Common Sense . . . Almost

I was reading about the California Woman who just gave birth to octuplets. The poor lady had 6 kids already.

It seems like the media has no shortage of advice and criticism for her. Some stories imply that any sane person would have aborted several of the babies, others wonder about a possible breach of medical ethics by the doctor who implanted 8 embryos in the first place.

I'm glad she didn't abort them, I do wonder about the doctor though. Fox news tries to at least be helpful

"Eating, sleeping and bathing are the key areas to get scheduled," he said. "The same goes for mom and dad. Parents need to make sure they're whole or else they won't be valuable to their children."

Good, so far so good, just good common sense, but then common sense seems to go right out the window:

Sophy said the expense of raising 14 children will likely be prohibitive, citing studies that estimate it costs roughly $2.5 million to raise a child to adulthood. Using that math, raising 14 children would cost roughly $35 million.

"And that's basic stuff," he said. "That doesn't include swimming lessons and things like that. It's very costly and hopefully the planning that needs to be done was done upfront."

What the heck? 2.5 million dollars? For one child? Who won't even know how to swim? I don't even have to think to know that that is patently absurd.

If your family makes $100,000 a year and spends every penny on only one child for 20 years that's still only 2 million dollars. Throw in a $100,000 college education, and another $100,000 for law school, and you're still not there.

Common sense should tell you that many people who don't earn 2.5 million dollars in their lifetime successfully raise children to adulthood. For example, the median income in the U.S. is about $50,000. that median earner will need 50 years to make 2.5 million. Obviously it doesn't cost them 2.5 million to raise one child.

The reporter makes matters worse by simply regurgitating the number and then calculating that it will take 35 million dollars to raise the 14 children in the family.

Absolutely ridiculous.

Surprised Economists

I've been struck repeatedly over the last few years by how many stories about the economy contain phrases along the lines of "economists were surprised by..."
It seems like they are surprised by any economic news that comes out. Something is always more or less than predictions, and not by just a little, but by orders of magnitude. For example, economists were surprised again today by job numbers and factory orders. (Incidentally, I wish I'd got to this earlier, the wording earlier today was different, the "news people" softened their description of how surprising the numbers were).

a government report showed the nation’s employers cut far fewer jobs than expected last month, stirring optimism about the buoyancy of the economy. . .
The Labor Department’s report that employers cut 20,000 jobs in April was a relief to Wall Street, which had been expecting payrolls to fall by 75,000 jobs. . .
The Commerce Department said U.S. manufacturers saw orders increase 1.4 percent in March. Economists expected a 0.2 percent increase after declines in January and February.

They were expecting 75000 fewer jobs. They were only off by 275% This one isn't sooooo bad, after all there are a lot of jobs in the nation, and the usual gains are 200-300 thousand. Maybe they had a bad day. But, 0.2 versus 1.4? That's off by 600% and the viable range on those numbers is never more than a few percentage points.
I can only think of 3 explanations for the constant stream of these stories:

• First, the stupid economists are the only ones giving interviews.
• Second, these are the smart ones, and even they don't know what they are talking about.
• Third, and this is my theory: You cannot reduce the countless individual choices of a quarter billion people to a formula with any degree of accuracy.

This may disappoint some of my economist friends, but economics is NOT a hard science, it is a descriptive science. It is valuable when looking retrospectively, but absolutely useless as a tool for precise prediction.
Economics is not the only 'science' with this problem. Political science, sociology, psychology, and even, to some extent biology have the same shortcoming. This is because they are trying to predict the actions of beings with souls and free will. In such cases, the best you can do is averages and general trends.
That doesn't mean they are not worthwhile tools, but their practitioners need to recognize the limits of their science and not advocate more detailed policies than the science can support.

Why I Quit the Social Sciences

MSNBC has an encouraging headline today:

Bucking the trend in many other wealthy industrialized nations, the United States seems to be experiencing a baby boomlet, reporting the largest number of children born in 45 years.

The nearly 4.3 million births in 2006 were mostly due to a bigger population, especially a growing number of Hispanics. That group accounted for nearly one-quarter of all U.S. births. But non-Hispanic white women and other racial and ethnic groups were having more babies, too....

The same report also showed births becoming more common in nearly every age and racial or ethnic group. Birth rates increased for women in their 20s, 30s and early 40s, not just teens. They rose for whites, blacks, Hispanics, American Indians and Alaska Natives.

If I were to guess at the reasons, I would say things like: "people are confident in the future" or "people are well-to-do enough that they can support a larger family" or simply "Americans love family and value children."

According to "the experts," however, I would be mistaken. The actual reasons, of course, are:

a decline in contraceptive use, a drop in access to abortion, poor education and poverty.

Huh??? That the stupidest thing I've read in weeks. I must have missed the Supreme Court's over-ruling of Roe v. Wade, and the onset of the current Depression with its widespread poverty. I'm sorry, but poor education does NOT explain an increase in fertility among women in their 30s and 40s.

This is a prime example of social science failing to see the trees for the forest (to turn the metaphor around). They are taking a generalization and applying it to a specific case (the U.S.) which may not fit the generalization. All this "expert" did was think of the generalizations commonly used to explain the decline in fertility which usually accompanies economic development, then... and this is a basic logical fallacy... assumed that since fertility increased, the level of development as measured by the above factors must have declined.

Anyone who has had any logic training at all knows that:

If A (development), then B (lower fertility)
Not B,
ergo not A

is not logically sound.

That is what I hated about the social sciences. They all seem to believe that because the group acts a certain way on average, individuals within the group act the same way. No allowance is made for individual choice or action. Everything is averages, means and standard deviations.

Social Science cannot explain individual cases that deviate from the norm. It cannot account for Ghandi or Hitler, Mother Teresa or Stalin, the Pioneers or the Crusades, Jim Jones or Jesus Christ, and it cannot, apparently, explain why Americans love and value children more than Europeans do.

The Top 1%

We've heard a lot this election cycle about "the top 1%" of income earners. Usually in a context like this:

Mr./Ms. Candidate (D): ". . . and I'll give every American healthcare by making sure the top 1% pay their fair share!"
Audience: (applause)
Newscaster: "A bold new proposal, from a bold new . . . (blah, blah, blah)"

But who are the mysterious "top 1%?" and what is "their fair share" anyway?

One gets the impression that they are watching CNN, poolside at the summer home, champagne in hand, laughing at the audacity of the politicians and vowing: "I will never, NEVER! pay my fair share!"

Or perhaps they are meeting old friends at the upscale "Club Un Percenteaux" in Manhattan (a very exclusive club -- it only admits 1% of those who apply) and plotting to buy off Congress to keep their low tax rates.

Thomas Sowell has a great article on who they are on National Review Online. Turns out the club isn't so exclusive after all:

Who are those top one percent? For those who would like to join them, the question is: How can you do that?

The second question is easy to answer. Virtually anyone who owns a home in San Francisco, no matter how modest that person’s income may be, can join the top one percent instantly just by selling their house.

But that’s only good for one year, you may say. What if they don’t have another house to sell next year?

Well, they won’t be in the top one percent again next year, will they? But that’s not unusual.

Americans in the top one percent, like Americans in most income brackets, are not there permanently, despite being talked about and written about as if they are an enduring “class” — especially by those who have overdosed on the magic formula of “race, class and gender,” which has replaced thought in many intellectual circles.

At the highest income levels, people are especially likely to be transient at that level. Recent data from the Internal Revenue Service show that more than half the people who were in the top one percent in 1996 were no longer there in 2005. . .

These are not permanent classes but mostly people at current income levels reached by spikes in income that don’t last.

More ways to get in the club:

These income spikes can occur for all sorts of reasons. In addition to selling homes in inflated housing markets like San Francisco, people can get sudden increases in income from inheritances, or from a gamble that pays off, whether in the stock market, the real estate market, or Las Vegas. . . corporate CEOs, those who cash in stock options that they have accumulated over the years get a big spike in income the year that they cash them in. . . Some of these incomes are almost as large as those of big-time entertainers — who are never accused of “greed,” by the way.

I might add own a small business to the list. The tax code makes it easy to live very well off your business, and report almost no income (it's been reinvested in the business).

It's not the same people who are rich at any given time. That's the beauty of the American economy. Anyone really can get rich (at least for a while), and no one has to stay poor. The free flow of goods and labor, the flexibility of business to hire (and fire) as necessary, and nearly universal access to education means that:

Most Americans in the top fifth, the bottom fifth, or any of the fifths in between, do not stay there for a whole decade, much less for life. And most certainly do not remain permanently in the top one percent or the top one-hundredth of one percent.

As to what "their fair share" may be, who knows. One might think it would be roughly the same as their percentage of the total income in the country. I do know that (according to the IRS) in 2004 they paid

• 36.89% of all income taxes, and made
• 19% of the total income.

Meanwhile, the bottom 50% paid

• 3.3% of all income taxes, and made
• 13.4% of the total income

There's at least an argument that they pay their share already.