Something Not Unlike Research

I'm for raising taxes on the affluent. Am I a hypocrite?

post by Bill Gardner

I support an increase in the taxes paid by the wealthiest and highest income Americans. I want this to happen to reduce the deficit and to fund some essential services to benefit the poor. This is not retribution. I don't think incomes are or could be based on what people 'deserve.' Finally, I am not motivated by envy, because I am in the group that should be taxed.

At this point, you may respond, "If you believe in increased taxes on persons like yourself, take the option to give the government more." And if I do not take that option -- which I do not -- I am a hypocrite.

So, there is no question that I am not nearly as generous or charitable a person as I should be. But that is a separate issue. I want the US to be a society where every child gets essential health care and education. Charities have never achieved these goals. Governments funded by progressive taxation get closer, in many developed societies. 

The epigenetic lottery

post by Bill Gardner

Tyler Cowen discusses the (possibly diminished) US social mobility, and asks

How much of [social] immobility is due to “inherited talent plus diminishing role for random circumstance”?  Is not this cause of immobility very different — both practically and morally — from such factors as discrimination, bad schools, occupational licensing, etc.?  What are you supposed to get when you combine genetics with meritocracy?  I do not know how much of current American (or other) immobility is due to this factor, but I find it discomforting that complaints about mobility are so infrequently accompanied by an analysis of this topic.

So, the idea is that nature roles the dice and gives each child a set of genetic endowments. Families will also invest their resources in cultivating the children's talents. Then, as we become adults, 'society' (meaning the schools, job markets, etc.) places each of us in the social hierarchies of wealth, income, and power (the figure to the right is from Catherine Mulbrandon [@visualecon], and shows the 2005 income distribution among the bottom 98% -- adding the next 2% takes you way off the page). If societies are increasingly meritocratic, those outcomes will mirror the individual distribution of genetic talent and family resources to an increasing degree. So it could be that reduced mobility and increasing social inequality of outcomes reflects increasingly accurate meritocratic selection processes. And many would argue that such processes are not inherently unjust, so maybe we should just get over being upset about the worsening inequality of outcomes. If you add the ideas that genetic endowments are exogenous, and that trying to compensate for the inequality of family resources is either wrong or futile, then you have even stronger justifications for current inequality.

I don't buy these conclusions, for lots of reasons, but this post is not the place to provide the discussion that Cowen is calling for.

I want to raise just one objection here: The story about the genetic lottery is too simple. Our biology is less exogenous than most theorists believe. Michael Rutter explains that genes do not give us talents:

...although the DNA is what a person inherits, the effects of that DNA are dependent on a chain reaction that ends up with the expression of the products of the DNA in the structure and function of individual cells that is how environments alter genes (emphasis added).

Referring to this account of the interaction of nature and nurture, James Heckman writes

The field of epigenetics surveyed in Rutter (2006) demonstrates how genetic expression is strongly influenced by environmental influences and that environmental effects on gene expression can be inherited (emphasis added).

He then argues that there is evidence

that high quality early childhood interventions foster abilities and that inequality can be attacked at its source.  

and we are therefore not absolved from responsibility for the inequitable distribution of adult talent visible in infancy and early childhood.

The problem I'm pointing to in the meritocratic argument is that there isn't really a genetic lottery  in the way we imagine: and to the degree there is, the dice are loaded in the womb. If Heckman is right, there is much more we can do about inequality than most of us are willing to acknowledge.

However, if Heckman is right, it is also the case that much if not most of what we can do is equalize the epigenetic and child developmental lotteries that will govern inequality among future generations. And we have to decide whether we are motivated to struggle for equality in that future, a promised land that we will not see.

Prohibiting Anti-Smoker Hiring Policies is Not "Leveling Down"

post by Paul Kelleher

Bill responds today to my view that anti-smoker hiring policies are unfair to those who smoke. I have argued that many smokers are victims of social arrangements that confine them to highly constrained socioeconomic situations. These situations are highly correlated with smoking uptake, and since smoking (and/or just feeding an addiction) relieves stress, many smokers are doing nothing irrational or particularly worthy of condemnation. I have made the point that anti-smoker hiring practices promise to make many already disadvantaged smokers even worse off by erecting further barriers to scarce employment opportunities. I would rather see a more compassionate approach that actively helps smokers quit without making them worse off economically. (I do not doubt that Bill also wants to put compassion at the fore, although his last paragraph here does sound a bit harsh to me given that smoking is an addiction that most smokers acquire before they are considered wise enough to vote).

Against my view, Bill claims that the policies I favor amount to "leveling down": my preferred policy is said to sacrifice improvements in average and overall economic well-being for the sake of a narrower variance in social outcomes (assuming, that is, that non-smokers are more productive). Indeed, Bill argues that I favor less variance in social outcomes at the cost of both fewer economic and fewer health improvements, since an increasingly anti-smoker society would contribute to less smoking overall. Bill concedes that less inequality can sometimes justify a loss in aggregate or average outcomes, but not in this case. 

Bill hasn't got the dynamics of my argument quite right. I am not in favor of leveling down. I am not, for instance, in favor of intentionally harming the better off in order to reduce the inequality between them and those worse off. Nor am I arguing here for policies that harm the better off as a side-effect of improving the situation of those worse off (although I am in favor of other policies fitting this mold, as I assume Bill is). Each of these sorts of policy would bring the top down and would thereby decrease inequality. But I am advocating for neither. Rather, I am arguing that it is unjust to make the worst off even worse off than they already are. I do concede that this might lead to lower overall health or welfare, at least in the short to medium term. How much lower aggregate health of welfare? Who knows.

My argument type is, then, the third on this list:

1. Worsen the better off in order to reduce inequality.

2. Worsen the better off as a side-effect of policies designed to improve the worst off. 

3. Prevent worsening the worst off, even if that interferes with potential improvements for the better off.

In my view, (1) is the hardest to justify and (3) the easiest; I think most would agree with me on at least that. If the worst off referred to in (3) are indeed absolutely badly off for reasons of injustice, then we see that the issue is not as clear cut as simply "mean vs. variance." Mine isn't an aesthetic thesis about the virtue of flat distributions. Nor am I wholly insensitive to foregone improvements for the better off. Instead, I am focusing on a third factor: what we owe to those who already experience the brunt of injustice.

I am therefore against anti-smoker hiring policies for both reasons of compassion and reasons of justice. That does not mean that I think smoking should be "a lifestyle choice that we want to protect" (to quote Bill). I am fine with less draconian attempts to turn people off smoking, such as higher cigarette taxes (used in turn to fund smoking cessation programs) and even greater health care cost sharing for smokers. Erecting greater barriers to employment is, however, going too far in my opinion.

May Employers Ethically Refuse to Hire Smokers?

post by Paul Kelleher

From USA Today:

More job-seekers are facing an added requirement: no smoking — at work or anytime.

As bans on smoking sweep the USA, an increasing number of employers — primarily hospitals — are also imposing bans on smokers. They won't hire applicants whose urine tests positive for nicotine use, whether cigarettes, smokeless tobacco or even patches.

Such tobacco-free hiring policies, designed to promote health and reduce insurance premiums, took effect this month at the Baylor Health Care System in Texas and will apply at the Hollywood Casino in Toledo, Ohio, when it opens this year.

"We have to walk the walk if we talk the talk," says Dave Fotsch of Idaho's Central District Health Department, which voted last month to stop hiring smokers.

When I read a story like this, I always think first of the following passage from Michael Marmot's The Status Syndrome (pp. 68-9):

Here is a more contemporary picture of poverty. In an American city a young woman, let's call her Patty, sits and contemplates her life. She recalls that a researcher, doing a health survey, came to the local grocery store, where Patty works as a cashier, and asked her how much exercise she did. She laughed. Most of the day is spent sitting or standing behind the till. What about exercise at home? She lives in a crowded inner-city tenement building. She won't let the children play on the strip of asphalt nearby. Apart from broken glass, she is worried about the violence in this part of town.

Patty's reverie continues. The children come home from school and ask if they can go swimming. It would certainly relieve the long oppressive hours from Friday night to Monday morning that is the lot of a Single mother with two children. But joining a fitness club had been out of the question. They might as easily have a vacation on the moon. There is the Y. But it is an hour on the bus. With the bus, entry, snacks, and sodas for the kids, the trip would cost $30. A king's ransom, but it would fill a couple of hours at least. Then what? She and the children sit cooped up in their two bedroom apartment going quietly stir-crazy. Not so quietly. The children yell at each other and start to fight again. Patty lights another cigarette.

As she contemplates the week ahead, she thinks that the boy needs new sneakers. Why they have to be the ones with special laces, when he never does them up, is beyond her. Something about all the other kids having them. The girl has been to three different friends for dinner and a sleepover in the last month. She wants friends home to her place. Four children, pizzas all round ... Where is that money going to come from? Patty lights another cigarette. She remembers when she splurged and bought herself a pair of designer jeans. It was Mother's Day before last. Gallows humor of the Single mother to buy herself clothes that she could not afford on Mother's Day.

As she thinks about it, she realizes that the only money she spends on herself is the cigarettes. When she took the children to the clinic the other day, the nurse told her, for the umpteenth time, that she shouldn't be smoking: bad for her health and a bad example for the children. The hell with that, thought Patty, take the cigarettes away and what am I left with? That clinic nurse should try leading my life, and see if she's still worried about lung cancer in thirty years' time. I have enough trouble getting through next week.

Lots of "lifestyle choices" have effects on health care costs. A provocative example I cite in the classroom is a employee's choice to have a child. I don't know how the added costs of this choice stack up to the added costs of smoking; I need to look into that further. But putting the examples side by side makes for a useful thought experiment: do we have the same intuitions in each case about whether it's OK to refuse to hire the potentially health-costly applicant? If not, why not? If it is because having children is a "respectable" choice while smoking is not, then I would urge that we spend more time thinking about passages like Marmot's, as well as all the information we have about how people become smokers and what makes it so hard for them to stop.

I don't insist that these Marmot-inspired thoughts are dispositive. There's of course a lot more to say on this issue. As always, I'd welcome your thoughts and a continued discussion in the comments section.

Private Charity as a Public Good?

post by Paul Kelleher

Milton Friedman (Capitalism and Freedom, ch. 12):

The heart of the [classical] liberal philosophy is a belief in the dignity of the individual, in his freedom to make the most of his capacities and opportunities according to his own lights, subject only to the proviso that he not interfere with the freedom of other individuals to do the same. [...]

[The classical liberal] will regard private charity directed at helping the less fortunate as an example of the proper use of freedom. And he may approve state action toward ameliorating poverty as a more effective way in which the great bulk of the community can achieve a common objective. He will do so with regret, however, at having to subsitute compulsory for voluntary action.

The egalitarian will go this far, too. But he will want to go further. He will defend taking from some to give to others, not as a more effective means whereby the "some" can acheive an objective they want to achieve, but on grounds of "justice." At this point, equality comes sharply into conflict with freedom; one must choose. One cannot be both an egalitarian, in this sense, and a liberal.

Friedman never explains why, on his classical liberal view, I am permitted to take your money if that is required to make my pursuit of private charity "more effective." Nor does he explain why I am permitted to do this if I and others are coercively promoting charity, but not if we are coercively promoting "justice." All we are told is that once the goal becomes justice rather than charity, then "at this point, equality comes sharply into conflict with freedom." Huh?

The same questions arise for someone who believes (1) that the market gives people what they deserve and are entitled to keep, but (2) some "altruistic well-to-do" are too weak-willed to give to charity on their own, so they need to call in goverment to make them give, even if the non-altruistic well-to-do are thereby forced to give up some of their "just deserts." Like Friedman, Greg Mankiw never explains why this is a stable position to hold. 

Reihan Salam, Paul Ryan, the Safety Net, and Public Sector Profiteers

post by Bill Gardner

Reihan Salam recommends two lines of argument that he attributes to Rep. Paul Ryan:

• "[C]onservatives shouldn’t attack the safety net."
• Rather, they should "Attack Public Sector Profiteers... and the lack of spending restraint that actually exacerbates cost growth in health, education, and other domains."

I agree that conservatives should not attack the safety net, so a good first step would be to just stop doing it. Ryan's proposal would leave the safety with a gaping hole. There are more than 45 million Americans without health insurance. This number will decresease because of the expansion of Medicaid under the Affordable Care Act, but Ryan would repeal that. Among the uninsured, there are healthy Americans who could afford health insurance but elect not to purchase it, and some of them would likely be induced to purchase it through Ryan's tax credit scheme. However, the majority of the uninsured are at less the 200% of the Federal poverty level, and cannot realistically afford private health insurance under Ryan's plan. We do not yet have a real safety net if large numbers of poor families fall through it.

OK, how about "Attack public sector profiteers"? Umm... let's see, which side is promoting class warfare here?  (And how well did that work out?) 

First, what could "public sector profiteers" mean? I think public sector would include not just government employees, but also private sector workers whose income depends on government programs. In Canada this would include nearly all doctors and nurses; both are unionized, even the residents have a union. It includes many health care providers in the states. What does it mean to call them profiteers? I doubt that Reihan Salam is challenging the right of teachers or health care providers to better themselves. "Profiteering" comes from war time, when military suppliers exploit an emergency to get enrich themselves by unethical means.

So what is unethical about how public sector workers pursue their interests? I will stipulate to the following:

1. Public sector demands for income or restructured work conditions sometimes harm the populations they are employed to serve.
2. By voting as a bloc, by making political contributions, by gaining great influence in left political parties, and by cloaking their self-interests under the needs of their vulnerable clients, public sector health care providers achieve considerable leverage over government. When they use that leverage to raise taxes, they are raising their incomes by taking money from taxpayers. 

These are tendentious arguments, but that does not mean they are wrong. On point 1, medical guilds and unions often structure care in ways that increase guild members' incomes but harm patients. If this seems implausible to you, read Atul Gawande's famous article about health care in McAllen, TX. Point 2 is just, I think, a fact.

So why won't I join in an attack on public sector privateers? I think there are cases where teachers unions or health care workers unions take the wrong side of an issue, and there I side with management in the interests of students or patients. But I wouldn't single them out as profiteers. Pharmaceutical and device manufacturers, hospital owners, insurers all pursue policies in their self-interest that compromise the best interests of patients (point 1). And they have vastly greater resources to influence the political process (point 2). So unless we want to routinely refer to all stakeholders as profiteers, it is not clear to me that the word has much application.

Moreover, our views about the motives and moral integrity of stakeholders give us zero useful information about how to reform health care. Consider this argument:  

1. Defense manufacturers and contractors sometimes produce weapons that earn them huge profits, but actually diminish national security and the safety of armed services members. 
2. By making political contributions, by gaining great influence in right political parties, and by cloaking their self-interests under the banner of patriotism, defense manufacturers achieve considerable leverage over government. When they use that leverage to raise taxes, they are raising their incomes by taking money from taxpayers. 

These points are both true, but they do not tell us what weapons we need to purchase, or how high to set the defense budget. "Attack the Defense Profiteers" is not a plan to make America more secure, and a plan to "Attack the Public Sector Profiteers" will not make it healthier.

The morality of health-care priority-setting

post by Paul Kelleher

I'd bet a tidy sum that the most cited thought experiment in contemporary moral and political philosophy--aside from Rawls's Original Position, perhaps--is T.M. Scanlon's Pious Aid Recipient example. Google Scholar says the source paper has only 310 citations, which I believe raises pressing questions about the reliability of Google Scholar. In any case, here it is:

The strength of a stranger's claim on us for aid in the fulfillment of some interest depends upon what that interest is and need not be proportional to the importance he attaches to it. The fact that someone would be willing to forego a decent diet in order to build a monument to his god does not mean that his claim on others for aid in his project has the same strength as a claim for aid in obtaining enough to eat (even assuming that the sacrifices required of others would be the same).

Scanlon states his point succinctly, but let me repeat it: to determine which duties we have to others, we should look at the claims they have on us, and not merely at the strengths of their preferences. Someone may want help building their religious monument more than they want to be adequately nourished, but my main duty is to respond to their claims, not to their preferences. This does not mean that there are no claims to have one's preferences satisfied, but note that this would still give priority to the underlying claims and not to the preference themselves.

Scanlon's thought experiment came to mind when reading this post by Leo Katz. Katz asks us to imagine Al, a pianist, who has a finger badly injured in a traffic accident. The only doctor around must choose between helping Al, or helping Bea, who faces paralysis in one of her legs if not helped immediately. Many would say that Bea should receive priority, since losing the use of a leg is in general worse than losing the use of a finger. Of course, to Al, this isn't so. But the doctor's question is who has the stronger claim on the doctor's help, and many would say that Bea does. (If you doubt this, ask yourself: should the doctor interrogate Bea to determine whether her leg is as important to her as Al's finger is to him?)

But there is one more piece to Katz's story. Just before making his decision about whom to help, the doctor sees that Al has another injury that will lead to paralysis in both his legs if not addressed immediately. Now the doctor must choose between three courses of action: (1) save Al's finger; (2) save Al's legs; or (3) save Bea's leg. Here is Katz:

How can he [the doctor] treat Al’s finger when Bea’s more serious leg injury needs attention? How can he treat Bea’s leg injury when Al’s far more serious leg injury isn’t getting treated? How can he treat Al’s leg injury when Al clamors to have his finger treated instead? We are in a sort of cycle.

How is it to be broken? At least one plausible way of breaking it, my own guess is that it is the most plausible, is to not let Al opt for getting his finger treated. He retains his priority over Bea only if he has is leg injury treated, not otherwise. But that means that we are rejecting a win-win transaction. For that is what the doctor’s treating Al’s finger rather than his legs surely is...The reason, in brief, is that Al has a strong claim on the doctor’s attention for his serious injury and a much weaker claim for his less serious injury.

I think Katz is correct to invoke the Scanlonian notion of claims here. I am less sure, however, that treating Al's finger really should be considered a "win-win" that creates the problematic "cycle" Katz describes. Fixing Al's finger is a win-win only if Bea is no longer in the picture. For if Al is the only relevant patient, then it might well be true that the doctor should help Al in whatever way Al prefers (unless fixing his finger is much more costly than fixing his legs). But Bea is never "out of the picture." It is Al's legs, and not Al or Al's preferences, that generate the claim that overrides Bea's claim. If Al's legs-based claim is ignored, then Bea's leg-based claim is the strongest claim remaining. Within the Scanlonian framework of claims, fixing Al's finger while Bea suffers paralysis in her legs is in no sense a "win-win."

The morality of claims and claims-adjudication is essential to the morality of priority-setting in the health care setting. And things can get philosophically hairy very quickly. I will be posting a good deal on these issues in the coming weeks.

Mankiw vs. Nozick on Just Deserts

post by Paul Kelleher

The short version: Greg Mankiw believes people should get what they deserve, and that what people deserve is based on the economic value of what they contribute to social production. Mankiw attributes this view to libertarian philosopher Robert Nozick. But Nozick explicitly rejects the view, noting a problem with it that Mankiw never addresses.

Students of economics learn that, under a certain set of assumptions, a competitive market economy leads to an efficient allocation of resources. However, since economic efficiency may not the only thing we care about, many economists are careful to note that there may be equity-based reasons to condemn otherwise efficient arrangements. Harvard economist Greg Mankiw thinks this is a mistake. In "Spreading the Wealth Around: Reflections Inspired by Joe the Plumber", Mankiw argues that when competitive markets promote efficiency, they do so by rewarding factors of production (including labor) in proportion to their productive contribution. Mankiw thus extols "the inherent equity of the competitive market": the market ensures that factors of production are paid what they deserve.

Mankiw claims that this "Just Deserts Theory" can be found in the work of the libertarian philosopher Robert Nozick (among others). But in fact, Nozick believed the area of economics that Mankiw draws on--Marginal Productivity Theory (MPT)--cannot reliably be used to assess individuals' productive contributions. Nozick did think that MPT could explain why individuals get what they get in market distribution, but this was not because Nozick thought the market does or should reward people in accordance with their contribution. Rather, Nozick's view is that people are entitled only to what others are willing to give them (either as gifts or in economic exchange). MPT helps us understand who will be willing to give what to whom, but that is it. So Nozick would say Mankiw is wrong on two counts: (1) people are not in fact entitled to their "Just Deserts"; (2) even if people were entitled to their just deserts, MPT cannot be used to identify what it is people deserve in Mankiw's sense.

Let me explain Nozick's argument for this second point. Nozick agrees with Mankiw that (at least under a set of "idealized circumstances") MPT can be used to predict the wage that rational firms will be willing to pay to a worker for performing a specific job. To illustrate, consider the following graphic*:

For economic reasons that Mankiw and Nozick agree upon, a rational firm will pay all laborers a wage equal to the value of the output generated by adding the last laborer, depicted here as laborer #10. To use some economic jargon, firms will pay a wage equal to the marginal value product of labor. Where Nozick and Mankiw disagree is on how this economic jargon should be interpreted. According to Mankiw, when wages are set in this way, it ensures that "each person's income reflects the value of what he contributed to society's production of goods and services...[E]ach person receives his just deserts" (emphasis added). Nozick claims that this is not an accurate characterization. Here is why: all we know from the graphic is that after adding the 10th laborer, the total product went up by 6 bushels of corn; but we don't know exactly how that outcome arose. For example, it might have been achieved by the 10th laborer simply producing 6 extra bushels all by himself. Or, those 6 extra bushels might have resulted from the 10th laborer producing 16 bushels while some other laborers simultaneously reduced their collective output by 10 (perhaps because they reduced their effort when the 10th man was added). In this case, the marginal value product of labor will still be defined by MTP as 6 bushels, and all the workers will still be paid a wage equal to the value of 6 bushels. But it will nonetheless be false to say (as Mankiw does) that "each person's income reflects the value of what he contributed." While it is true that adding the 10th laborer resulted in a net increase of 6 bushels, we cannot deduce any worker's actual contribution from this fact. 

Nozick summarizes this point in a footnote to p. 187 of Anarchy, State, and Utopia:

Thus marginal productivity theory is not best thought of as a theory of actual produced product...but rather as a theory of the difference (subjunctively defined) made by the presence of a factor.

Paul Samuelson makes the same point here:

In our example, output increases from ten bushels to eighteen bushels when one adds the second man not because the second man only adds eight, but rather because his presence on the field makes the situation such that the total output of both men is eighteen...[W]hat we wish to note is that by adding the second man, output was increased by eight. Thus, the marginal product of the second man is eight. But his actual contribution may be very different than this.

If Mankiw is right that each person's income should reflect the value of what s/he contributed, it does not seem that marginal productivity theory can tells us what we need to know. Importantly, this worry arises even if we grant the many unrealistic assumptions MPT seems to require for its validity. Of course there may be even more problems with using MPT as part of a theory of just income distribution. Amartya Sen discusses several of these in a very nice 1985 paper called "The Moral Standing of the Market" (which Mankiw doesn't cite).

 

*This figure comes from p. 28 of David Schweickart's After Capitalism.

What kind of mobility matters?

post by Paul Kelleher

Mark Thoma had a column yesterday on income inequality and economic mobility. He argues that greater income inequality may be less problematic if there were also greater mobility. If one's chances for moving up and down the economic ladder were no better or worse than anyone else's (including those who are currently at the top), then a longer ladder may not be such a bad thing.

Thoma identifies two kinds of mobility: intra-generational and inter-generational. Intra-generational mobility concerns the prospects for mobility that individuals and/or families face during their lifetime. Inter-generational mobility concerns "how easy it is to move between social classes across generations." In other words, relative to the prospects your parents faced, are yours better or worse?

I worry (but am not sure) that Thoma is focusing on both the wrong problem and the wrong solution. Near the end of the article Thoma claims, "Increasing mobility can help, but this alone won’t overcome the inequality problem." What, exactly, is "the inequality problem"? Reading his article, I don't see Thoma complaining about income inequality as such. Rather, I see him worrying about two more specific things. First, he is concerned about the power that those at the top often have to bend public policy toward their interests. Second, he is concerned about stagnant or even reversing living standards for those at the bottom and the middle. These two issues are connected to income inequality, but they are connected only contingently. For it is possible to imagine a society where the living standards of everyone improve significantly and steadily, but where those at the top improve faster than others, and so inequality grows. It is also possible (although perhaps harder) to imagine policy changes that hem in the political clout that greater wealth buys, so that political influence becomes somewhat disconnected from economic status.

Let's set aside the issue of political power and focus on the connection between income inequality and stagnating standards of living for the non-rich. Here there may be a kind of mobility that is more important than the two kinds Thoma introduces. His notions are both relative notions: they assume that mobility is a zero-sum game, so that if one person's mobility improves, another's automatically declines: if my chances of getting to the top increase, then the chances that a person at the top will drop down must also increase. But Lane Kenworthy--whom Thoma also cites--notes that there are also absolute notions of mobility:

Absolute intragenerational mobility refers to changes in income compared to the income one started with. Suppose a person begins her working career with an income of $25,000. If a decade later her income is $30,000 (adjusting for inflation), she has experienced upward absolute intragenerational income mobility. [...]

For intergenerational mobility, the distinction between absolute and relative is analogous. If a person’s inflation-adjusted income is $30,000 and her parents’ was $25,000 at a comparable point in life, she has experienced upward absolute intergenerational income mobility. Because of economic growth, we expect that such upward mobility will be the norm.

It is at least conceptually possible to achieve absolute mobility--of both intra- or inter-generational varieties--while income inequality remains steady or even increases. And if we again bracket the issue of unequal political power, one wonders how many people would care about stagnant or declining relative mobility if absolute mobility were improving appreciably. That is, if living standards at the bottom and the middle were improving nicely rather than deteriorating, how much would those in the middle care if their chances of rising to the very top were not improving? How much should they care? 

Over the last 30 years, increasing income inequality has been accompanied by stagnating living standards for much of the population. And it is probably true that improving living standards for the non-rich would lead to less income inequality. But it is not clear that it would or even should lead to greater relative mobility. Significant improvements in relative mobility, especially for those at the middle, may--may--require arrangements that carry unpalatable efficiency costs as well. On the other hand, if improvements in absolute mobility is the more important issue, then we may be able to boost mobility while avoiding the costs associated with distributions that are flat enough to permit easy movement between quintiles of the income distribution.

Finally, since absolute mobility isn't a zero-sum game, it may be achievable without having to displace the privileged from their position of relative advantage. That may turn out to be a politically useful ancillary implication of choosing to care more about absolute mobility than relative mobility. 

What causes racial inequities in health?

post by Bill Gardner

The image is a recruitment letter from the Tuskegee experiment.

I am reading Angus Deaton's working paper, "What does the empirical evidence tell us about the injustice of health inequalities?" He notes the pronounced racial difference in health in the US.

In 2006, life expectancy at birth was 4.1 years less forAfrican Americans than for white Americans. There are also pronounced racial  differences in treatment patterns, for example for cardiovascular disease... or knee arthoplasty...

Why does this happen?

The conventional explanation for these inequalities, endorsed by a 2002 report of the National Academies of Sciences..., is that the encounter between healthcare providers and patients leads to poorer treatment of African Americans by largely white providers. 

If you accept this explanation for racial disparities in health care, then you may believe that the solution is to train culturally-competent health care providers, that is, providers who are able to interact effectively with persons from different cultures to deliver care.

Deaton does not dispute the cultural incompetence explanation, but

there is another, perhaps more obvious explanation, which is that African-Americans receive worse health care because the hospitals and clinics that serve them are of lower quality than the hospitals and clinics attended by other Americans. Hospitals in the US are run on something close to an apartheid basis, with few white patients in the hospitals that treat mostly African-Americans, and vice versa...; doctors and nurses are much less segregated, with many white doctors in “black” hospitals, and African-American doctors in “white” hospitals. 

That is, because we live in a largely segregated society, race is highly correlated with geography. This point does not seem to be widely recognized in the literature on health disparities. (A technical implication is that a regression analysis of disparities that does not account for the spatial clustering of data is likely to omit an important variable.) This clustering matters because

The “black” hospitals have worse outcomes, are less well-provisioned, their pharmacies have fewer drugs, and their providers are less well-qualified... In consequence, people who live in cities with large African American populations—both African-Americans and whites who live in those areas—have poorer health.

Both the "doctors are culturally incompetent" and "hospitals serving blacks are under-resourced" causes for health disparities would represent gross injustices. Both could be true. My sense, however, is that the medical establishment and many disparities researchers have attached themselves to the cultural competence explanation. It is the kind of problem that seems like it could be fixed by HR department training, or continuing medical education. Providing facilities and providers of equal quality to everyone, regardless of race or income, would be both expensive and -- shall we say -- politically difficult.

h/t to Mike Foster, for helping clarify these matters for me.