Monday, January 16, 2012

Krugman on Martin Luther King and Inequality

An excellent op-ed here.

The connections he draws between (1.) discrimination, (2.) inequality, and (3.) mobility are very important.

This has cropped up in a lot of the racial disparities work I've done at Urban. People are always shocked when they find fairly high racial parity in a controlled setting. For example, one project I was on looked at racial differences in the transition to adulthood and some important variables we looked at had to do with "risky behavior". Drugs, teen sex, fighting, carrying weapons, etc. There wasn't any significant difference between black and white youth on these points when we controlled for youth characteristics. More recently (in a brief that will be coming out soon) when we looked at black males in the Great Reccession we found that given a certain educational level employment outcomes were relatively close (wages may not have been - we did not look at those).

I'm not saying this happens everywhere or even that the conditional differences were exactly the same in all of our cases. But it often surprises people that these things can be close.

But that conditional difference really just tells you about is discrimination, bias, or unequal treatment for one reason or another on a particular indicator. Given a set of characteristics, what is the disparity, in other words? What drives a lot of the disparities in society is that often blacks have much less of this "set of characteristics" that we're controlling for than whites do. So we found that controlling for parental education, family structure, and income, blacks and whites are about as likely to be arrested. The problem is black youth are much more likely to have parents with less education, come from an unstable family structure, and grow up in poverty. The real factor driving a lot of later racial disparities in the U.S. is that too damned many black kids grow up poor.

That's why talking about inequality and mobility (the way Krugman does) is so important for getting a full sense of racial disparity in the country. Simply talking about discrimination only gives you a partial answer. It doesn't matter if a young black man with a college degree and a young white man with a college degree get treated comparably in the labor market (they don't, but let's say they do). That doesn't matter if considerably fewer young black men get college degrees in the first place.

Conditional differences only get you so far. This is a major problem with how a lot of people trained in economics think about disparities. We're too quick to just toss things into a regression. The problem is that we don't live in a counter-factual world. We can't hold everything else constant. And in the case of racial disparities, what we can't hold constant matters a lot.


  1. From his op-ed:

    "And in America, more than in most other wealthy nations, the size of your paycheck is strongly correlated with the size of your father’s paycheck."

    Professor Krugman once said the correlation was 50%.

    That's not strong.

    A 50% correlation has 25% significance.

    r = 0.5

    r^2 = 0.25

  2. I'm reminded that Bill Cosby got a fair amount of criticism a few years ago for suggesting various groups weren't doing enough (the "pound cake" speech) - that feeling of non-parity between the races can go both ways and it can provoke policies in both ways (which only makes things worse because you might have some blind "post-racial" activists claiming we're ready to bury affirmative action, for example). If anything, his speech pointed out the seeming complexity of the issue, identifying various trends and sub-groups within black America.

    What's interesting is that despite the known (slight, very slight, and mostly cosmetic) physiological differences between racial or ethnic groups, I've always felt that if there was any kind of mental differences at all that it'd be virtually impossible to discern them. Even if there was one (say whites are less capable on a particular standardized tests than blacks - obviously this was not the historical speculation, as seen with the Arthur Jensen controversy at UC Berkley in the 1960s), the deviation between individuals will still mean that an ideal society should have a nearly full proportional representation between the races. (For what it's worth, Jensen's concern - or belief - was that IQ was mainly inherited, with only a smaller portion open to environmental factors).

    Here's an interesting set of facts to mull over, though, from Professor Rhodri Jeffreys-Jones' history of the FBI (I might be off slightly on these numbers since this is from memory):

    - African-Americans make up about 15% of the U.S. population
    - Their representation in Congress is slightly more than 9%
    - Their representation in the FBI is 5.5%

    That makes the FBI look pretty bad, huh? But compare this to Europol's 2005 diversity figures:

    - In 2005, Europol had no non-white or Muslim agents.

    This tells us nothing about how well black Americans are actually faring in Federal policing, but it does suggest that the U.S. needs to keep improving its apparent leadership in this area (to use boilerplate language).

    For economics, of course, there are also stunning figures about America's black population being in a de facto recession before our recession, and being plunged into a depression, collectively, during the nation's recession.

    Activists in the U.S. have fought hard for scraps of parity between ethnic and racial groups that we have, but now the differences are more subtle to the casual onlooker. It's just as critical as ever to be cognizant of the importance of moving onward about mobility, however. Unfortunately, it will take a suave and forceful argument to convince people that perhaps racism comes in an economic variant, when there are no fire hoses trained on the groups in question - only an unsupportive and jealous eye cast at their lot (if ever the plight of black Americans enter into most peoples' consciousness).

  3. Strong is relative, Prateek (as in strong, stronger, strongest). It ain't a light switch.

  4. It's also very nice to see one of Martin Luther King Jr.'s concerns treated so well on the Federal holiday in his honor. Recall that, in the period before he was shot, he was preparing to gear up to fight economic issues. In the decade after his death, a trend toward greater economic inequality became far more visible, yet the nation had no strong leader like the Rev. King to call attention to it. Instead we had the neoliberal movement running rampant - "Ford to [New York] City: Drop Dead."

    @ Prateek: I can guess a few possible explanations for that. One, the middle class appears to be under fire, and there is the "lost generation" to consider. Two, the absolute top income earners in any given year are mostly unstable income earners - making the vast amount of their wealth in one year.

    I've seen some other statistics on income inequality and it does seem to be a noticeable trend that the wealthy get wealthier. Speaking about this in generational terms could be an unnecessary diversion from the core issue, which is that there's less income group mobility than many people (still) assume.

  5. Daniel, I feel that a correlation with a 25% significance is not strong at all.

    It is, in fact, quite weak. Okay, strong and weak are merely subjective terms, but let's visualise this issue.

    You can have 100 pairs of father and son. In 50 pairs, you see either a poor father and a rich son or a rich father and a poor son. In 50 other pairs, you see either both rich father and son or both poor father and son.

    Out of the latter 50, only 25 of them reflect a close income class similarity between father and son, while the other 25 reflect income similarities that are purely caused by reasons other than parent's income.

    So in 75 out of 100, we have either reverse cases of father and son earning capacity, or trivial, unimportant, unrelated cases of similar earning capacity in father and son.

    Which is why a 50% correlation between father's income and son's income is not a sign of class division, period.

  6. Prateek, two points:

    First, an r of 0.5 is generally considered a large effect size in the social sciences ( (Of course, this would not be the case in the hard sciences!) I guess it depends on if you say "this explains only one-quarter of the variation" or "this explains a FULL ONE-QUARTER of the variation!!!" :)

    Second, I'm not sure your example is the proper way to view the issue. I think we are referring to "intergenerational earnings elasticity" (IEE), which is measured to be just below 0.5 for the US. A (patriarchal) interpretation of an IEE of X is that if one dad makes 100% more than another dad, then the first dad's son will make (100*X)% more than the second dad's son. Or, for every $1000 that the dad makes less than average, the son will make $(1000*X) less. From this perspective, I think an IEE of 0.5 seems pretty large, especially since many other developed countries have an IEE less than 0.2 (though plenty of other developed countries have similar or only slightly better IEE).

  7. Is it true that children of poor whites score better on standardized tests than children of wealthy blacks? Or is this whole link bogus?


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