Posts tagged ‘Derek Thompson’

September 30, 2013

Higher divorce risk among marriages where wives earn more than husbands, but why?

by Grace

Despite a worldwide increase in marriages where wives are more educated than their husbands, “there are so very few marriages where women earn more than their husbands”.  And these marriages are more likely to lead to divorce.

… Evidence suggests that couples are less likely to get married if the woman’s income exceeds her partner’s. Once married, a wife earning more than her husband is more likely to be unhappy in the marriage, more likely to feel pressured to take fewer hours, and more likely to get divorced.

In what Derek Thompson of the Atlantic describes as a “cool” research paper by Marianne Bertrand, Jessica Pan, and Emir Kamenica, an “intuitive” theory for these unhappy marriages is proposed.  It’s the husband’s fault.

… What if there’s a deficit of marriages where the wife is the top earner because — to put things bluntly — husbands hate being out-earned by their wives, and wives hate living with husbands who resent them?

If this were true, we would expect to see at least three four other things to be true. First, we’d expect marriages with female breadwinners to be surprisingly rare. Second, we’d expect them to produce unhappier marriages. Third, we might expect these women to cut back on hours, do more household, or make other gestures to make their husbands feel better. Fourth, we’d expect these marriages to end more in divorce. Lo and behold (as you no doubt guessed), the economists found all of those assumptions borne out by the evidence.

Wait a minute.  Commenters to this story argue that this is just as likely to be the wife’s fault. 

What is the basis for laying this issue squarely at the feet of men?

What if there’s a deficit of marriages where the wife is the top earner because — to put things bluntly — wives hate settling for men who earn less than them and many women’s hypergamy lead them to resenting husbands whom they out-earn.

If you’re going to resort to random speculation, why not speculate equitably.

This story follows what I’ve seen described as common rule of gender issue reporting; blame it on men.

It’s a fundamental law of gender-issue reporting. Should any inequity be discovered between men and women, it must always be framed as either advantageous towards women, or, if obviously disadvantageous towards women, be framed as somehow men’s fault.

More men graduating – this is obviously a product of a sexist society and we must spend resources and restructure society to rectify this travesty.

More women graduating – the is a natural consequence of earlier female maturity and better communication skills for an information-based economy.

Men make more money – Evil, sexist. We must ban pink princess toys and create a national daycare system.

Women make more money – Hail our new feminist overlords – it’s the End of Men and “Get over it, guys. It’s a woman’s world, now.”

What if “the wives resent their husbands as losers and parasites who are not as good as other men they know”?  Especially since “84% of working women want to stay home with kids”.

Related:  Trouble for some marriages where wives earn more than husbands (Cost of College)

November 2, 2012

‘Eds and Meds’ – Are soaring costs tied to third-party payments?

by Grace

Higher education and healthcare (Eds and Meds) are two areas of our economy that share a recent history of soaring costs outpacing inflation.  Another common feature of these two sectors is a high reliance on other people’s money.

Both sectors have consistently been creating new jobs.
As reported by Derek Thompson in The Atlantic, healthcare and education are the only major job sectors that have experienced net positive growth during the last five years, a period that started two years before the “Great Recession Trough”.

These soaring costs cannot be sustained.

If the health care cost crisis has long been known, the public is just waking up to the crisis in higher education costs.  Skyrocketing tuition has driven the cost of many colleges through the roof.  This traditionally didn’t bother students, who were assured that a college education the key to a good job that would easily allow loans to be repaid.  In a global age where even knowledge economy jobs are subject to offshore competition, and a recession that’s kept many young people — including many now deeply in debt — unemployed or underemployed.  There is now about $1 trillion of it outstanding, much of it non-dischargeable in bankruptcy….

Regardless of how it plays out, when you look at spending in aggregate in America, it’s clear increases in health care and higher education spending cannot keep increasing at current rates.  This means that it just isn’t possible for all the cities out there dreaming of eds and meds glory to realize their dream. America simply can’t afford it.

William Henderson, Indiana University law professor writing in The Legal Whiteboard, sees an opportunity for productivity gains.

There is an opportunity here.  I would be extremely bullish on innovations that produce productivity gains in the Eds and Meds sectors.  I recently listened to this HBR Ideocast discussion with Robert Kaplan, the Harvard Business School professor best know for developing the Balanced Scorecard.  Kaplan is now turning his considerable intellect toward the problem of cost-containment in healthcare.

What the key insight?  Measuring how much patient treatment actually costs–to date, there has been almost no sophisticated cost accounting in healthcare.  Most of the brainpower has gone to dealing with (and maximizing) third party reimbursements.  Under Kaplan’s system, fortunately, we can actually identify the points in the system that cost way too much and thus begin the reengineering process.

The same thing may soon be happening in higher ed.  Another Harvard Business School professor, Clayton Christiansen, who authored the renowned business book, The Innovator’s Dilemma, recently co-authored a letter that called for colleges and universities to quit chasing prestige and start focusing on innovations that improve educational quality without increasing price.  Remarkably, the letter was included in a mass mailing by the American Council of Trustees and Alumni — going to 13,000 trustees!  See Inside Higher Ed, Distruption’s Strange Bedfellow, July 12, 2102.  Another Insider Higher Ed story suggests that this may be the true faultline driving the University of Virginia controversy.  See Disruptive Innovation: Rhetoric or Reality?, June 26, 2012.

The world appears to be changing, even in Eds and Meds sector.

Related:  Does increasing federal aid cause college costs to rise? (Cost of College)

October 5, 2012

Does increasing federal aid cause college costs to rise?

by Grace

Some analysis and commentary on the idea that increasing federal aid causes college costs to rise

Cheap Student Loans Are Awesome and a No-Brainer (Ohhh Yeahhhh) (The Atlantic, Derek Thompson)

Even if student loans are a reasonable investment for government to make, it’s equally reasonable to wonder whether subsidizing college is responsible for higher college costs. As James Surowiecki has written eloquently, tuition is rising for reasons that have nothing to do with Stafford loans. But as Jordan Weissmann has written for us, the economic literature found that funneling money to middle class students has contributed to college costs rising even more than they would have without loans. The evidence is mixed.

Are we subsidizing student debt too generously? (Washington Post)

Yes, federal subsidies do drive up tuition. It’s Econ 101: basic economics dictates that conclusion.  —  Hans Bader, senior attorney and counsel for special projects at the Competitive Enterprise Institute

Why They Seem to Rise Together: Federal Aid and College Tuition (Minding The Campus)

Richard Vedder:

Andrew Gillen masterfully demonstrates that Bill Bennett is right–federal financial aid programs lead to higher tuition. The implications of this and related financial aid effects are profound:

1. The intended income transfers from taxpayers (and, increasingly bondholders) to students have been largely diverted to college coffers; swelling payrolls and leading to armies of new university bureaucrats, million-dollar college presidents, an academic arms race and other pathologies;

2. This, in turn, has thwarted university productivity growth and helps explain why higher education is vastly more expensive than in most other major developed countries;

3. The goal of helping low-income students has not been met, and a lower percent of recent college graduates come from less affluent students than was true in 1970 when Pell Grants did not exist;

4. To the extent that these aid programs have increased enrollments (read Gillen), they have added to the growing disconnect between labor-market realities and student job expectations, creating armies of college graduates who are bartenders, taxi drivers, etc.

5. Enrollment increases, in turn, have contributed to a dumbing down of higher education and to declining standards.

What to do? The federal government needs to wind down its financial aid commitment. Restrict eligibility for aid to truly low-income students. Impose performance criteria for aid recipients: mediocre students will lose aid. Make the college absorb some of the risk for loan defaults–a lesson we should have learned from the financial crisis. Give Pell Grants as vouchers directly to students, not schools. Reinstate private lending options. Unveil new human capital contract approaches that reduce debt reliance. Downsize and reinvent federal programs and allow market discipline to operate more.

All these recommendations are worth considering.


March 13, 2012

What young people are saying about (not) buying homes

by Grace

Derek Thompson in The Atlantic compiled anecdotes illustrating young people’s views on buying a home versus renting.  Here are some selected quotes from his piece, following up a previous post about student loans as a reason that young people are not buying homes.  

‘Get the hell out of debt as soon as possible’
‘Buying has really worked out for us’
‘I love the mobility that renting allows me’
‘My generation wants more freedom to travel, to see and live in new places’
‘I did the math and buying came out cheaper than renting
‘A house is nothing but a huge time and money suck’
‘I could not imagine ever wanting to buy a house’
‘Student loans: A drag on credit that negate the chance to save up a downpayment.’
‘Is home owning right for everyone? Goodness no.’
‘We got tired of building someone else’s equity’
‘I’m a committed renter’
‘I was so glad we were renting when our water heater blew out’
I don’t think buying makes sense: We’ve weathered three layoffs since the crash’
‘I would recommend home ownership — in my Texas community only’
‘Don’t buy a fixer-upper unless you really, really know’
‘The days of home ownership being a good investment are NOT over…’
‘There are simply not enough places I want to live where I could afford a house/condo’
‘I would buy the house’

Back in my 20s when I had my first job out of college, the conventional wisdom was that buying a home was great investment.  Many of us felt pressured to invest in real estate, which had been increasing in value at a healthy clip over the previous decade.  So I bought a home, along with many of my fellow petroleum industry workers who were reaping the financial benefits of an oil boom.  Mortgage rates were 12-14% at that time.  Shockingly, home prices tanked shortly afterwards.  Gee, who could have seen that coming?

The market value of my home declined to about one-half of its purchase price, and I was stuck.  I don’t remember using the term “underwater” at that time, but that was me.  After leaving town and renting at a loss for several years, I was finally able to get rid of my house through a short sale.  It was a long and painful experience, but it taught me to be on the lookout for future economic bubbles.  It seems there’s always a new one on the horizon.

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