One of Greg’s students inquires about Noam Scheiber’s retort that “all the cleverness has crowded out some of the truly deep questions we rely on economists to answer” There are many reasons to defend Steven Levitt but I’ll focus on just one – his work is vitally important.
I spend most of my days thinking about taxes, and government spending and public policy, issues well with in the schema of traditional big economics. My hope is that one day I’ll have a clever new idea, or perhaps as importantly, a clever way of explaining an old one that will help us and our children live happier, healthier, more productive lives.
Steven Levitt spends his days thinking about the roots of crime, corruption, and the racial divide. If he can help us understand those issues he will do more for economic prosperity than I ever could.
Creating the right incentives for corporations to locate here in the US is important, but getting young urban kids out street gangs and into college is much more important. Tax policy works at the fringes of the free market economy, corruption goes right to the heart of why some economies succeed and others fail.
In 2004 the median black man earned only 75% of the median white male. That gap is virtually eliminated when accounting for 8th grade test scores. A cure for the test score gap could mean a GDP boost of nearly 3% based on earnings alone.
These questions are big questions.
Perhaps, the deeper question is whether we have to take ourselves seriously to do serious work. Do we have to talk about boring issues in a boring way? Or, can we address the things that that everyday people care about? Does being a uncommonly productive scholar mean being divorced from common things?
Tuesday, April 24, 2007
In A Word - No
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9 comments:
Sure, but how important is it to know that Sumo wrestlers cheat? The critique has substance, even if it isn't 100% correct.
It's not particularly important to know that Sumo wrestlers cheat. But when you could find out WHICH ones are cheating, then it becomes vitality important in removing corruption from the sport.
Levitt's getting a bad rap because of the book, I think, not because of his research. After all, he did win the John Bates Clark award, and while maybe he did have his detractors (Heckman seems to have always had a low opinion of him), enough people thought he enough of him to award him with it. I think what bugs people is the marketing of the book - the idea that "freakonomics" is something Levitt came up with. But, most people didn't know that economists studied crime, corruption and cheating, so it probably did require some packaging to have broad appeal.
Karl, where did you do your PhD? Just wondering. I've been noticing your posts on Mankiw's blog for a while and was curious.
My problem with his arguments *appear* fairly sloppy. There may be thorough, rigorous analysis supporting his "sexy" connnections, but they are set forth in a way that implies that correlation = causality. I like that he makes economics accessible, but anyone interested in actual economics I would recommend a less superficial read.
The criticisms against sumo wrestling I think miss the point. Even if you're not interested in sumo wrestling, the value to using it as a case study to test theories of corruption is that the data is good, the stakes are high, and the incentives were presumably aligned to encourage cheating. Ideally, we'd have great data in other high stakes environments where incentives seem to encourage cheating, but we usually don't. But you can see a whole range of early Levitt papers that look at these kinds of things anyway - like the teacher cheating paper, or even the bagel seller paper. If we see cheating among such professions as sumo wrestlers and teachers - two gropus that many ex ante believe are non-responsive to such price changes - then it provides indirect evidence for similar activities in environments where you would expect them - like commercial environments.
Using sports to test things like racial discrimation or corruption has such a long history because the data is so great, and the stakes are so high. The best papers on racial discrimination seem to be ones that looked at things like the market for baseball cards, or the lining of an NBA basketball team with first and second tiered players. From these environments, we've actually been afforded the chance to learn about the phenomenon.
The same goes for Levitt's work on crime. People forget that until Levitt's paper using gubernatorial cycles to estimate the impact of police hiring on crime, there was not to my knowledge any paper that found positive effects of police hirings on crime, since police hirings is endogeneous to the crime rate in the first place. So many papers would, instead of finding a negative sign on the estimated police hiring coefficient, would find a positive sign - hiring police increased crime? This was an important paper, and a clever paper, but people are too quick to skip past the first when they decry the second. The same goes for Levitt's overcrowding paper. That paper continues to inform our understanding of the impact of incapacitation on crime rates, specifically because Levitt found a useful source of exogenous variation which allows us a chance to better understand the complex relationship between imprisonment and crime.
My thoughts on Levitt are that he is an asset to science. I work in cross-discipline areas and the kind of empirical work you see outside of economics seems like it could benefit from the scientific rigor that a quest for "clean identification" ultimately produces. Because one is so concerned about selection, endogeneity, or simultaneity, one is also conscience regularly of just how problematic identifaction really is. But in other disciplines, I notice researchers claiming causality with very flimsy evidence, or I notice them simply saying it's impossible to establish causality and so become content with correlations, risk factors, etc. Angrist, Levitt, Card, Krueger and all the other labor economists who helped open the door of natural experimentation and instrumental variable ultimately showed a middle way. It'll be a while before we figure out what's left from this, but I think the popularity of the book leads a lot of people to paint Levitt as some kind of court jester whose just trying to amuse us. Before the book, Levitt's reputation was that he had pushed the frontier of knowledge in very important areas, and his methodology was valuable for empirical work more broadly. Not that he invented IV estimation or anything, but as a practitioner, he's as good as they get.
An interesting reading:
http://www.noapparentmotive.org/papers/DiNardo_on_Freakonomics.pdf
Sorry, the link was incomplete in my previous message. here is the complete link to John DiNardo's review of Freakonomics:
http://www.noapparentmotive.org/
papers/DiNardo_on_Freakonomics.pdf
Scott, I take your point, or points. For the record I think Levitt richly deserved his JBC medal and he's probably the best at what he does. I also enjoyed his book even though the tone was a bit grating. Having said that I think there has been a large proliferation of papers on cutsy topics. "Applied micro" has basically exploded relative to the other sub-disciplines. And a lot of it is on very shaky theoretical ground - the theory is usually some ad hoc story about how people behave and how they're influenced by incentive and then a lot of hand waving-let's-just-run-those- regressions. Nobody thinks about theory seriously anymore, or at least it seems like it sometimes.
Levitts work is definitely interesting and I think worthwhile, but will it have a long lasting impact? I don’t know and I claim no one really knows at least yet. Freakonomics has the qualities to become a classic, but it has its own drags like giving an impression about you as a demi-god or Indiana Jones! Afterall, he himself has claimed that a lot of his work borders on the trivial.
One thing that really annoyes me about Levitt/Dubner team is that they over-blow everything they write about. Their praises are so out of proportion that it makes their writings very unpersuasive, at least to a reader like me. For example, their articles about both Emily Oster and Roland Fryer were ridiculously exaggerated in their praise.
And I agree with Sheiber’s claim that a lot of hard problems take up a longer time and your kind of research kind of ignores those questions cauz they like to churn out papers much faster! I think John Rawls took 12 years to write his book, Keynes took 4-6 years, Sraffa 20 years, Wittgenstein published only 1 book in his lifetime and so on with a huge list of authors who have really made an impact. And nobody really knows how much an impact something will make. Afterall Cournot went unnoticed for about 40 years and Slutsky for around 20 years and talk about their impact! And I doubt anyone with a serious head thinks of Levitts work in a similar category as any of those guys. Thats a pretty tough list to be on. But that is not to say that his work doesnt have any substance, cauz then most people’s work will be considered useless! His approach is important in its own place, but it has its own short-comings too.
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