship followed a cyclical pattern associated with economic and capital market conditions.

Jorge Guzman and Scott Stern National Bureau of Economic Research
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High-potential US startups have approached their 2000 peak, despite a decline in total startup numbers, according to @ScottStern @nberpub.

Has US entrepreneurship declined in quantity but not quality?

Core argument: Across 15 US states from 1988–2014, the total number of American startups declined while high-potential startups approached their 2000 peak, indicating a shift in entrepreneurial quality rather than a uniform decline.

While the total number of American startups has declined, high-potential US startups have approached their 2000 peak, indicating a shift in entrepreneurial quality. From 1988-2014, quality-adjusted measures of entrepreneurship followed a cyclical pattern influenced by economic and capital market conditions. This suggests that investment cycles significantly impact high-growth entrepreneurship, with economic and institutional conditions driving both the initial quality and scaling of new ventures. The data underscores the importance of focusing on the quality of startups rather than just their quantity, as high-potential ventures are crucial for economic dynamism and innovation. This trend highlights the resilience and adaptability of the US entrepreneurial landscape, even amid broader declines in startup numbers.

Takeaways by Macro Roundup® AI

  1. Across 15 US states from 1988–2014, the total number of American startups declined while high-potential startups approached their 2000 peak, indicating a shift in entrepreneurial quality rather than a uniform decline.
  2. Quality-adjusted measures of entrepreneurship followed a cyclical pattern tied to economic and capital market conditions, suggesting that investment cycles affect high-growth entrepreneurship.
  3. Economic and institutional conditions appear to shape both the initial quality of new ventures and their subsequent scaling, supporting the case for measuring startup quality rather than counts alone.

"....Assessing the state of American entrepreneurship requires not simply counting the quantity but also the initial quality of new ventures. Combining comprehensive business registries and predictive analytics, we present estimates of entrepreneurial quantity and quality from 1988-2014. Rather than a secular pattern of declining business dynamism, our quality-adjusted measures follow a cyclical pattern sensitive to economic and capital market conditions. Consistent with the role of investment cycles as a driver of high-growth entrepreneurship, our results highlight the role of economic and institutional conditions as a driver of both initial entrepreneurial quality and the scaling of new ventures over time….”

Jorge Guzman and Scott Stern, “The State of American Entrepreneurship: New Estimates of the Quantity and Quality of Entrepreneurship for 15 US States, 1988-2014.” National Bureau Of Economic Research, July 2019, https://www.nber.org/papers/w22095