Conservative Bias Revealed

There is a study out that is stirring up quite some debate in the blogosphere. At the one hand it shows that adopted children do not tend to inherit their parents social well-being in terms of family income, as do biological children. At the other hand, it claims to show that drinking and smoking habits are transmitted from parents to children irrespectively of the parenthood is biological or through adoption:
"transmission of drinking and smoking behavior from parents to children is as strong for adoptees as for non-adoptees. For height, obesity, and income, transmission coefficients are significantly higher for non-adoptees than for adoptees."
Alex Tabarrok quickly rushes out to display his conservative bias by solely focusing on the parts of the results that might be used for underlining the importance of our genes:
"What do parents transmit to their biological children but not to their adopted children? Genes. When we observe, as we do, that low-income parents tend to have low-income children and high-income parents tend to have high-income children we should not bemoan the inequities of nurture but rather the inequities of nature."
Alex says absolutely nothing about the part of the results that severely undermines our belief in the relative importance of the genes. That's bias. A conservative bias to comfort those who feel threatened by the social mobility of the dynamic modern market-economies. Let me try a more down-to-earth analysis:

If you are adopted from Korea to the U.S., you are likely to eventually get an income well below that of your new parents, the study says (but probably far above that of your biological parents I guess). Probably, in my opinion, because you are likely to have got a far worse start when it comes to such things as nutrition, breast-feeding and suffering the trauma of separation from your biological parents. Having a different-colored skin is another thing that might cause problems (signaling to counterparties facing adverse selection), so its no wonder your average expected family income is lower than that of your new parents. What about the broken link between the parents' and the children's present and future family income? Its broken, says the study. But it does not say whether its broken because the lack of genetic linkage, or because of the adoptees' adverse experience in early childhood. And in any case, the results on drinking and smoking clearly shows that we often tend to believe too much in the importance of genetic links.

Continuing the analysis from the perspective of the adoptee also reveals the cruelty that lies just one step ahead in the direction of Alex' analysis. Being forced to leave one's children has after all to be viewed as some kind lack of economic success. And if economic success is in the genes, adoptees have not tended to inherit much on it. Weak genes and hardships in early childhood. That's just too much. I don't want to believe it. And I don't do believe it. But I still try to keep up some unbiasedness when thinking about it.

The Natural Use of Force

Cosma Shalizi points us to an interesting discussion about classical mechanics. Why is the concept of force that central in the field, asks Frank Wilczek, winner of the Nobel Prize in physics this year:
"Newton's second law of motion, F = ma, is the soul of classical mechanics. Like other souls, it is insubstantial. The right-hand side is the product of two terms with profound meanings. ...The left-hand side, on the other hand, has no independent meaning."
Now, who could be better to explain this than a parent with small kids? Applying too little force to an object, toy, flowerpot or big sister, is meaningless since it wont overcome friction or otherwise create any meaningful acceleration. Applying lots of force might be fun since the object might break or accelerate a lot or even both. But its risky too since you might get hurt in the process. Small kids experiment with force all the time. Eventually, as Wilczek indicates, they finally learn:
"when we hold up a weight— we definitely feel we are doing something, even though no mechanical work is performed. Force is an abstraction of this sensory experience of exertion."
But its more than that, after having grown-up and fine tuned our nervous system, we actually continously feel with quite some precision the tension in our muscles, and we're thereby able to fine tune the force we are applying. We are able to handle objects without much consideration but yet almost always applying just about the right amount of force. Force as an abstraction seems very tightly linked to our "sensory experience of exertion". This might just as well explain the natural use of force in classical mechanics.

(Wilczek mentioning of exertion seems to refer to what you feel when the work the muscle have to do even to hold a static force [see his description of this process] begins to eat away the available energy resources in the muscle. Something I guess is quite different from the ability to precisely weigh objects.)

Open Thread

parrotlet from www.wingsparrotlets.com

Go on and post on just everything! Expect to find comments on wide ranging subjects, from macroeconomy and investments to excerpts from the New York Times on Chinese art. Thanks to www.wingsparrotlets.com for the picture above, and Anne for the pointer. (Note to spammers: I do quite some gardening in here, deleting, banning IP's and such.)

Marginal Counter-Revolution

For some reason, unknown to me, Tyler Cowen is supporting the myth that increasing productivity is posing a threat, even in the long run, to large groups of people in a free market economy. He quotes from Jane Galt the following:
"Something that conservatives, and especially libertarians, have been slow to grapple with is that the more productive our society gets, the greater the possibility that some peoples' labor simply isn't productive enough to support them at a minimum level. ... Are we comfortable telling people to live as if they're nineteenth century peasants, if their cognitive gifts, or education, won't stretch to more?"

Other people than me has of course noticed that the claim that productivity would hurt the poor is bogus. This unless "a minimum level" is referring to a level that is increasing with productivity. The sentence with the "nineteenth century peasants" clearly speaks against this however. In a market economy, competition for jobs drives up wages for unskilled labor at the same rate as increasing productivity makes skilled work pay off better. In a free market with rational agents, this is the case even when unskilled labor productivity fail to increase. Rather than reminding readers about the virtues of free market economy, Tyler points to a way in which increased productivity actually hurt. In areas where many skilled workers want to live, their productivity increase translate into higher housing prices, so the unskilled workers have to move. So what? Aren't we all much better off than people in the corresponding positions in society were say 100 years ago? Isn't this mainly thanks to productivity increases and free markets?

And were are all the hoards of people that "isn't productive enough to support them[selves] at a minimum level" due to centuries of unfettered productivity growth?

Greenspan's Speech - Quite Some Market Reaction

Greenspan didn't really say anything he hadn't said before in his speech on Friday. It must have been the timing that made the dramatic fall in U.S. assets that followed Greenspan's remarks:

"It seems persuasive that, given the size of the U.S. current account deficit, a diminished appetite for adding to dollar balances must occur at some point."

but also

"The inability to anticipate changes in supply and demand for a currency is at the root of the statistically robust finding that forecasting exchange rates has a success rate no better than that of forecasting the outcome of a coin toss."

and of course (central banker should always blame treasurer, no?)

"Reducing the federal budget deficit (or preferably moving it to surplus) appears to be the most effective action that could be taken to augment domestic saving."

Note also that treasuries and dollars, that simultaneously got weaker on Friday, has shown the reverse relationship during the year. Treasury bonds tend to have strengthened on weaker dollar, perhaps via growth expectations. Treasuries stronger and dollar weaker on growth below expectations. But what will happen next?

Mr "Strong Dollar" Speaking in London

Here is what Mr "Strong Dollar" is recently said, according to Bloomberg that reported that "U.S. Treasury Secretary John Snow speaks about the U.S., European and global economies and the outlook for economic growth. He is speaking [in] London":
3) BN 10:49 *SNOW SAYS STRONG DOLLAR IS U.S. POLICY
4) BN 10:47 *DOLLAR FALLS; SNOW SIGNALS NO AGREEMENT TO STEM ITS DECLINE
6) BN 10:45 *SNOW SAYS U.S. WILL ADDRESS CURRENT ACCOUNT DEFICIT
7) BN 10:45 *SNOW SAYS REST OF THE WORLD MUST HELP MANAGE CURRENCY VALUES
8) BN 10:40 *SNOW SAYS BETTER GROWTH IN EU IS IN THE INTEREST OF THE U.S.
10) BN 10:39 *SNOW SAYS EU ECONOMIC POLICY MUST FOCUS ON GROWTH
11) BN 10:37 *U.S.'S SNOW SAYS GAP BETWEEN RICH AND POOR WILL NARROW
12) BN 10:37 *SNOW SAYS WIDENING GAP BETWEEN RICH & POOR DUE TO RECESSION
14) BN 10:34 *U.S. TREASURY SECRETARY SNOW SPEAKING IN LONDON Q&A SESSION
15) BN 10:34 *U.S.'S SNOW SAYS MARKETS SHOULD SET VALUE OF EURO

Now, I just want to add what happened simultaneously in the currency market:
10:34 1.2999 USD per Euro
10:49 1.2997
10:41 1.3020
10:47 1.3030
11:00 1.3034
all times are central european

Admittedly, currency traders are talking about important option expiries today as factors behind today's fall in the dollar. But one has to admit that that the "strong dollar policy" doesn't seem all that solid now. After the dollars' fall forcefully breaking through the 1.30 level, Snow got the question why he was repeating that he is behind the strong dollar policy. "Because the U.S. has a strong dollar policy" he answered laughing, while everybody else was laughing too. Everybody - except European finance ministers and European exporters who sell their added value in USD and pay wages in Euro.

Geese Moving South

Most birds that visit us during the summer have already moved south. Still some geese are moving on their way cross the country from the north. I saw some of them weekend before last in a couple of neat vedge formations (they sure seem to know their fluid mechanics!). Here's a picture of greylag geese that I borrowed from the Univeristy of Lund's site for Waterfowl Research.

Come back soon will you? Please!

More on Media Under-Diversification

Foreign Dispatches serves us an example of how commercial TV-networks are, or at least ought to be, chasing the median viewers' taste, simply because, as Abiola puts it, "it would be commercial madness to do otherwise". In this case the chase is along a political left-right scale. This is someting that leads away from the earlier discussion of the failure of commercial media to fulfil the diverse demands of their audiences, towards someting of much wider interest: How do the dynamics of free media interact with democracy? A question no less complicated that that about the impact of state-run media.

Winner: the Saddam-Did-It-Crowd!

Looking at the exit polls, its clear that voters beliefs' about the so called War on Terror are neatly aligned with the way they voted. Bush voters apparently thinks that the occupation of Iraq is a part of the fight against international terrorism. This pretty much confirms the poll results newsweek got in the beginning of September: about half of those asked thought that Saddam was "directly" involved in planning the terrorist attack on September 11. Presumably the same half that told CNN that they saw Iraq war as a part of war on terrorism, of which over 80% voted for Bush. It really seems like the Saddam-Did-It crowd got their way. More correctly perhaps, those who manipulated voters into believing that Saddam did it got their way.
CNN.com Election 2004: "IS IRAQ WAR PART OF WAR ON TERRORISM?
........ BUSH ... KERRY ... NADER

Yes (55%) ... 81% ... 18% ... 0%

No (42%) ... 11% ... 88% ... 1%"

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