Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “…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
  • “…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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, June 22, 2020

AI Summary. A personal family history recounts a father's battery design work at Western Electric and a mother's shift from hairdresser to vocational school teacher after earning teaching certification while raising a family, illustrating the roles of technological innovation and education in economic growth.

Greg Mankiw Greg Mankiw's Blog
Date Posted:
Is Database:
Database

@GregMankiw, “Growing up, my father’s work in battery design at Western Electric seemed mundane, yet it underscores the critical role of innovation in economic growth, driving GDP & productivity.”

How do innovation and education in one family illustrate economic growth?

Core argument: Dorothy Theresa Sawchak Mankiw's husband worked on battery design at Western Electric, work the author links to the telecommunications technology and infrastructure underpinning GDP and productivity.

Growing up, the importance of my father's work in battery design at Western Electric seemed mundane, yet it underscores the critical role of innovation in economic growth. The evolution of technology and infrastructure, such as telecommunications, hinges on such foundational work, driving GDP and productivity. My mother's journey from a hairdresser to a vocational school teacher highlights the economic impact of education and skill development, crucial for labor market adaptability. Her pursuit of teacher certification while raising a family exemplifies the resilience and adaptability needed in a dynamic economy. These personal histories reflect broader economic themes: the significance of human capital investment and technological advancement in shaping economic landscapes.

Takeaways by Macro Roundup® AI

  1. Dorothy Theresa Sawchak Mankiw's husband worked on battery design at Western Electric, work the author links to the telecommunications technology and infrastructure underpinning GDP and productivity.
  2. Dorothy Theresa Sawchak Mankiw moved from hairdresser to vocational school teacher, earning teacher certification while raising a family, which the author presents as illustrating the economic role of education and skill development.
  3. The author frames both family histories as reflections of broader economic themes: human capital investment and technological advancement shaping economic outcomes.

“…In 1958, nine months after I was born, Mom, Dad, Peg, and I left Trenton for a newly built split-level house in Cranford, New Jersey. My father was working for Western Electric, an arm of AT&T, first as a draftsman and then as an electrical engineer. He worked there until his retirement. One of his specialties was battery design. When I was growing up, I thought it sounded incredibly boring. Now I realize how important it is….”

Greg Mankiw, "Dorothy Theresa Sawchak Mankiw,"Greg Mankiw's Blog, April 17, 2020, http://gregmankiw.blogspot.com/2020/04/dorothy-theresa-sawchak-mankiw.html

Dorothy Theresa Sawchak Mankiw

Dorothy Theresa Sawchak Mankiw: Extended Excerpt Image 1


Above is a picture of my mother as a young woman. I would like to tell you about her.

My mother was born on July 18, 1927, the second child of Nicholas and Catherine Sawchak.

Nicholas and Catherine were immigrants from Ukraine. They came to the United States as teenagers, arriving separately, neither with more than a fourth-grade education. Catherine was from a farming area in western Ukraine. She left because her family wanted her to marry an older man rather than her younger boyfriend, who had been conscripted into the army. Her first job here was as a maid. Nicholas was from Kiev, where he had been trained to be a furrier. In the United States, he worked as a potter, making sinks and toilettes. When Nicholas and Catherine came to the United States, they thought they might return home to Ukraine eventually. But World War I and the Russian Revolution intervened, causing a change of plans. Catherine’s boyfriend died in the war. Nicholas and Catherine met each other, married, and settled in a small row house in Trenton, New Jersey, where they lived the rest of their lives.

Catherine and Nicholas had two children, my uncle Walter and my mother Dorothy. When my mother was born, her parents chose to name her “Dorothy Theresa Sawchak.” But because Catherine spoke with a heavy accent, the clerk preparing the birth certificate did not understand her. So officially, my mother’s middle name was “Tessie” rather than “Theresa.” She never bothered to change it.

Nicholas and Catherine were hardworking and frugal. They saved enough to send Walter to college and medical school. He served as a physician in the army during the Korean war. Once I asked him if he worked at a MASH unit, like in the TV show. He said no, he worked closer to the front. He patched up the wounded soldiers the best he could and then sent them to a MASH unit to recover and receive more treatment. After the war, he became a pathologist in a Trenton-area hospital. He married and had two daughters, my cousins.

My mother attended Trenton High School (the same high school, I learned years later, attended by the economist Robert Solow at about the same time). She danced ballet. She water-skied on the Delaware River. She loved to read and go to the movies.

In part because of limited resources and in part because of the gender bias of the time, my mother was not given the chance to go to college. Years later, her parents would say that not giving her that opportunity was one of their great regrets. Instead, my mother learned to be a hairdresser. She was also pressured to marry the son of some family friends.

The marriage did not work. With my mother pregnant, her new husband started “running around,” my mother’s euphemism for infidelity. They divorced, and she kicked him out of her life. But the marriage did leave her with one blessing—my sister Peg.

My mother continued life as a single mother. Some years later, she met my father, also named Nicholas, through social functions run by local Ukrainian churches. They both loved to dance. He wanted to marry her, but having been burned once, she was reluctant at first. Only when she realized that he had become her best friend did she finally accept.

In 1958, nine months after I was born, Mom, Dad, Peg, and I left Trenton for a newly built split-level house in Cranford, New Jersey. My father was working for Western Electric, an arm of AT&T, first as a draftsman and then as an electrical engineer. He worked there until his retirement. One of his specialties was battery design. When I was growing up, I thought it sounded incredibly boring. Now I realize how important it is.

My mother then stopped working as a hairdresser to become a full-time mom. But she kept all the hairdresser equipment from her shop—chair, mirrors, scissors, razors, and so on—in our basement. She would cut the hair of her friends on a part-time basis. When I was a small boy, she cut my hair as well.

I attended the Brookside School, the public grade school which was a short walk from our house. When I was in the second or third grade, my mother was called in to see the teacher. The class had been given some standardized aptitude test. “Greg did well,” the teacher said. “We were very surprised.”

At that moment, my mother decided the school was not working out for me. I was talkative and inquisitive at home but shy and lackluster at school. I needed a change.

She started looking around for the best school she could find for me. She decided it was The Pingry School, an independent day school about a dozen miles from our house. She had me apply, and I was accepted.

The question then became, how to pay for it? Pingry was expensive, and we did not have a lot of extra money. My mother decided that she needed to return to work.

She started looking for a job, and an extraordinary opportunity presented itself. Union County, where we lived, was opening a public vocational school, and they were looking for teachers. She applied to be the cosmetology teacher and was hired.

There was, however, a glitch. The teachers, even though teaching trades like hairdressing, needed teacher certification. That required a certain number of college courses, and my mother had not taken any. So she got a temporary reprieve from the requirement. While teaching at the vocational school during the day, she started taking college courses at night to earn her certification, all while raising two children.

My mother taught at the vocational school until her retirement. During that time, she also co-authored a couple of books, called Beauty Culture I and II, which were teacher’s guides. From the summary of the first volume: “The syllabus is divided into six sections and includes the following areas of instruction: shop, school, and the cosmetologist; sterilization practices in the beauty salon; scalp and hair applications and shampooing; hair styling; manicuring; and hairpressing and iron curling.” I suppose one might view this project as a harbinger of my career as a textbook author.

When my parents both retired, they were still the best of friends. They traveled together, exploring the world in ways that were impossible when they were younger and poorer. During my third year as an economics professor, I was visiting the LSE for about a month. I encouraged my parents to come over to London for a week or so. They had a grand time. I believe it was the first time they had ever visited Europe. When I was growing up, vacations were usually at the Jersey shore.

My father died a few years later. My mother spent the next three decades living alone. She was then living full-time at the Jersey shore in Brant Beach on Long Beach Island. The house was close to the ocean and large enough to encourage her growing family to come for extended visits. Two children, five grandchildren, four great-grandchildren. The more, the merrier. Nothing made her happier than being surrounded by family.

My mother loved to cook, especially the Ukrainian dishes she learned in her childhood. Holubtsi (stuffed cabbage) was a specialty. Another was kapusta (cabbage) soup. One time, the local newspaper offered to publish her kapusta soup recipe. They did so, but with an error. Every seasoning that was supposed to be measured in teaspoons was printed as tablespoons. The paper later ran a correction but probably to no avail. I am not sure if anyone ever tried the misprinted recipe and, if so, to what end.

During her free time in her later years, my mother read extensively, played FreeCell on her computer, and watched TV. A few years ago, when she was about 90 years old, I was visiting her, and I happened to mention the show “Breaking Bad.” She had not heard of it. She suggested we watch the first episode. And then another. And another. After I left, she binge-watched all five seasons.

As she aged, living alone became harder. When she had trouble going up and down the stairs, an elevator was added to her house. But slowly her balance faltered, and she fell several times. She started having small strokes, and then a more significant one. She moved into a nursing home. Whenever I visited, I brought her new books to read. Her love of reading never diminished.

This is, I am afraid, where the story ends. Last week, Dorothy Theresa Sawchak Mankiw tested positive for Covid-19. Yesterday, she died. I will miss her.

AI Summary. A Taub Center study finds 19% of second-generation Ethiopian Israelis hold high-quality jobs versus 9% of the first generation, and 20% hold higher education degrees compared with 5.7% of their parents' generation. Among Ethiopian Israeli university graduates, 55% work in high-quality positions, comparable to the general Jewish population.

Meirav Arlosoroff Haaretz
Date Posted:
Is Database:
Database

Ethiopian Israelis show significant employment progress, with 19% of second generation holding high-quality jobs, compared to 9% of first generation, according to @MeiravArlosoroff in Haaretz.

Are second-generation immigrants closing employment and education gaps?

Core argument: The Taub Center study finds 19% of second-generation Ethiopian Israelis hold high-quality jobs, compared with 9% of the first generation, while 55% of Ethiopian university graduates work in high-quality positions, comparable to the general Jewish population.

The employment landscape for Ethiopian Israelis shows significant progress, particularly among the second generation. While only 9% of the first generation hold high-quality jobs, this figure rises to 19% for the second generation. The Taub Center study highlights that 55% of Ethiopian university graduates are employed in high-quality positions, comparable to the general Jewish population. Despite lower average salaries due to career choices in less lucrative fields like teaching and nursing, the educational attainment of the second generation is notable, with 20% holding higher education degrees compared to 5.7% of their parents' generation. Employment rates have also improved, with a jump from 50% to 72% over 12 years, indicating successful integration efforts. This progress is supported by targeted educational investments, such as the 35m shekels ($9.2m) allocated for special programs, demonstrating a positive trajectory for the community's economic integration.

Takeaways by Macro Roundup® AI

  1. The Taub Center study finds 19% of second-generation Ethiopian Israelis hold high-quality jobs, compared with 9% of the first generation, while 55% of Ethiopian university graduates work in high-quality positions, comparable to the general Jewish population.
  2. Higher education attainment among second-generation Ethiopian Israelis reaches 20%, versus 5.7% in their parents' generation, though average salaries remain lower because of career choices in less lucrative fields such as teaching and nursing.
  3. Employment rates among Ethiopian Israelis rose from 50% to 72% over 12 years, alongside targeted educational investments including 35 million shekels ($9.2 million) allocated for special programs.

When the Israelis started airlifting the Ethiopian Jews out in the early 1990’s it was a major domestic controversy people didn’t want them - and the second generation is still underperforming:

"....Nevertheless, young Ethiopians still lag behind in the quality of their employment;only 19 percent hold jobs considered high-quality (the figure is 9 percent for the first generation).But when the Taub Center checked the kind of jobs Ethiopian Israelis with higher education obtain, it emerged that the gap has almost completely disappeared. Fifty five percent of Ethiopian university graduates are employed in high-quality positions, like the figure for the Jewish population in general. The salaries of Ethiopian university graduates are lower than the average, but that is because of their choice to study professions that are less lucrative, like teaching or nursing. This choice is connected to the fact that only a few in the community study for the five-unit matriculation exam in math...”

Meirav Arlosoroff, "Ethiopians in Israel: An Employment and Educational Success,:Haaretz, August 7, 2015, https://www.haaretz.com/opinion/.premium-ethiopians-in-israel-an-employment-and-educational-success-1.5375832

While the Ethiopian community has a long way to go before they can close gaps, the direction is definitely the right one.

Thousands of Ethiopian Israelis have been demonstrating in recent months to protest their difficult situation. The figures show that Israelis of Ethiopian origin are indeed in difficult straits: The income of an Ethiopian household is 35 percent lower than that of an average household in Israel, only 5 percent hold quality jobs as opposed to 33 percent of Jewish Israelis in general, and half of Ethiopian-Israeli women and 17 percent of the men work in cleaning and kitchen jobs.

These figures stem from the great gap in education in the Ethiopian community. Only 20 percent have university education as opposed to 40 percent of the general population, mainly because only 53 percent of Ethiopian Israelis earn a matriculation certificate (compared with 73 percent of the population in general). What is more, the quality of matriculation certificates awarded to Ethiopian Israeli students is lower than that of others; only three Ethiopian high-school students sat last year for the five-unit matriculation exam in mathematics.

It is easy to understand the communitys protests against the backdrop of these figures. However, there seems to be a misunderstanding. In fact, it may be that the outbreak of protest shows the exact opposite - it is testimony that the Ethiopian community is growing stronger and has reached such a level of strength that it can loudly demand its rights.

That is, the figures should tell the story that the absorption of Ethiopian Jews in Israel has been a success in terms of education and employment. A recently published study by the Taub Center for Social Policy Studies in Israel focused on comparing the situation of Ethiopian Jews to that of the Jewish population in general in Israel and to the Arab population.

According to the Taub Center studys figures, Ethiopian Israelis lag behind non-Ethiopian Israelis in most areas. But the study did not make do with just a general overview of the Ethiopian community. They also looked deeper within the community, comparing gaps between adults (those born in Ethiopia and who came to Israel at a relatively advanced age) and the second generation (born in Israel or who came at a young age and were educated mainly in Israel).

Here is where the picture of success emerges: A huge gap was seen between the first and second generations, a gap so great that it shows successful integration of the second generation in Israel.

For example, 90 percent of the younger generation has a high-school education, almost the same percentage as the Jewish population in general (93 percent) and three times the percentage of first-generation Ethiopians in Israel (36 percent). The rate of matriculation is only 53 percent, but that is almost four times the figure for the first generation (16 percent). The 20 percent of second-generation Ethiopian Israelis with higher education is almost four times the rate of their parents generation (5.7 percent).

Employment among Ethiopian Israelis - and here the figures apply to both generations because the second generation has only recently entered the Israeli workplace - jumped from 50 to 72 percent in 12 years. The most impressive leap is for women, from 35 percent to 65 percent in one decade. The percentage of Ethiopian Israelis working in janitorial services, by the way, has already fallen to only 5 percent.

Nevertheless, young Ethiopians still lag behind in the quality of their employment; only 19 percent hold jobs considered high-quality (the figure is 9 percent for the first generation).

But when the Taub Center checked the kind of jobs Ethiopian Israelis with higher education obtain, it emerged that the gap has almost completely disappeared. Fifty five percent of Ethiopian university graduates are employed in high-quality positions, like the figure for the Jewish population in general. The salaries of Ethiopian university graduates are lower than the average, but that is because of their choice to study professions that are less lucrative, like teaching or nursing. This choice is connected to the fact that only a few in the community study for the five-unit matriculation exam in math.

The Education Ministry speaks cautiously of relative success in special programs for the Ethiopian community - in the past decade alone, Ethiopian students received dedicated funding of 35 million shekels ($9.2 million). This educational investment, together with funding earmarked by the state for Ethiopian absorption in the areas of welfare and employment, is apparently bearing fruit.

While the Ethiopian community has a long way to go before they can close gaps with the Jewish society in general, the figures show that the direction is definitely the right one.

And by the way, the unfortunate figure that comes up in almost all areas of the Taub study is that Ethiopian Israelis are already pulling ahead of Arab Israelis. This shows that Israels problem of discrimination and exclusion stems not only from racism toward Israelis of Ethiopian origin, but toward Arabs as well.

AI Summary. 22% of Germany's workforce works part-time versus 15% in the US, and US black men aged 25–55 worked about 1,250 hours annually versus 1,750 for white men. Median black household income is 59.2% of white, but adjusting for government benefits narrows the gap to an estimated 15%.

OECD Staff Organisation for Economic Co-operation and Development
Date Posted:
Is Database:
Database

US black men aged 25-55 worked 1,250 hours annually in 2018, compared to 1,750 hours for white men, highlighting a substantial gap in work hours.

How do differences in hours worked shape income gaps?

Core argument: US black men aged 25–55 worked about 1,250 hours annually in 2018 versus 1,750 hours for white men, a gap that contributes to median black household income equal to 59.2% of median white household income.

The comparison of living standards between the US and Germany reveals significant differences in work patterns and income disparities. In Germany, 22% of the workforce is employed part-time compared to 15% in the US, indicating a higher prevalence of part-time work. Among US workers, black men aged 25 to 55 worked approximately 1,250 hours annually in 2018, compared to 1,750 hours for white men, highlighting a substantial gap in work hours. This disparity contributes to a median black household income that is 59.2% of the median white household income. When adjusted for government benefits, the black/white wage gap narrows to an estimated 15%. Furthermore, US black disposable income is approximately 96% of German disposable income, suggesting that despite lower work hours, US blacks have comparable disposable income levels to Germans. These insights underscore the complex interplay between work hours, income disparities, and living standards across different demographics and countries.

Takeaways by Macro Roundup® AI

  1. US black men aged 25–55 worked about 1,250 hours annually in 2018 versus 1,750 hours for white men, a gap that contributes to median black household income equal to 59.2% of median white household income.
  2. Adjusting for government benefits narrows the estimated US black/white wage gap to 15%, and US black disposable income stands at roughly 96% of German disposable income.
  3. Part-time employment accounts for 22% of Germany's workforce compared with 15% in the US.

Although 22% of Germans work part time vs only 15% in the US 20.7/(116.5 + 20.7)https://tradingeconomics.com/united-states/part-time-employment

Simonetta Longhi, “Racial Wage Differentials In Developed Countries,” Institute Of Labor Economics, June 2017, https://ec.europa.eu/eurostat/statistics-explained/index.php/Living_conditions_in_Europe_-_income_distribution_and_income_inequality

Elise Gould, "Stark Black-White Divide In Wages Is Widening Further," Economic Policy Institute, February 27, 2019, https://www.epi.org/blog/stark-black-white-divide-in-wages-is-widening-further/

Jeff Spross, "The Unexpected Truth About Americans' Work Hours," The Week, February 26, 2018, https://theweek.com/articles/756859/unexpected-truth-about-americans-work-hours

"Real Median Household Income By Race And Hispanic Origin: 1967 to 2017," U.S. Census Bureau, Accessed June 23, 2020, https://www.census.gov/content/dam/Census/library/visualizations/2018/demo/p60-263/figure1.pdf

BLS Staff, "Labor Force Characteristics By Race And Ethnicity, 2018," U.S. Bureau Of Labor Statistics, October 2019, https://www.bls.gov/opub/reports/race-and-ethnicity/2018/home.htm

"United States Part Time Employment," Trading Economics, Accessed June 23, 2020, https://tradingeconomics.com/united-states/part-time-employment

OECD, "Hours Worked," Organisation for Economic Co-operation and Development, Accessed June 23, 2020, https://data.oecd.org/emp/hours-worked.htm

https://theweek.com/articles/756859/unexpected-truth-about-americans-work-hours

on average black men ages 25 to 55 worked about 1250 hours a year in 2018 vs 1750 for white men 1250/1750 =.714 40.3 median black income/.714 = 56.4/68.1 median white income = 82.8% …suggests the black/white wage gap after adjusting or gov benefits might be closer to 15%, although more household headed by women (who earn less than men on average) among blacks pushes the estimate the other way

https://www.epi.org/blog/stark-black-white-divide-in-wages-is-widening-further/

https://wol.iza.org/uploads/articles/365/pdfs/racial-wage-differentials-in-developed-countries.pdf

Asian 81.3/61.4 = 1.32 x 1.28 = 1.70

White 68.1/61.4 = 1.11 x 1.28 = 1.42!

Note Hispanics earn 50.5 divided by 61.4 = 82% x 1.28 = 1.05 times average German

2017 dollars 40.3 median black household income/ 68.1 white not Hispanic median household income = 59.2%. Average household income is 61.4. so 40.3/61.4 = 66% x 1.28 = 84% = us black/german. German minorities earning about 15% less than Germans so German minorities and US minorities earn about the samehttps://wol.iza.org/uploads/articles/365/pdfs/racial-wage-differentials-in-developed-countries.pdfandhttps://www.census.gov/content/dam/Census/library/visualizations/2018/demo/p60-263/figure1.pdf

Us worforce 78% white - (89% white Hispanic x 17% of workforce is Hispanic =15%) = 63% + 6% Asian = 69% white or Asian = 31% not white or Asianhttps://www.bls.gov/opub/reports/race-and-ethnicity/2018/home.htm

Although the us average would be less than the white us average: 31% (approximates blacks and Hispanics) x 75% x X + 69% x X = 50.3; 0.92X=50.3; X= 54.5 x.75 = 40.9/39.4 = 1.04 us black disposable income vs German.

1.28 times the US black/white of 75% =.96 US black disposable income vs German disposable income,

Although part-time is probably lower for 25 to 55 yea olds, since older Germans work more than older Americans

.78 x.85= 66% fulltime German vs.85 x 80 = 68% full time Americans ages 24 to 55

Ed Comment: Black-White wage gap in the US is about 25%—the same as in Europe. However, American disposable incomes, a proxy for real wages (after tax and government benefits) is 15 to 30% more than northern Europe: US $50.3k/Germany $39.4k = 1.28.

Although Americas work more hours (approx. 1786/1363 = 1.31https://data.oecd.org/emp/hours-worked.htm, which accounts for all of the difference

Although more (25 to 55 year old) Germans work than Americans 85%/80% =1.06

AI Summary. Analysis of nearly 5m police encounters finds police are 53% more likely to use physical force on Black civilians than white civilians in New York City and 350% more likely nationally, with disparities in nonlethal force persisting after controls though reduced by 66%. No racial differences were found in police shootings.

Roland Fryer Wall Street Journal
Date Posted:
Is Database:
Database

Analysis of 5m police encounters in NYC reveals racial disparities in nonlethal force use, with police 53% more likely to use physical force on black civilians than white ones.

Do racial disparities in police use of force extend to shootings?

Core argument: Across nearly 5m NYC police encounters, police were 53% more likely to use physical force on black civilians than white ones, while nationally the likelihood of physical force on blacks was 350% higher.

Analysis of nearly 5m police encounters in NYC reveals significant racial disparities in nonlethal force use, with police 53% more likely to use physical force on black civilians than white ones. Nationally, the likelihood of physical force on blacks is 350% higher. Even after controlling for various factors, racial disparities in nonlethal force persist, reduced by 66% but still significant. Data from NYC's Stop and Frisk program and the Police-Public Contact Survey highlight these differences, documenting various force levels from hands-on to baton strikes. Despite these disparities in nonlethal force, no racial differences were found in police shootings across cities or data subsets. This suggests that while racial disparities exist in nonlethal encounters, they do not extend to lethal force, challenging perceptions shaped by high-profile incidents of police brutality.

Takeaways by Macro Roundup® AI

  1. Across nearly 5m NYC police encounters, police were 53% more likely to use physical force on black civilians than white ones, while nationally the likelihood of physical force on blacks was 350% higher.
  2. Controlling for various factors reduced the racial disparities in nonlethal force by 66%, but the remaining gaps stayed significant.
  3. The analysis found no racial differences in police shootings across cities or data subsets, indicating the disparities in nonlethal force do not extend to lethal force.

Roland Fryer, "What the Data Say About Police,"Wall Street Journal, June 22, 2020, https://www.wsj.com/articles/what-the-data-say-about-police-11592845959

Fryer on what his research says:“…There are large racial differences in police use of nonlethal force. My research team analyzed nearly five million police encounters from New York City. We found that when police reported the incidents,they were 53% more likely to use physical force on a black civilian than a white one. In a separate, nationally representative dataset asking civilians about their experiences with police, we found the use of physical force on blacks to be 350% as likely. This is true of every level of nonlethal force, from officers putting their hands on civilians to striking them with batons. We controlled for every variable available in myriad ways. That reduced the racial disparities by 66%, but blacks were still significantly more likely to endure police force.…. No matter how we analyzed the data, we found no racial differences in shootings overall, in any city in particular, or in any subset of the data.I have grappled with these results for years as I witnessed videos of unmistakable police brutality against black men. How can the data tell a story so different from what we see with our eyes?...”

His data suggests that an officer’s race doesn’t really have an impact on use of force:

“…We use four sources of data - none ideal - which together paint an empirical portrait of racial di↵erences in police use of force conditional on an interaction. The first two data sources - NYC’s Stop and Frisk program and the Police-Public Contact Survey (PPCS) - provide information on non-lethal force from both the police and civilian perspectives, respectively…The database contains detailed information on the characteristics of each stop (precinct, cross streets, time of day, inside/outside, high/low crime area), civilian demographics (race, age, gender, height, weight, build, type of identification provided), whether or not the officers were in uniform, encounter characteristics (reason for stop, reason for frisk (if any), reason for search (if any), suspected crime(s)), and post-encounter characteristics (whether or not a weapon was eventually found or whether an individual was summonsed, arrested, or a crime committed). Perhaps the most novel component of the data is that officers are required to document which one of the following seven uses of force was used, if any: (1) hands, (2) force to a wall, (3) handcuffs, (4) draw weapon, (5) push to the ground, (6) point a weapon, (7) pepper spray or (8) strike with a baton.6 Ocers are instructed to include as many uses of force as applicable…”

Here ae the levels of force the data records:

“…. Second, lower level uses of force - such as the use of hands - are both recorded in these data and more frequently used by law enforcement than more intense uses of force. For instance, if one were to use arrest data to glean use of force, many lower level uses of force would simply be considered standard operating procedure. Putting hands on a suspect, pushing them up against a wall, and putting handcuffs on them are so un-noteworthy in the larger context of an arrest that they are not recorded in typical arrest descriptions. Yet, because proactive policing is a larger and less confrontational portion of police work, these actions warrant data entry….”

Ed Comment:I read the paper. It raised (in me) all the concerns I raised to you. Black officers act the same toward blacks and whites as white officers. Disparities in the use of force decline as force increases. And their data comes primarily from stop and frisk, which WAS an extreme form of policing. They try to make an estimate of the dangerousness of the suspect but their estimate is silly—education, income, and employment—none of which would be know to the officer, and probably not very predictable since so few people commit crimes. Ironically, in many instances, especially with stop and frisk, the office may know the suspect. And nowhere where did I see a simple measure of how much more dangerous are whites than blacks on average or more precisely white stopped by the police vs blacks stopped by the police. Since blacks commit 8-times as much crime, it seems likely they are more dangerous on average. By measuring the dangerousness of suspects with variables such as income, education, and employment, that an officer can’t identify, you limit the use of aggressiveness to reactive uses rather than proactive uses. That limitation seems impractical. If I apprehend a frail man or women, i.e., less dangerous to me, I might be much less inclined to use proactive aggressiveness because I know I can win reactively. (SWAT teams come storming in with overwhelming firepower to discourage aggressiveness before it starts. Policemen wear guns to be intimidating.) If I fear that I can’t win reactively, I might try to intimidate you into not trying in the first place, so I can reduce the chances of needing to react. It surely seems odd that black policemen would discriminately treat black suspects the same as white policemen treat them, if there were no hidden variables/reasons, i.e. it was merely racism.

Ed Comment:“We found that when police reported the incidents, they were 53% more likely to use physical force on a black civilian than a white one. We controlled for every variable available in myriad ways. That reduced the racial disparities by 66%, but blacks were still significantly more likely to endure police force.” Does that mean 53% x (100% - 66%) = 17.5% more likely all things equal (other than race)? That seems consistent with his finding that if you don’t resist, blacks have are 21% more likelihood of suffering police aggression than whites. He says aggression includes “officers putting their hands on civilians” to officers shooting unarmed suspects. Presumably, most of the incidents are minor incidences (e.g., hands on). And he finds no disparity at the highest level of aggression (killing). So it may be the case that the disparities range from high for minor acts to none existent for major acts of aggression. So how much of the 17.5% difference stems from minor acts of aggression vs major acts? Despite it being an obvious question, oddly, he doesn’t say. That suggests he is being less than forthcoming about it, and therefore there may be big differences he has chosen not to reveal in the op-ed. Please examine the report. Chetty did the same thing in his teacher study. Teachers had big effects in total. But those effect came predominantly from the most talented students, which was overlooked in the reporting. That doesn’t bode well for improving the scores of low-scores, which was the point of his study and recommendation. PS it would also be revealing to see the disparity between how black and white cops treat black and white suspects, all other things equal. The later is relevant because back cops are likely to be in black neighborhoods dealing with more violent crimes and criminals. So you have to hold those things equal. It may be the case that back cops are as racist as white cops. But if they are, it would be an indication there may be hidden variables at work. Again, he has the data but he doesn't say. That's not a good sign. BTW, what mired of variables do they measure? PSS I suspect the “hidden variable” is the probability of escalation by the suspect. Surely police use aggression to deter aggression/escalation. We know blacks commit more crime and more violent crime. So it seems likely they are more likely to escalate with police than whites. I’m curious to see if he includes this variable. It seems like he has the data to estimate it. And he seems surprisingly reluctant to say that his analysis shows racism.

Steve Comment:Looking through the paper to find out how much of the data is lower level force but lower level force is more frequent:

Ed Comment:“We found that when police reported the incidents, they were 53% more likely to use physical force on a black civilian than a white one. We controlled for every variable available in myriad ways. That reduced the racial disparities by 66%, but blacks were still significantly more likely to endure police force.” Does that mean 53% x (100% - 66%) = 17.5% more likely all things equal (other than race)? That seems consistent with his finding that if you don’t resist, blacks have are 21% more likelihood of suffering police aggression than whites. He says aggression includes “officers putting their hands on civilians” to officers shooting unarmed suspects. Presumably, most of the incidents are minor incidences (e.g., hands on). And he finds no disparity at the highest level of aggression (killing). So it may be the case that the disparities range from high for minor acts to none existent for major acts of aggression. So how much of the 17.5% difference stems from minor acts of aggression vs major acts? Despite it being an obvious question, oddly, he doesn’t say. That suggests he is being less than forthcoming about it, and therefore there may be big differences he has chosen not to reveal in the op-ed. Please examine the report. Chetty did the same thing in his teacher study. Teachers had big effects in total. But those effect came predominantly from the most talented students, which was overlooked in the reporting. That doesn’t bode well for improving the scores of low-scores, which was the point of his study and recommendation.

Ed Comment:“We found that when police reported the incidents, they were 53% more likely to use physical force on a black civilian than a white one. We controlled for every variable available in myriad ways. That reduced the racial disparities by 66%, but blacks were still significantly more likely to endure police force.” Does that mean 53% x (100% - 66%) = 17.5% more likely all things equal (other than race)? That seems consistent with his finding that if you don’t resist, blacks have are 21% more likelihood of suffering police aggression than whites. He says aggression includes “officers putting their hands on civilians” to officers shooting unarmed suspects. Presumably, most of the incidents are minor incidences (e.g., hands on). And he finds no disparity at the highest level of aggression (killing). So it may be the case that the disparities range from high for minor acts to none existent for major acts of aggression. So how much of the 17.5% difference stems from minor acts of aggression vs major acts? Despite it being an obvious question, oddly, he doesn’t say. That suggests he is being less than forthcoming about it, and therefore there may be big differences he has chosen not to reveal in the op-ed. Please examine the report. Chetty did the same thing in his teacher study. Teachers had big effects in total. But those effect came predominantly from the most talented students, which was overlooked in the reporting. That doesn’t bode well for improving the scores of low-scores, which was the point of his study and recommendation. PS it would also be revealing to see the disparity between how black and white cops treat black and white suspects, all other things equal. The later is relevant because back cops are likely to be in black neighborhoods dealing with more violent crimes and criminals. So you have to hold those things equal. It may be the case that back cops are as racist as white cops. But if they are, it would be an indication there may be hidden variables at work. Again, he has the data but he doesn't say. That's not a good sign. BTW, what mired of variables do they measure? PSS I suspect the “hidden variable” is the probability of escalation by the suspect. Surely police use aggression to deter aggression/escalation. We know blacks commit more crime and more violent crime. So it seems likely they are more likely to escalate with police than whites. I’m curious to see if he includes this variable. It seems like he has the data to estimate it. And he seems surprisingly reluctant to say that his analysis shows racism.

Tuesday, June 23, 2020

AI Summary. The top 100 high-income individuals who failed to file tax returns owed nearly $10bn in unpaid taxes over a three-year span, cases the Internal Revenue Service did not pursue. The gross tax gap between taxes owed and paid averaged $441bn a year, with nonfilers accounting for roughly $39bn, or 9%.

Treasury Inspector General For Tax Administration Treasury Department
Date Posted:
Is Database:
Database

Btw 2014-2016, the top 100 high-income nonfilers failed to pay nearly $10bn in taxes, highlighting a significant oversight by the IRS.

How much unpaid tax do high-income nonfilers owe uncollected?

Core argument: The top 100 high-income nonfilers failed to pay nearly $10bn in taxes between 2014 and 2016, cases the IRS did not work.

Between 2014-2016, the top 100 high-income nonfilers failed to pay nearly $10bn in taxes, highlighting a significant oversight by the IRS. The gross Tax Gap, the difference between taxes owed and paid, averaged $441bn annually for 2011-2013, with nonfilers contributing approximately $39bn (9%). Despite being fewer in number, high-income nonfilers are a major source of this gap. The IRS's lack of action on these cases suggests a missed opportunity to recover substantial revenue, which could have implications for fiscal policy and resource allocation. Addressing this issue could help reduce the Tax Gap and improve tax compliance among high-income earners, potentially increasing government revenue and contributing to economic stability.

Takeaways by Macro Roundup® AI

  1. The top 100 high-income nonfilers failed to pay nearly $10bn in taxes between 2014 and 2016, cases the IRS did not work.
  2. The gross Tax Gap between taxes owed and taxes paid averaged $441bn annually for 2011-2013, with nonfilers accounting for roughly $39bn, or 9%.
  3. High-income nonfilers, though fewer in number, are a major source of the Tax Gap, and IRS inaction on these cases points to a missed opportunity to recover substantial revenue.

Suspect we will be hearing a great deal about this Treasury report.

IRS is leaving money on the table by not pursuing high income nonfliers. Top 100 nonfliers failed to pay ~10B USD btw 2014-2016

“…. TIGTA also identified the top 100 high-income nonfilers for Tax Years 2014 through 2016 that the IRS did not address or resolve, who had estimated tax due totaling $9.9 billion…The gross Tax Gap is the estimated difference between the amount of tax that taxpayers should pay and the amount paid voluntarily and on time. The average annual gross Tax Gap is estimated to be $441 billion for Tax Years 2011 through 2013, and approximately $39 billion (9 percent) is due to nonfilers, taxpayers who do not timely file a required tax return and timely pay the tax due for such delinquent returns. According to the IRS, high-income nonfilers, although fewer in number, contribute to the majority of the nonfiler Tax Gap….”

Treasury Inspector General For Tax Administration, “High Income Nonfilers Owning Billions Of Dollars Are Not Being Worked By The Internal Revenue Service,” Treasury Department, May 29, 2020, https://www.treasury.gov/tigta/auditreports/2020reports/202030015fr.pdf

AI Summary. Federal "pattern-or-practice" police investigations that followed viral incidents of deadly force are estimated to have caused 179 excess homicides each within 24 months, while investigations prompted by civilian complaints or lawsuits reduced crime. The authors attribute the increase to a sharp drop in police-civilian interactions, 90% in Chicago.

Tanaya Devi and Roland Fryer National Bureau of Economic Research
Date Posted:
Is Database:
Database

Police investigations following viral incidents of deadly force, such as those in Baltimore, Chicago, and Ferguson, lead to significant increases in homicides and total crime.

Do federal police investigations after viral incidents increase homicides?

Core argument: Pattern-or-practice police investigations following viral incidents of deadly force produced an estimated 179 excess homicides per investigation within 24 months, totaling nearly 900 additional deaths across cities including Baltimore, Chicago, and Ferguson.

Empirical analysis reveals that police investigations following viral incidents of deadly force, such as those in Baltimore, Chicago, and Ferguson, lead to significant increases in homicides and total crime. These investigations resulted in 179 excess homicides per investigation within 24 months, totaling nearly 900 additional deaths. In contrast, investigations driven by civilian complaints or lawsuits typically reduce crime, saving 61 lives per investigation. The primary cause of increased crime in viral cases is a sharp decline in police-civilian interactions, with Chicago experiencing a 90% drop post-investigation. This reduction in policing activity is linked to almost 34,000 excess felonies across affected cities. The data suggests that viral media events can disrupt policing effectiveness, leading to adverse macroeconomic and social outcomes.

Takeaways by Macro Roundup® AI

  1. Pattern-or-practice police investigations following viral incidents of deadly force produced an estimated 179 excess homicides per investigation within 24 months, totaling nearly 900 additional deaths across cities including Baltimore, Chicago, and Ferguson.
  2. Investigations prompted by civilian complaints or lawsuits typically reduce crime, saving an estimated 61 lives per investigation.
  3. The estimated rise in crime after viral-incident investigations is attributed to a sharp decline in police-civilian interactions, including a 90% drop in Chicago, linked to almost 34,000 excess felonies across affected cities.

Tanaya Devi and Roland Fryer, “Policing The Police: The Impact Of “Pattern-Or-Practice” Investigation On Crime, National Bureau Of Economic Research, June 2020, https://www.nber.org/papers/w27324.pdf

“….This paper provides the first empirical examination of the impact of federal and state "Pattern-orPractice" investigations on crime and policing. For investigations that were not preceded by "viral" incidents of deadly force, investigations, on average, led to a statistically significant reduction in homicides and total crime. In stark contrast, all investigations that were preceded by "viral" incidents of deadly force have led to a large and statistically significant increase in homicides and total crime.…The incident that sparks an investigation into a police department is an important determinant of how the investigation will impact policing and crime. For investigations that are sparked by mostly civilian complaints, allegations, lawsuits or media reports of excessive force, investigations caused a statistically significant decline in homicide and total crime rates. These investigations saved lives - 61 per investigation, in the 24 months following investigations. For the five investigations that were sparked by nationally visible incidents of deadly use of force - Baltimore, Chicago, Cincinnati, Ferguson and Riverside- investigations cause statistically significant increases in both homicide and total crime. Contrary to other investigations, investigations during this time lost lives - 179 of them, per investigation, in the 24 months following the start of the investigation. That’s 893 total. Almost 900 individuals whose potential may not have been realized. And, we are still counting. A back-of-the-envelope calculation suggests that these five cities converge to pre-investigation levels 51 months after the investigation and, by that time, almost 1214 excess homicides will have occurred…. We estimate that these investigations caused almost 900 excess homicides and almost 34,000 excess felonies. The leading hypothesis for why these investigations increase homicides and total crime is an abrupt change in the quantity of policing activity. In Chicago, the number of police-civilian interactions decreased by almost 90% in the month after the investigation was announced. In Riverside CA, interactions decreased 54%. In St. Louis, self-initiated police activities declined by 46%. Other theories we test such as changes in community trust or the aggressiveness of consent decrees associated with investigations -- all contradict the data in important ways….”

Evidence suggests the “Ferguson Effect” is real:

Ed Comment:“…Shocking. This is the problem with having 375 million annual interactions with the police and burning down the cities and undermining relationships with the police when a small fraction of those interactions go horribly wrong, especially when there is no evidence of racial bias in police shootings, surprising little in other significant uses of force, and none comparing white officers to black (expect that black officers are more likely to kill unarmed white suspects). It’s unfathomable to me how Trump’s lies, which are despicable, would be more important than a whole national movement based on exaggerations supported by a barge of fictional depictions of wholly unprovoked police killings (The Hate You Give/ To kill A Mocking Bird) that brainwash my naïve child, unjustifiably undermines support for the police and authority in general, and has caused 1000 extra homicides and 35,000(!!) excess felonies, many of the latter of which were committed against innocent victims. Two wrongs don’t make a right….”

AI Summary. An analysis of New York City stop-and-frisk data and a national police-public contact survey estimates that Black and Hispanic civilians are over 50% more likely to experience non-lethal force in police interactions, with these disparities persisting after controlling for encounter context and civilian behavior. The same data show no racial differences in officer-involved shootings.

Roland Fryer National Bureau of Economic Research
Date Posted:
Is Database:
Database

Research by @RolandFryer finds that black & Hispanic individuals are over 50% more likely to experience non-lethal force in police interactions, despite controlling for context & civilian behavior. No racial differences in officer-involved shootings.

Do racial disparities in police use of force differ by severity?

Core argument: Black and Hispanic individuals are over 50% more likely to experience non-lethal police force, a disparity that persists after controlling for encounter context and civilian behavior, according to analysis of NYC Stop and Frisk and Police-Public Contact Survey data.

Analyzing data from NYC's Stop and Frisk program and the Police-Public Contact Survey (PPCS), the study reveals that black and Hispanic individuals are over 50% more likely to experience non-lethal force in police interactions. Despite controlling for context and civilian behavior, these disparities persist. Interestingly, the data shows no racial differences in officer-involved shootings, suggesting that an officer's race does not significantly impact the use of force. The study highlights that lower-level uses of force, such as using hands or handcuffs, are more frequently employed and documented, reflecting standard police procedures. This comprehensive analysis underscores the complexity of racial dynamics in policing and suggests that systemic factors, rather than individual officer bias, may drive these disparities.

Takeaways by Macro Roundup® AI

  1. Black and Hispanic individuals are over 50% more likely to experience non-lethal police force, a disparity that persists after controlling for encounter context and civilian behavior, according to analysis of NYC Stop and Frisk and Police-Public Contact Survey data.
  2. The study finds no racial differences in officer-involved shootings and reports that an officer's race does not significantly affect the use of force.
  3. Lower-level uses of force, such as hands or handcuffs, are more frequently employed and documented, reflecting standard police procedures, and the study suggests systemic factors rather than individual officer bias may drive the observed disparities.

Initial Fryer paper:“This paper explores racial differences in police use of force. On non-lethal uses of force, blacks and Hispanics are more than fifty percent more likely to experience some form of force in interactions with police. Adding controls that account for important context and civilian behavior reduces, but cannot fully explain, these disparities. On the most extreme use of force - officer-involved shootings - we find no racial differences in either the raw data or when contextual factors are taken into account. We argue that the patterns in the data are consistent with a model in which police officers are utility maximizers, a fraction of which have a preference for discrimination, who incur relatively high expected costs of officer-involved shootings.”

Roland Fryer, “An Empirical Analysis Of Racial Differences In Police Use of Force,” National Bureau Of Economic Research, July 2016 (Revised January 2018)https://www.nber.org/papers/w22399

His data suggests that an officer’s race doesn’t really have an impact on use of force:

“…We use four sources of data - none ideal - which together paint an empirical portrait of racial di↵erences in police use of force conditional on an interaction. The first two data sources - NYC’s Stop and Frisk program and the Police-Public Contact Survey (PPCS) - provide information on non-lethal force from both the police and civilian perspectives, respectively…The database contains detailed information on the characteristics of each stop (precinct, cross streets, time of day, inside/outside, high/low crime area), civilian demographics (race, age, gender, height, weight, build, type of identification provided), whether or not the officers were in uniform, encounter characteristics (reason for stop, reason for frisk (if any), reason for search (if any), suspected crime(s)), and post-encounter characteristics (whether or not a weapon was eventually found or whether an individual was summonsed, arrested, or a crime committed). Perhaps the most novel component of the data is that officers are required to document which one of the following seven uses of force was used, if any: (1) hands, (2) force to a wall, (3) handcuffs, (4) draw weapon, (5) push to the ground, (6) point a weapon, (7) pepper spray or (8) strike with a baton.6 Ocers are instructed to include as many uses of force as applicable…”

Here ae the levels of force the data records:

“…. Second, lower level uses of force - such as the use of hands - are both recorded in these data and more frequently used by law enforcement than more intense uses of force. For instance, if one were to use arrest data to glean use of force, many lower level uses of force would simply be considered standard operating procedure. Putting hands on a suspect, pushing them up against a wall, and putting handcuffs on them are so un-noteworthy in the larger context of an arrest that they are not recorded in typical arrest descriptions. Yet, because proactive policing is a larger and less confrontational portion of police work, these actions warrant data entry….”

Steve Comment:Looking through the paper to find out how much of the data is lower level force but lower level force is more frequent:

Ed Comment:“We found that when police reported the incidents, they were 53% more likely to use physical force on a black civilian than a white one. We controlled for every variable available in myriad ways. That reduced the racial disparities by 66%, but blacks were still significantly more likely to endure police force.” Does that mean 53% x (100% - 66%) = 17.5% more likely all things equal (other than race)? That seems consistent with his finding that if you don’t resist, blacks have are 21% more likelihood of suffering police aggression than whites. He says aggression includes “officers putting their hands on civilians” to officers shooting unarmed suspects. Presumably, most of the incidents are minor incidences (e.g., hands on). And he finds no disparity at the highest level of aggression (killing). So it may be the case that the disparities range from high for minor acts to none existent for major acts of aggression. So how much of the 17.5% difference stems from minor acts of aggression vs major acts? Despite it being an obvious question, oddly, he doesn’t say. That suggests he is being less than forthcoming about it, and therefore there may be big differences he has chosen not to reveal in the op-ed. Please examine the report. Chetty did the same thing in his teacher study. Teachers had big effects in total. But those effect came predominantly from the most talented students, which was overlooked in the reporting. That doesn’t bode well for improving the scores of low-scores, which was the point of his study and recommendation.

Ed Comment:“We found that when police reported the incidents, they were 53% more likely to use physical force on a black civilian than a white one. We controlled for every variable available in myriad ways. That reduced the racial disparities by 66%, but blacks were still significantly more likely to endure police force.” Does that mean 53% x (100% - 66%) = 17.5% more likely all things equal (other than race)? That seems consistent with his finding that if you don’t resist, blacks have are 21% more likelihood of suffering police aggression than whites. He says aggression includes “officers putting their hands on civilians” to officers shooting unarmed suspects. Presumably, most of the incidents are minor incidences (e.g., hands on). And he finds no disparity at the highest level of aggression (killing). So it may be the case that the disparities range from high for minor acts to none existent for major acts of aggression. So how much of the 17.5% difference stems from minor acts of aggression vs major acts? Despite it being an obvious question, oddly, he doesn’t say. That suggests he is being less than forthcoming about it, and therefore there may be big differences he has chosen not to reveal in the op-ed. Please examine the report. Chetty did the same thing in his teacher study. Teachers had big effects in total. But those effect came predominantly from the most talented students, which was overlooked in the reporting. That doesn’t bode well for improving the scores of low-scores, which was the point of his study and recommendation. PS it would also be revealing to see the disparity between how black and white cops treat black and white suspects, all other things equal. The later is relevant because back cops are likely to be in black neighborhoods dealing with more violent crimes and criminals. So you have to hold those things equal. It may be the case that back cops are as racist as white cops. But if they are, it would be an indication there may be hidden variables at work. Again, he has the data but he doesn't say. That's not a good sign. BTW, what mired of variables do they measure? PSS I suspect the “hidden variable” is the probability of escalation by the suspect. Surely police use aggression to deter aggression/escalation. We know blacks commit more crime and more violent crime. So it seems likely they are more likely to escalate with police than whites. I’m curious to see if he includes this variable. It seems like he has the data to estimate it. And he seems surprisingly reluctant to say that his analysis shows racism.

Ed Comment:I read the paper. It raised (in me) all the concerns I raised to you. Black officers act the same toward blacks and whites as white officers. Disparities in the use of force decline as force increases. And their data comes primarily from stop and frisk, which WAS an extreme form of policing. They try to make an estimate of the dangerousness of the suspect but their estimate is silly—education, income, and employment—none of which would be know to the officer, and probably not very predictable since so few people commit crimes. Ironically, in many instances, especially with stop and frisk, the office may know the suspect. And nowhere where did I see a simple measure of how much more dangerous are whites than blacks on average or more precisely white stopped by the police vs blacks stopped by the police. Since blacks commit 8-times as much crime, it seems likely they are more dangerous on average. By measuring the dangerousness of suspects with variables such as income, education, and employment, that an officer can’t identify, you limit the use of aggressiveness to reactive uses rather than proactive uses. That limitation seems impractical. If I apprehend a frail man or women, i.e., less dangerous to me, I might be much less inclined to use proactive aggressiveness because I know I can win reactively. (SWAT teams come storming in with overwhelming firepower to discourage aggressiveness before it starts. Policemen wear guns to be intimidating.) If I fear that I can’t win reactively, I might try to intimidate you into not trying in the first place, so I can reduce the chances of needing to react. It surely seems odd that black policemen would discriminately treat black suspects the same as white policemen treat them, if there were no hidden variables/reasons, i.e. it was merely racism.

AI Summary. The authors estimate that a 1% increase in foreign capital inflows raises local house prices by 0.27% but housing supply by only 0.004%, indicating highly inelastic local housing markets. U.S. zip codes with large foreign-born Chinese populations saw house prices grow 8% more amid Chinese capital inflows, a pattern that reversed with U.S.-China trade tensions.

Caitlin Gorback and Benjamin Keys National Bureau of Economic Research
Date Posted:
Is Database:
Database

House prices in US zip codes with high foreign-born Chinese populations grew 8% more after 2011, driven by Chinese capital inflows, but this trend reversed with the U.S.-China trade war. @CaitlinGorback @BenjaminKeys, @nberpub.

Do foreign capital inflows raise local house prices more than supply?

Core argument: House prices in U.S. zip codes with high foreign-born Chinese populations grew 8% more after 2011, driven by Chinese capital inflows, a trend that reversed with the U.S.-China trade war.

House prices in U.S. zip codes with high foreign-born Chinese populations grew 8% more after 2011, driven by Chinese capital inflows, but this trend reversed with the U.S.-China trade war. A 1% increase in foreign capital raises local house prices by 0.27% and housing supply by 0.004%, highlighting the inelastic nature of local markets. Foreign-buyer taxes, like those in Vancouver, have spillover effects on non-targeted markets such as Seattle. Neighborhoods with large foreign populations are more vulnerable to price swings, making them less accessible to U.S. residents. Despite rising prices, new construction adds housing stock, though the U.S. housing market remains inelastic in the short run, contributing to an affordability crisis as cities struggle to rapidly increase supply.

Takeaways by Macro Roundup® AI

  1. House prices in U.S. zip codes with high foreign-born Chinese populations grew 8% more after 2011, driven by Chinese capital inflows, a trend that reversed with the U.S.-China trade war.
  2. A 1% increase in foreign capital raises local house prices by 0.27% but housing supply by only 0.004%, indicating inelastic local housing markets.
  3. Foreign-buyer taxes such as Vancouver's spill over into non-targeted markets like Seattle, and neighborhoods with large foreign populations are more vulnerable to price swings and less accessible to U.S. residents.

New NBER finds Chinese capital flight drove up western housing prices, worth noting that this trend may have reversed in 2018-2019 possibly in response to Chinese capital controls (for example in Seattle zip codes with lots of Chinese saw prices flatten while the rest of the city up ticked)

It also suggests the capital controls such as Vancouver’s foreign buyers tax pushed buyers to Seattle, this suggests the USG does have the ability to limit incoming risk adverse capital if we want to (granted there are spillovers)

“…Interconnected capital markets allow mobile global capital to flow into immobile local assets. This paper examines how foreign demand affects U.S. housing markets, and uses this demand shock to estimate local price elasticities of supply. Other countries introduced foreign-buyer taxes meant to deter Chinese housing investment beginning in 2011. We first show house prices grew 8 percentage points more in U.S. zipcodes with high foreign-born Chinese populations after 2011, subsequently reversing with the onset of the U.S.-China trade war. Second, we use international tax policy changes as a U.S. housing demand shock and estimate local house price and quantity elasticities with respect to international capital. We find that a 1% increase in instrumented foreign capital raises house prices at the zip code level by 0.27%, and housing supply by 0.004%. Finally, we use the two elasticities to construct new local house price elasticities of supply for the largest 100 CBSAs. These supply elasticities average 0.1 and vary between 0.02 and 0.7, suggesting that local housing markets are inelastic in the short run and exhibit substantial spatial heterogeneity….Our findings have three primary implications. First, we establish that foreign-buyer taxes, generally imposed in response to Chinese investment, have spillovers in other non-targeted markets; for instance,imposing foreign buyer taxes in Vancouver has affected Seattle’s housing market. Next, we show thatneighborhoods with a large share of foreign residents are more susceptible to house price swings in response to foreign capital flows. From an affordability standpoint, these neighborhoods are less accessible to existing U.S. residents as prices rise due to foreign investment. However, we also show that the real economy responds to these signals, with new construction adding additional housing stock in the same neighborhoods. Finally, we document that the U.S. housing market is highly inelastic in the short run, but heterogeneous across cities. Our results are consistent with the recent rise in house prices nationally creating an affordability crisis, as cities are not rapidly adding stock in response…”

Caitlin Gorback and Benjamin Keys, “Global Capital And Local Assets: House Prices, Quantities and Elasticities,” National Bureau Of Economic Research, June 2020, https://www.nber.org/papers/w27370