Tag Archives: freakonomics

Deskilling

Is a lack of demand for skilled labor contributing to America's stubbornly high unemployment rate?

What explains the current low rate of employment in the U.S.? While there has substantial debate over this question in recent years, we believe that considerable added insight can be derived by focusing on changes in the labour market at the turn of the century. In particular, we argue that in about the year 2000, the demand for skill (or, more specifically, for cognitive tasks often associated with high educational skill) underwent a reversal. Many researchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000. In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow. We go on to show that, in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together. In order to understand these patterns, we offer a simple extension to the standard skill biased technical change model that views cognitive tasks as a stock rather than a flow. We show how such a model can explain the trends in the data that we present, and offers a novel interpretation of the current employment situation in the U.S.

Freakonomics Dude in Camel City!

I might be one of a handful of people who will think this is exciting, but so what? Freakonomics coauthor Stephen Dubner is going to be playing a gig with his old band in Winston-Salem this week. From the Freakonomics blog:

A long time ago, I played in a rock band, called The Right Profile. It was a great deal of fun. We wound up getting a record deal with Arista…

But I quit the band about a year later. We were in the middle of making our first record. I decided I didn’t want to try to be a rock star after all, as much fun as it was. Writing suits me better.

I pretty much went cold turkey and have performed almost no music since then. But all these many years later, The Right Profile is set to ride again, if only for a few songs. We were asked to participate in a concert by the Vagabond Saints’ Society at a centennial celebration for the city of Winston-Salem, N.C., on Fri., May 7, from 7-10 pm.

I can’t wait. Winston-Salem has produced some amazing music over the years (the dB’sBen FoldsLet’s Active, the AlisonsDillon Fence, and many more), and it will be great fun to hear these guys again and crawl backwards into the time capsule. Also I can’t wait to play again with my bandmates Tim FlemingJeffrey Dean Foster, and Jon Wurster.

The date is actually May 10 and according to the centennial celebration website the  Vagabond Saints' Society show will be at 6th and Cherry. Should be a blast.

IRS Should Just Hire a Bunch of Direct Marketers and Listen to My Mom

During a show about how much tax revenue the IRS doesn't collect – 17% or $450 billion a year – the folks at Freakonomics talk about how a little-known unit of the British government called the Behavioral Insights Unit gooses the UK's tax collection efforts:

One of my favorite examples of this comes from a small unit in the British government called the Behavioral Insights Team.  What they do is experiment with all kinds of cheap and simple nudges.  For instance, sending out letters that appeal to the herd mentality in all of us. Here is the unit’s director, David Halpern:

David HALPERN: So what we do is we simply tell people something, which is true, which is 9 out of 10 people in Britain pay their tax on time. And by putting that single bit of information into the top of a letter, it makes people much more likely themselves to pay the tax on time.

GARDNER: So it’s peer pressure?

DUBNER: That’s exactly right — we like to run with the herd.  They also tried another super simple trick, which was just handwriting a message on the outside of the tax envelope.  This message would just say simply that the contents are important, but it’s written in hand.

HALPERN: Of course people are like ‘oh my God, but how can that possibly be practical?’ Well we’ve now just got the results in. It turns out that for every pound or every dollar that you spend on getting, you know, someone to write on the envelope, you get $2,000 return.  A one to 2,000 return. So it’s a nice simple illustration of these small things and how consequential they are.

Anyone who's spent even a week working as a direct marketer could have told you this would work. The IRS should just hire a bunch of laid off direct marketing folks and they'd pay for themselves in no time.

Later in the podcast they talk about an idea from a behavioral psychiatrist at Duke:

Dan Ariely, a behavioral psychologist at Duke, has a nice idea: to let taxpayers direct a small portion of their tax money to the parts of the government that they most care about:

Dan ARIELY: So I’m not sure what’s the right percent — five percent or ten percent.  But what if we got people to have a say about where some of the taxes go? All of a sudden you’re not looking at it as you against the government.  You’d have to look carefully at all that the government is doing for us — building libraries and roads, and education and military and so on and so forth and say, what do I care about?

My mother made this same argument when I was a kid. Her argument was that if she could earmark even one or two percent for any program/department of her choosing she'd feel better about paying her taxes in general. She also made another interesting point: taxpayers would be able to indicate with their dollars which programs they felt were most important. In essence we'd be able to tell which programs were truly valued by us, the taxpayers, and not have to trust politicians to divine what we wanted. That's why I figured it would never come to pass, and I haven't been wrong yet.

I Don’t Know

Want to surprise someone?  Admit you don't know the answer to a question, especially if it's a question about a topic on which you're supposed to be an expert.  Personally I respect anyone who has the guts to admit they don't know everything, and I took to heart a lesson I was taught early in my career; if you don't know the answer to a question the right response is "I don't know, but I'll be happy to find out for you."

The guys at Freakonomics recently posted two interesting items related to "I Don't Know."  The first was a response to the question “Why do people feel compelled to answer questions that they do not know the answer to?”.  The answer:

What I’ve found in business is that almost no one will ever admit to not knowing the answer to a question. So even if they absolutely have no idea what the answer is, if it’s within their realm of expertise, faking is just an important part. I really have come to believe teaching MBAs that one of the most  important things you learn as an MBA is how to pretend you know the answer to any question even though you have absolutely no idea what you’re talking about. And I’ve found it’s really one of the most destructive factors in business — is that everyone masquerades like they know the answer and no one will ever admit they don’t know the answer, and it makes it almost impossible to learn.

The second was a comment left by one of their readers:

In my classroom, students lose 1/4 point for wrong answers on quizzes. But for writing “I don’t know,” they get 1/4 point. (A correct answer is 1 point). The rationale is that if someone is in a medical emergency, and someone asks me what should be done, the answer “I don’t know” is much preferable to a guess. “I don’t know” leads the questioner to ask someone who hopefully is knowledgeable.

Part of why “I don’t know is so hard to say” stems from an education system based on attempting every single question, whether you know the answer or not.

P.S.: End-of-year student survey showed students strongly supported the +1/4 point IDK and -1/4 point wrong-answer system. 

If you think about it we do a lot of things that teach our kids to fear admitting ignorance, or making a mistake, and that inevitably leads to sending people into society who value being perceived as right more than they do actually being right.  I don't even want to think about the mischief we've brought on ourselves as a result.