EconomistMom.com
…because I’m an economist and a mom–that’s why!

EconomistMom.com

Back to Just (An) Economist Mom

January 10th, 2013 . by economistmom

econmomobile-fall2010

After 4 and 3/4 years and 932 posts (counting this one), I’m putting down my pen as “the EconomistMom” (capital-E, capital-M, smooshed together) and going back to being (more ordinarily) just (an) economist mom.  (I think in my older (i.e., younger) days I would have been anal about it and set a target of ending at the 1,000th post mark.)

I’m leaving (technically, have already left) the Concord Coalition–where I have worked the whole time I’ve been writing this blog–and joining the Pew Charitable Trusts as their new chief economist on February 4.  This move allows me to look beyond the almost-exclusively federal budget focus I’ve had for the past dozen-plus years, to support Pew’s much larger umbrella of public policy issues at all levels of government and across a wide variety of subject areas–a mission and agenda which nevertheless can still be summarized as one promoting “fiscal responsibility” by using our scarce economic resources as wisely as possible to maximize the well being of our society.  As the Pew website (”about us”) explains:

The Pew Charitable Trusts is driven by the power of knowledge to solve today’s most challenging problems. Pew applies a rigorous, analytical approach to improve public policy, inform the public and stimulate civic life.

We partner with a diverse range of donors, public and private organizations and concerned citizens who share our commitment to fact-based solutions and goal-driven investments to improve society.

I’m so grateful to the Concord Coalition for making this blog possible.  My experience writing it and interacting with my readers has taught me many things, not just about economic policy issues as I’d use it as a “sketchpad” of sorts to test out my first numerical calculations and analytical interpretations, but also about my personal life, as every day (usually late night actually) I would sit down alone with what felt like a blank canvas (and not just the empty Wordpress shell) and ask myself “what’s on my mind?”…”What do I want to say?”…”Who is listening?” I had never really taken the time and space out of my crazily busy life-at-the-surface to look down deep at myself.  I had never really kept a personal diary since becoming a grown up, either.

It turns out I didn’t really learn that many brand new things about fiscal policy, but I learned them better this time around in trying to communicate the ideas to the more general audience (I hoped) of my blog.  I learned a lot more about the politics of what I had thought were more clear-cut, plain economic issues, too.  For example, I learned that one cannot advocate reforming the Social Security system without being accused of trying to destroy the program, and that one cannot advocate raising taxes without being accused of trying to destroy the economy.  (By the way, neither is true about me:  I want to strengthen both the Social Security program and the economy.)  I learned that when it comes to these very tough public policy issues, politicians would rather keep fighting over small stuff (and even attack each other personally) than acknowledge that they agree on the big (but hard) stuff.  Because then they would be out of excuses and would just have to do it–that hard, tough (but good-for-all-of-us) stuff.  I learned that if people commenting on my blog seemed very critical of me, personally, in response to a policy opinion I made that they didn’t like, I should nevertheless not take it personally.

I learned much more about myself and my own life in writing this blog though.  Readers wouldn’t have necessarily followed much of that unless you actually knew me in real life and thus could read between my lines as you observed the changes in my personal life.  Some who did think they could see between the lines chose to publicly criticize me by posting public comments here, like the time a former sister-in-law, in comments on a post I had written about college decisions, wrote very candidly (posting her full name and work email) that I was a “fraud,” told me to “shut up already” and suggested–in the ultimate of hurtful things one could say to a mother–that it was “as if” I would ever do anything for any of my kids.  Well, I eventually learned that I should not take those comments personally either.  (Those were also one of only a handful of non-spam comments that I censored (removed) from public visibility but kept in perpetual “pending” status as a reminder that nasty words usually say more about the author than about the subject/target.)

I could have let out more of my personal details here as a very public form of my personal therapy (I do like and need to talk and “get things out”), but that would have been unfair to the real-life people in my real life.  But suffice it to say, the process of writing my blog has been a marvelous vehicle in my long personal journey of self-discovery over the past 4 3/4 years, and it has led me to a better and happier place.  Someday when my life at the surface is not so busy and I’m not working to pay my bills (and my kids’ college bills–obviously not anytime soon), I hope to write down my story.  But not here, and not now.  In the meantime, I will keep mindful of a pearl of wisdom attributed to the Dalai Lama (with my insertion):

“Live a good, honorable life.  Then when you get older and think back [and maybe finally write it down!], you’ll be able to enjoy it a second time.”  :)

I am a tremendously lucky person to be able to make a living doing the kind of “work” that I love to do and to have the support and love of my friends (especially my boyfriend, Bill) and family (especially my parents, Ed and Bee Lim, and my kids).  I hope I can pay some of that back but, more importantly, pay some of that forward.  And speaking of that, I’d like to end with something that’s more from my “mom” perspective than from my “economist” perspective, so I’m going to quote a wise, mature mom rather than any book-smart economist.  From Anna Quindlen’s book “Lots of Candles, Plenty of Cake,” which I’ve just started listening to on my car rides (and love, love, love it already, just a few chapters in!):

“Being a parent is not transactional. We do not get what we give. It is the ultimate pay-it-forward endeavor: We are good parents not so they will be loving enough to stay with us but so they will be strong enough to leave us.”

That’s my kids, my dogs, and me below–in a photo taken around Thanksgiving.  (L to R:  Emily, 19; Grace, 16; me, 50(!); Johnny, 14; Allison, 21.)  They are great kids, growing up fast, two already in college, all of them seemingly ready to leave me already.  (The dogs–Tammy on left and Taco on the right–well, they likely won’t ever leave my side until death do us part.)

It’s been fun!  Thank you for reading and coming along for my ride, especially those of you who have visited here daily for years.  EconomistMom signing out for now!

Sincerely,

Diane Lim (formerly Rogers)

(an economist and a mom)

photo15

On Anxiously Seeking Women in Binders

October 17th, 2012 . by economistmom

So of course, the world is all “atwitter” about the “binders full of women” comment (in the CNN video embedded above; here’s the transcript for reference–just search “binders”).

Yes, the visual was ridiculous, and the comedians are going to have a field day with this (beyond the field days ordinary bloggers and tweeters have already had).  But the whole exchange bugged me more than amused me.  I was bothered by the suggestion that this is how women get hired to high positions: employers have it pointed out to them (even via talking to themselves) that the first-round “qualified” applicants are all men. So they are told to go look for more women–to collect the resumes in “binders”–because they don’t already know these women to be qualified the first time around; they only think those women “could be qualified” in their looking again.  And they have to become “anxious” enough to hire so many more people such that the women can finally rise over the bar.  Well, yukk to all that.  I don’t find it so funny, and I hope I am never hired by someone who found me only in a “binder.”

Still, I look forward to the SNL version.  :)

The Economist-Mommy Track

August 27th, 2012 . by economistmom

No, not a discussion of how to become an EconomistMom like me, but rather, the Economist magazine’s take on the “Mommy Track” and the “real reason why more women don’t rise to the top of companies.”  I agree with this reasoning (especially where I have added emphasis):

Several factors hold women back at work. Too few study science, engineering, computing or maths. Too few push hard for promotion. Some old-fashioned sexism persists, even in hip, liberal industries. But the biggest obstacle (at least in most rich countries) is children. However organised you are, it is hard to combine family responsibilities with the ultra-long working hours and the “anytime, anywhere” culture of senior corporate jobs. A McKinsey study in 2010 found that both women and men agreed: it is tough for women to climb the corporate ladder with teeth clamped around their ankles. Another McKinsey study in 2007 revealed that 54% of the senior women executives surveyed were childless compared with 29% of the men (and a third were single, nearly double the proportion of partnerless men).

Many talented, highly educated women respond by moving into less demanding fields where the hours are more flexible, such as human resources or public relations. Some go part-time or drop out of the workforce entirely. Relatively few stay in the most hard-driving jobs, such as strategy, finance, sales and operations, that provide the best path to the top.

Consider this example. Schumpeter sat down with a mergers-and-acquisitions lawyer who says that, before starting a family, she was prepared to “give blood” to meet deadlines. After the anklebiters appeared, she took a job in corporate strategy at an engineering firm in Paris. She found it infuriating. Her male colleagues wasted time during the day—taking long lunches, gossiping over café au lait—but stayed late every evening. She packed her work into fewer hours, but because she did not put in enough “face time” the firm felt she lacked commitment. She soon quit. Companies that furrow their brows wondering how to stop talented women leaving should pay heed.

But I don’t like how the Economist insinuates it’s up to the new Yahoo CEO to prove that working moms really can rise to the top, this way:

Ms Mayer of Yahoo! is an inspiration to many, but a hard act to follow. She boasts of putting in 90-hour weeks at Google. She believes that “burn-out” is for wimps. She says that she will take two weeks’ maternity leave and work throughout it. If she can turn around the internet’s biggest basket case while dandling a newborn on her knee it will be the greatest triumph for working women since winning the right to wear trousers to the office (which did not happen until 1994 in California). To adapt Malia Obama’s warning to her father on his inauguration, the first pregnant boss of a big, well-known American company had better be good.

I think it’s all too easy to claim before the baby comes that you will be just as committed to your professional job, time-wise as well as attention-wise, once the baby arrives.  And in my own experience, going back to work full time soon after the baby is born is far easier than staying at work full time after the baby has turned into a teenager with needs that can’t really be properly met by anyone other than their actual parent.  Mothers have an obvious comparative (biological) advantage to fathers in caring for our newborn kids, but I think mothers keep the comparative advantage in terms of the “tug” we feel toward home over office (i.e., where we feel we make the biggest difference) throughout our kids’ childhoods.

Why Women Should Be Happy We Can’t Have It All

July 15th, 2012 . by economistmom

I recorded my had-to-be-quick take on the Anne-Marie Slaughter article this week for Marketplace radio (and the Marketplace Money weekend show); it is airing this weekend on various NPR stations at various times.

You should listen to it to see how I managed to get in a dig at the Bush tax cuts (I know it seems to come up in my mind in any context)…

But my main points (from my economist-mom perspective):

The mom in me may still feel pressure from society to have it all, to take care of everything. But the economist in me remembers the law of diminishing marginal utility, that if we could really have it all, whatever we had last obtained wouldn’t be worth anything to us.

Constraints that prevent us from having it all also force us to prioritize, to choose whatever gives us the greatest value, first. Individuals can’t do everything we are good at or even best at. A concept economists call “comparative advantage” applies here. I might have inherent absolute advantage in terms of my skills as an economist over some men and women who have more successful careers as economists than I. But my greatest comparative advantage — absolutely! — is as mom to my own kids…

So women — and anyone — shouldn’t be sad about not being able to “have it all.” It only means we have to “settle for” having what makes us happiest.

One of these days I might find the time in my (happily)-falling-short-of-having-it-all life to elaborate more on my thoughts about the Slaughter piece and how in my life I’ve chosen a much different path–and how any of us who can say we have “chosen” a particular and generally happy and satisfying path are very, very lucky.  (In general I thought the article was very insightful and that women were probably over-horrified in their reactions to the negative tone of the title of her piece.  I’m sure that like me, many women trying to have it all didn’t have enough time to read the article before reacting to it!)

Q: How is College Like Owner-Occupied Housing?

June 13th, 2012 . by economistmom

college-loans-and-tuition-from-wsj-061012

…A:  When loans to purchase it are subsidized, the price of it goes up!

I’m fascinated by this story that appeared in the Wall Street Journal this week (by Josh Mitchell), with the subtitle “As Student Debt Grows, Possible Link Seen Between Federal Aid and Rising Tuition.”  The article explains the link this way:

Rising student debt levels and fresh academic research have brought greater scrutiny to the question of whether the federal government’s expanding student-aid programs are driving up college tuition.

Studies of the relationship between increasing aid and climbing prices at nonprofit four-year colleges found mixed results, ranging from no link to a strong causal connection. But fresh academic research supports the idea that student aid in the form of grants leads to higher prices at for-profit schools, a small segment of postsecondary education.

The new evidence?  Continuing into the WSJ story, my emphasis added:

The new study found that tuition at for-profit schools where students receive federal aid was 75% higher than at comparable for-profit schools whose students don’t receive any aid. Aid-eligible institutions need to be accredited by the Education Department, licensed by the state and meet other standards such as a maximum rate of default by students on federal loans.

The tuition difference was roughly equal to the average $3,390 a year in federal grants that students in the first group received, according to the National Bureau of Economic Research working paper by Claudia Goldin of Harvard University and Stephanie Riegg Cellini of George Washington University…

The authors said their findings lent “credence to the…hypothesis that aid-eligible institutions raise tuition to maximize aid.

I see two main problems with that bottom-line conclusion/suggestion–with the strong caveat that I have not read the actual NBER working paper but only this WSJ story on it (and would love to hear your comments, especially if any of you have read the academic paper).

First, it’s tough to do the “all else constant” experiment here, given that “aid-eligible institutions need to be accredited.” That means being aid-eligible is strongly correlated with whatever qualities make the schools qualify for accreditation.  The Education Department’s website explains how accreditation is done:

The goal of accreditation is to ensure that education provided by institutions of higher education meets acceptable levels of quality. Accrediting agencies, which are private educational associations of regional or national scope, develop evaluation criteria and conduct peer evaluations to assess whether or not those criteria are met. Institutions and/or programs that request an agency’s evaluation and that meet an agency’s criteria are then “accredited” by that agency.

In other words, how “comparable” can two for-profit schools really be with each other, if one (the one providing aid) qualifies as accredited and the other (the one without aid) not?  The way prices work in most markets (for all kinds of goods and services), is that higher quality goods and services command higher demand and hence higher prices.  Take houses, for example.  You could compare two houses that are alike in many measurable attributes–square footage, lot size, school district, age, number of bedrooms and bathrooms, etc–and yet there would be many unmeasured attributes (and some unmeasurable qualities) that might explain why one house sells for a much higher price than the other.  In the case of college tuition, whatever variables the researchers controlled for in terms of “comparability,” we know they couldn’t control for the underlying factors that determined accreditation of the schools–because any of those factors were indistinguishable (inseparable) from the characteristic of whether the school was aid-eligible or not.  I suspect that if we were shown any pair of “comparable” schools in this experiment, we would conclude the aid-eligible school was of obviously higher quality than the aid-ineligible school (it was obvious to the accrediting agency, after all), and that that difference in quality was a reasonable enough reason why the higher quality school charged higher tuition.  So theoretically, the aid doesn’t have to have anything to do with what causes the higher price, and it might be that the only reason why higher prices seem correlated with greater aid is because higher quality is correlated with higher prices.

Second, even if the subsidized loans do have at least something to do with higher tuition and fees, this is just due to the forces of supply and demand–not the ulterior motives of rent-seeking colleges. The WSJ article about the NBER paper suggests that the empirical research provides evidence that colleges take advantage of their aid eligibility to set higher tuition prices, and/or manipulate their tuition charges to increase their aid eligibility.  But I suspect the hard-to-measure true story doesn’t contain quite so much willful drama on the part of the actor playing the college.  Instead, the causation probably runs this way:  subsidized loans lower the out-of-pocket costs of college to students, the lower price increases demand (shifts out the demand curve), and higher demand means a higher market price.  (Microeconomics students learn that the government subsidy acts like a “wedge” between the price received by the seller (the college)–now higher–and the price paid by the consumer (the student)–now lower.)  The higher price received by colleges after the subsidized aid is  not because the suppliers just on their own decide to claim most or all of the benefits of the subsidy by simply setting the price of tuition to reflect a full (or otherwise whimsically-decided) mark-up.

So more subsidized loans means greater demand for the college educations those loans buy, and along with all the other reasons why demand for college is increasing (like, no one can get a job now anyway, but especially not those without college degrees), this raises the market price of college, and, yes, the profits of those for-profit institutions of higher education fortunate enough to be deemed good enough for (simultaneously) accreditation and government-subsidized aid.

So this reminds me of how the government subsidizes home mortgages, via the mortgage interest deduction.  (Actually, technically, it’s from the combination of the non-taxation of the imputed rental services from owner-occupied housing and the mortgage interest deduction.)  Economists universally understand that the mortgage interest deduction raises the price of owner-occupied housing, because the value of the mortgage interest subsidy gets capitalized into the price of houses everywhere–even the prices of houses that are not literally purchased by people who take out mortgages and live in them as owner occupiers.  The point is that many players in the market for housing will qualify for the subsidy, and market prices will reflect how much of the market is made up of those people.  On the issue of the mortgage interest deduction, economists often worry about what the economic effects of that subsidy are, and whether policymakers really intended for those effects.  We can say that homeownership is a good thing, and we can hope that this subsidy to homeownership actually increases homeownership.  But it is a subsidy not to homeownership per se, but to the costs of borrowing to purchase a home–and the larger and/or more expensive the house (and the bigger the loan), the bigger the value of the subsidy.  (And on top of that, the higher ones income, the bigger the subsidy–because the subsidy is run through a tax deduction that makes the subsidy an “upside down” one, with larger percentage subsidies given to people in higher income tax brackets.)  Economists have found evidence that the mortgage interest deduction definitely raises housing prices, but not as much evidence that the subsidy increases homeownership as much as encourages people to buy more expensive houses with larger mortgages.  (For microeconomics students out there, both the income and the substitution effects work in those directions.)  And then we get to the public policy concern:  is that government subsidy worth its cost?  What is the goal of the policy?  If there are social benefits to homeownership, are there even bigger social benefits when people buy bigger houses (even if by going into bigger personal debt)?

Now come back to the student loan story.  College is like owner-occupied housing in that if you subsidize the costs of borrowing for college, you will raise the market price of a college education–just like the mortgage interest deduction raises the market price of a house.  Further, you might hope that what you’re doing with the subsidy is making it possible for kids to go to college who otherwise wouldn’t be able to afford it.  That might be partly the case, just like there are surely some households at the cusp of the owning-vs-renting decision for which the mortgage interest deduction is the marginal factor that makes owning the winner.  But just like the mortgage interest deduction goes to a lot of people who would own homes anyway and might just opt for the more expensive home made possible by a bigger mortgage, subsidized student loans go to a lot of students who would have gone to college anyway but may now opt to go to more expensive colleges made possible by larger (but subsidized) student loans.  And some of us might wonder if that policy effect is worth the cost, because government-subsidized educational aid costs real money (it increases government spending and increases our public debt), just like government-subsidized mortgages do.  Do all of us really want to be partially paying for kids (not even our own) to go to expensive colleges?

By the way, I speak about this effect of subsidized aid on the demand for expensive colleges, not just conceptually, but from personal experience.  I have two daughters in college, one at Princeton and the other at Sarah Lawrence.  [Clarification: these are non-profit institutions, not the for-profit colleges that the NBER analysis examined.  I don't have any personal experience with the for-profit versions.]  If you google their costs, you will see they certainly both qualify as “expensive.”  But a combination of need-based grant aid and subsidized loans have way narrowed the difference between the net cost to send my daughters to those schools and what the costs of sending them to the in-state (Virginia) public universities would be.  They would not be attending those schools were it not for the availability of such aid, but without that aid, they would have still gone to college–just to a cheaper (in-state) one.

Based on just my personal experience (thus far), I think that more expensive colleges tend to be worth their higher costs.  Certainly they must be worth their higher costs if they continue to attract students, and I know many students go to these expensive colleges without any subsidized aid–because they can afford it and decide it is worth spending their own money that way over other ways.  More expensive homes are worth their prices, too, given that (or to the extent that) there are people who demand such expensive homes.  The public policy question about whether we want to be subsidizing expensive homes, however, seems a more damning criticism than asking the same question about subsidized college aid, because there’s probably more value added–to society, broadly–in encouraging higher-quality educations that happen to come with higher prices, than in encouraging higher-priced homes that are made possible with larger mortgages.  If the bigger, more important, public policy goal regarding higher education is to make it possible for more students to attend any college, however, then the government’s subsidized student loan policy might score poorly compared with an alternative policy of increasing need-based grants–in the same way that the mortgage interest deduction scores poorly compared with alternative policies that subsidize affordable housing if the goal is to increase homeownership.

Your feedback, thoughts, personal experiences, welcome!

UPDATE (4:30 pm): I’m especially interested to hear from those of you with knowledge/experience with for-profit schools. I should have made clear that the NBER paper is focused on for-profit college/higher ed institutions, and in fact, here’s the relevant segment of the WSJ article (emphasis added):

Steve Gunderson, president of the Association of Private Sector Colleges and Universities, a trade group for for-profit schools, disputes a link between federal aid and prices, saying colleges merely respond to market demand.

The study’s authors warned their findings don’t apply to public colleges and private nonprofit schools, which they say are different because they aren’t motivated by profits and because their prices are largely determined by state funding and donations.

A spokesman for Education Secretary Arne Duncan said the administration believes there is a link between federal aid and tuition increases at for-profit schools, but that it sees no such tie with public and nonprofit schools.

(Even with a strong profit motive, I wonder how much these schools are able to set their own prices and manipulate their subsidized aid.  How competitive of a market is it, and is it not still true that their prices are largely a reflection of their relative qualities?)

My Son’s Media Debut

May 2nd, 2012 . by economistmom

My son Johnny and I were guests on “The Sports Docket” (an online radio show focused on NY sports) last night, talking about Jeremy Lin and the whole “Linsanity” thing and how inspiring he is to kids like Johnny who want to do well academically and otherwise.  Johnny was the first kid to ever be a guest on the show.  I had hardly anything to say since it was, well, a sports talk show.  (I was invited because of the Christian Science Monitor column I had written about Linsanity and Asian American stereotypes.)  But I enjoyed learning about some of the economics of professional sports, such as the influence of salary caps on ticket prices, from the other guest, Allen St. John.  I am hoping that Jeremy Lin himself finds out about Johnny’s interview and invites him to a Knicks game or just over to his house sometime soon!  ;)

Despite the (L)Injury, Still (L)Inspirational More Than (L)Insane

April 10th, 2012 . by economistmom

jeremy-lin-from-csm-column

My latest (and last, btw!) column in the print Christian Science Monitor, which was belatedly posted on their website last week.  Let me know what you think–especially if you are an Asian American who is the child of immigrant parents or if you are otherwise in a family still grappling with the cultural differences between Asia and America.  My own take on it was (L)inspired by my 13-year-old, bball-playing son Johnny’s new-found (half-)”Asian pride”–as he himself labeled it.  The CSM editor had to revise the opening sentence between the print and online versions, to account for Lin’s season-ending injury.  Here’s that latest version, reprinted in full:

It says something about the improbable season of Jeremy Lin that in two months he has gone from bench warmer to injured NBA star whose injury and six-week absence might keep the New York Knicks from making the playoffs.

Then again, everything about Lin has been improbable since he stepped onto a basketball court Feb. 4 and led the woeful and depleted Knicks to the first game of a seven-game winning streak. An Asian-American Harvard graduate – with a degree in economics to boot – was suddenly outscoring NBA stars. Commentators quickly dubbed it “Linsanity” – noting how odd it seemed that an Asian-American was the hottest thing in pro sports.

As an Asian-American, I have another word for his rocket-fueled season: inspirational. The bucking of the Asian-American stereotype is likely to have a positive effect, not only on the attitudes of non-Asians toward Asians but also on the aspirations of Asian-Americans themselves.

Many ethnic groups are stuck with worse stereotypes in America, but even the generally positive bias surrounding Asians can operate as a straitjacket. Asian-American kids are expected to be good at academics, especially math and science, and to excel at rote assignments, carrying them out obediently, politely, and responsibly. People believe we excel in our quantitative precision more than through any creativity or social skills – certainly not by dribbling a basketball!

These messages don’t come just from American society. They often come from our parents, especially immigrant parents. They raise us to be very motivated in school and steer us away from social, athletic, or most artistic pursuits because such activities are typically viewed as detracting from, rather than complementary to, the main goal of academic excellence.

It’s understandable why Asian immigrant parents (and immigrant parents generally) might raise their born-in-America kids that way. It’s a safe way to help one’s children integrate into and succeed within American society, since these precisely defined goals in academic subjects are less culturally and socially dependent. Someone who can solve math problems in Asia can solve them in America, too.

My own parents (my dad from South Korea, my Chinese mom from the Philippines, and both PhD chemists) raised me that way, and, like many Asian parents who hold their kids to very high standards, they meant well. But I would have never become an economist were it not for the distributional requirements in college that required me to take at least some social science classes – those subjects my parents somewhat dispara­gingly labeled “soft” (not “hard”) sciences.

No matter what one’s cultural background, branching out beyond our stereotypes and “comfort zones” can be good for us. As The New York Times’s David Brooks has explained in his book “The Social Animal,” developing our “human capital” as fully as possible depends on nurturing qualities that go far beyond our ability to score high on standardized tests.

Children are more likely to grow up to be successful adults the more opportunities they have to try different things – even things that parents might not expect their kids to be that good at. I tell my own children that if they do what they truly love, the money will follow – simply because loving what you do is the best way to do it really well.

Yes, Asian-American parents might have a harder time than other parents in “thinking outside the box” and allowing, and even encouraging, their kids to expand their horizons beyond the math-and-science-type academics. But that’s why Lin’s breakthrough is more than just “Linsanity.” His success – in the NBA of all places – is potentially a game changer for Asian-Americans.

Not AARP

February 5th, 2012 . by economistmom

cbo-chart-of-life-expectancy-jan2012-issue-brief

I’m turning 50 in a few weeks, but I’m not Anywhere Approaching Retirement Plans (AARP).  In fact, I’m an optimist and think I’m only about halfway through my life, as well as only about halfway through my working career.  And “quality adjusted” for how much wiser I have gotten over the years, that means I’ve really got most of my life and most of my working career still ahead of me.  That’s why I am having a hard time accepting my invitation to join the organization formerly known as the American Association of Retired Persons (AARP)–now just known as AARP–even with all their nice discounts and although their mission statement certainly sounds right up my (nearly-50-year-old) alley:

AARP is a nonprofit, nonpartisan organization with a membership that helps people age 50 and over have independence, choice and control in ways that are beneficial and affordable to them and society as a whole, ways that help people 50 and over improve their lives. Since 1958, AARP has been leading a revolution in the way people view and live life.

The AARP now emphasizes a broader notion of “quality of life”–rather than just “quality of retired life.”  They just happen to focus on those people who are 50 and over, not necessarily retired people, but just “older” or more “mature” people.  (I personally prefer the term “mature” to “senior,” although true confession time:  As some indication that I at least subconsciously have started identifying myself as a “senior,” the other day when I came across this CNN story’s headline which began “Senior’s Photo Deemed Too Sexy…”, I must confess I immediately clicked onto the article out of curiosity, expecting to see someone my age in the photo, and not the high school “senior” it turned out to be.  LOL.  I hadn’t even read far enough into the headline to notice the “yearbook” reference.)

If today’s AARP is really about helping those “50 and over [to] improve their lives” but also to encourage in the 50+ crowd the kind of “independence, choice and control” that could be “beneficial and affordable” to “society as a whole,” then AARP needs to break out of their old habit of automatically demanding that the retirement-age federal benefit programs not be modified to reflect the new characteristics of their no-longer-so-retired membership.  (The latest example was their unfortunate ad campaign designed to bully the supercommittee out of recommending any reforms to Social Security–which I was not too happy about.)

When AARP was founded in 1958, life expectancy at age 65 was about 5-6 years less than it is today, as shown in the chart above, which comes from a recent issue brief by the Congressional Budget Office. In the report, CBO explains how raising the eligibility age for Medicare and Social Security benefits–in ways that would only partially catch up to increases in longevity that have taken place over the years–would reduce the costs of the programs.

With my impending AARP eligibility and my dad’s very recent retirement at an age far exceeding the “normal” retirement age, I decided to write about this issue in a column for the Christian Science Monitor.  I explained that raising the “retirement age”–shorthand for the eligibility age for receiving full retirement benefits–seems to be just common sense, but I also acknowledged that given how we all age differently and work different types of jobs, any reduction of retirement benefits can’t be done in just an across-the-board, one-size-fits-all, way.  I concluded that:

Just as with any federal budget issue, this is a hard choice. If lawmakers are going to cut spending and deficits, they will have to cut overall benefits on average. There’s no way around that.

But cutting benefits for those who can afford to work longer, both financially and physically, can spare – and perhaps even strengthen – the benefits for those who cannot easily work longer.

And those fortunate enough to be the ones who can “afford it,” like me and my dad, may hardly be upset about this common-sense policy change. That’s because we are also the ones most likely to choose to work longer for reasons that have little to do with money.

Then last Thursday I spoke on this topic on Patt Morrison’s radio show on southern California’s NPR station, KPCC, where we heard a variety of perspectives from the listeners who called in.  The podcast recording is available here on the show’s website.

Bottom line is that with all of us living longer, at least some of us will choose to work longer.  As tough as it is to generalize with one-size-fits-all eligibility rules, does it really make sense to keep our rules fixed at where they were decades ago, back when 50 or 65 was a lot closer to being “almost old” or “old” than it is now?  I know many AARP members view their roles as parents or grandparents as their proudest achievements, and their kids’ and grandkids’ well being as what they care most about.  That makes me wonder if the AARP leadership even recognizes that and knows what the organization is doing when it simultaneously claims to have a mission to benefit “people age 50 and over” and “society as a whole” and opposes reforms to benefit programs that would raise eligibility ages.

Why Gift Cards Are a Thoughtful Gift: My Economist Mom Perspective

December 27th, 2011 . by economistmom

gift-cards

Before Christmas, Matthew Yglesias had this nice “economist’s guide to giving Christmas presents” in which he urged gift givers to get the most “bang per buck” by being both redistributive (not just reciprocal) in gift giving and taking risks by actually choosing a gift (avoiding the economist’s tendency to opt for cash for efficiency sake).

A few days ago (pre-Christmas) I felt like writing my Economist Mom corollary to Matthew’s column; I wanted to put in a plug for gift cards.  But I got too busy.

So, for the record (and as my advice for your future gift giving occasions), here are a few reasons why this economist and mom does not view gift cards as a “cop out” gift:

  1. A gift card to anyone is at least slightly more thoughtful than cash as long as one gives some thought to the selection of the merchant as having some correlation with the gift recipient.  It shows you made the effort to think about what the gift recipient might need/want and took the time to purchase the gift card (at least a tiny bit harder than visiting the ATM).
  2. From a mom’s perspective, giving gift cards to the kids is a perfect compromise to satisfy one’s urges to control the kids’ consumption (steering them toward particular merchants at least) while letting the kids to do their own fine-tuning.  It’s a great “maternalistic” alternative to giving cash.
  3. The “bang per buck” of the gift card is maximized when Christmas gift cards are redeemed at post-Christmas sale prices.
  4. Buying those gift cards before Christmas, even if they aren’t redeemed until after Christmas (or ever, actually) still contributed to economic activity when the cards were purchased.  It’s good stimulus even if the cards for pre-paid goods and services are never transformed into the actual goods and services.  (The purchase of the gift card itself is effectively purchasing the “service” of postponed explicit goods and services.)  In fact, businesses don’t seem to mind if you never redeem the gift cards and just end up giving them money!  But as a good gift-giving economist, if you care about overall welfare/utility maximization and not just business profits, you really should urge your recipients to use their gift cards before they lose them.

So maybe you can figure out where the bulk of my spending on my gifts to my kids went this year.  I’m spending the next few days driving them to the particular stores and advising them on their online shopping.

Hope you all have happy holidays.  Now go use your gift cards!  ;)

Emphasizing the Full in “Resourceful”

November 28th, 2011 . by economistmom

My latest “positive thinking” piece that came out in the Christian Science Monitor this week, just in time for Thanksgiving.  I have to admit I did a little live holiday shopping on Black Friday (but at the “safe” hour of 11 am) and will probably do a little online shopping before today (”Cyber Monday”) is over, but I’ll also be doing a lot of “shopping” for myself and others with the loads of good, but neglected, stuff I have right under my roof already.

In the CSM column, I also find reason why we should be grateful that our fiscal problem is indeed solvable, once we get our politics to cooperate.  (All hope is not yet lost with the super committee’s “failure.”)  I elaborated on that point in my column in Tax Notes (subscription only access) today as well, where I explain why Nobel laureate economist Peter Diamond is right when he says (and said at the National Tax Association meetings earlier this month) that the fiscal problem is just a “problem,” while the (lack of) jobs situation qualifies more as a “crisis.”  I’ll summarize my Tax Notes column for you all later.

I hope you readers had a very happy Thanksgiving holiday with your loved ones.   –Diane

« Previous Entries