The most astonishing thing about the extraordinary outpouring of growth and innovation that the United States and other economies have achieved over the past two centuries is that it does not astonish us. Throughout most of human history, life expectancy was about half what it now is, or even less. We could not record voices or speech, so no one knows how Shakespeare sounded or how “to be or not to be” was pronounced. The streets of the greatest cities were dark every night. No one traveled on land faster than a horse could gallop. The Battle of New Orleans took place after the peace treaty had been signed in Europe because General Andrew Jackson had no way of knowing this. In Europe, famines were expected about once a decade and the streets would be littered with corpses, and in American homes, every winter the ink in the inkwells froze.
We’re worried a lot that we’re all getting fatter. The thing is, so are lab animals on restricted diets. Scientists are starting to think this may be because we live in climate controlled environments where we don’t have to shiver much.
Anyway, my point is that when we change our environment, natural selection takes advantage.
It turns out that the Census Bureau counts just about any student living away at college (in the dorms, in student housing, and so on) as living in their parents’ home.
That actually makes some sense: it’s not like most college students have established a permanent residence — for the whole year (since we do most demographics on an annual basis) — from their parents, right?
Here’s the charts to help make sense of what this means in the data. First off, 20-somethings are a lot less likely to be married, but more likely to be living every other way:
Do note that there is definitely an uptick in people living at home with their parents since the Great Recession.
But also this note, showing that most of that is because they’re in college:
Note that this is not graduated-from-college-within-the-last-couple-of-years-and-can’t-find-a-job. That’s the bottom shaded area, and it’s declined over the last generation, and the uptick over the last 10 years is pretty modest.
So … lighten up … and tell the old folks to lighten up too. ;)
Having said that, do note that the center section will also include people staying in college because they can’t or won’t find a job and move out. So the millenials are not completely absolved here, but college towns have been full of “permanent students” for a very long time, and there’s little evidence that his phenomenon has gotten worse. And in fact, most universities are actually pushing students harder to get out the door than ever before.
Cross-posted from SUU Macroblog, which is required reading for my students.
Interestingly, that gives a half-life of (just about exactly) 27 years. This means that you’re indifferent between $100 today and $200 received in 27 years, or $400 received in 54 years, or $800 to be received in 81 years.
I strongly advise you to note that this a rate that’s low enough to justify quite a bit of current spending on abatement policies for anthropogenic global warming.
Personally, I still don’t think the statistics warrant being worried, but this definitely suggests that the financial argument against doing something isn’t that strong.
This is based on an NBER paper I’d missed:
Giglio, Stefano, Matteo Maggiori, and Johannes Stroebel (2014), “Very Long-Run Discount Rates.” National Bureau of Economic Research Working Paper 20133.
Thomas Piketty’s Capital In the 21st Century has been a bestseller in America since its translation came out in the spring. It’s being widely touted as the most important book in macroeconomics in decades.
It’s arguable that this is all a load of BS. It turns out no one is actually reading it.
Here’s how we know. When someone buys a book for their Kindle, they can highlight passages. Part of what you agree to when you buy a Kindle is that Amazon can keep track of those highlighted passages. The most frequently highlighted passages are actually shown towards the bottom right of a book’s webpage on Amazon.
For most books, these passages occur throughout the book. And a good sign that people finish the book is that there’s a heavily highlighted passage towards the end.
The thing is, of the 5 most heavily highlighted passages in Piketty’s book, the last one occurs on … page 26. Not one of the top 5 passages occurs in the last 670 or so pages.
There’s actually theory in statistics about the distribution of what are called record values. That isn’t applied here, but having some exposure to it, I’d estimate that 99.9% of readers never get past page 50 before abandoning the book. For example, suppose that (way back when) people started recording the time it took to run a mile, and kept track of each successive record: if the record times stopped going down once they hit 7 minutes … you might conclude a lot of things, but a pretty obvious possibility would be that no one is running that distance at all.
When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.
When the rate of return on capital significantly exceeds the growth rate of the economy (as it did through much of history until the nineteenth century and as is likely to be the case again in the twenty-first century), then it logically follows that inherited wealth grows faster than output and income.
Knowledge and skill diffusion is the key to overall productivity growth as well as the reduction of inequality both within and between countries.
The sharp reduction in income inequality that we observe in almost all the rich countries between 1914 and 1945 was due above all to the world wars and the violent economic and political shocks they entailed (especially for people with large fortunes). It had little to do with the tranquil process of intersectoral mobility described by Kuznets.
Over a long period of time, the main force in favor of greater equality has been the diffusion of knowledge and skills.
I have a Kindle 2, in which there are no pages, only locations (these are approximately a longish sentence each). Piketty is 13,605 locations long. A page in the hardcover edition of the book is about 19 to 20 locations; the biggest “page” I can show on my Kindle is about 11 locations.
# 1 is from location 88 (0.6% of the way through the book, and I have the second half of that quote highlighted)
# 2 is from location 547 (4.0% of the way through the book, and yes I have that one highlighted)
# 3 is from location 458 (3.4% of the way through the book, and I don’t have anything on that “page” highlighted
# 4 is from location 340 (2.5% of the way through the book, and I don’t have anything on that “page” highlighted)
# 5 is from location 480 (3.5% of the way through the book, and I don’t have that passage highlighted, but I do have two others on that “page”)
To put that in perspective, that’s like getting a text for a class that has they typical 15 chapters in it, and when the books are sold back to the bookstore at the end of the semester, they notice that no one highlighted anything after the first chapter. What would you conclude about a class like that? For my part, I’d conclude that the material wasn’t very interesting, the students weren’t trying hard, and no one was doing quality control to make sure they did.
Currently, I’m at location 1921, and I’ve highlighted 123 passages in the book. And yet I match up with 1.5 out of 5 of the most popular highlighted passages.
It’s a rough conclusion, but an academic macroeconomist, preparing to use the text in an advanced undergraduate class, doesn’t find interesting or worthwhile well over half of what the general reading public does.
I hate to sound elitist, but this doesn’t bode well for the public’s ability to understand macroeconomics even when guided by a book that’s quite readable. I think this is prima facie evidence that the intellectual baggage people bring with them to macroeconomics is huge.
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