Welcome to week 352! The articles below caught my attention this week. What are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********). Article titles preceded by [SR] require a subscription.
(2 January 2019): “Nudges, long aimed at saving behavior, are needed for people converting a nest egg into income” UCLA Anderson Review
********The idea of “nudge” comes from the Nudge: Improving Decisions About Health, Wealth, and Happiness, by Richard H. Thaler (a 2017 recipient of the Nobel Prize in Economics) and Cass Sunstein (who put nudges into practice in the Obama administration). In this article the research of Suzanne Shu is showcased, especially as it relates to the issue of “decumulation” in retirement. In the process some wise ideas from behavioral economics are lifted up and used to illustrate fundamental points. Especially important, I thought, was the notion of Full Retirement Age (FRA) for social security. For people of my age, FRA was 66. However, for each year in which social security payments are deferred up to 70.5, annual payments increase at 8% per year. What if our thinking was focused upon maximizing annual payments rather than FRA? Clearly many more people would put off receiving payments—perhaps defer retirement—until 70.5 rather than FRA. That clearly qualifies as a nudge. Much more to glean from this useful piece.
(7 January 2019): “Robert J. Shiller on Bubbles, Reflexivity, and Narrative Economics” Enterprising Investor
********This is a blog of The CFA Institute. CFA stands for Chartered Financial Analyst, which is perhaps the highest credential for those analyzing investments. This article is an interview with Nobel Laureate Robert Shiller, who is the author of Irrational Exuberance in which “he successfully called the dot-com bubble.” Subsequently, “he issued similarly accurate warnings about the bloated housing market.” The interview is of interview for learning the views of a thoughtful economist on current economic conditions. I was particularly interested in his (brief) discussion of “narrative economics,” which is evidently the title of a book he is working on. In the meantime, you might want to take a look at the presidential address he gave at the 2017 meeting of the American Economic Association. It’s title, “Narrative Economics,” is sure to be a good predictor of what is to come in his future book.
********According to Shiller in the core post of these comments, narratives provide “a convergence of the social sciences. Economists see themselves as trained in economics and are reluctant to get involved in sociology, psychology, anthropology, or history. . . . If you’re going to be involved with forecasting, you have to use every available perspective to stay in touch with reality.” He goes on to note, “The theme of my book is that there are new ways of thinking that are encouraged by stories that people tell. We communicate through stories that are salient or that appeal to us in our thinking. Typically they have a human interest component and often a political component. They often affect our thinking and our moral judgment.” Sounds like the invisible forces to me—I’ll be looking for his book.
(9 January 2019): “Big Dairy Is About to Flood America’s School Lunches With Milk” Bloomberg Businessweek
********The school lunchroom has long been a place where different views about nutrition and agribusiness interests have interacted with consequences. During the Reagan administration there was the “ketchup-as-a-vegetable controversy.” The Obama administration” backed the Healthy, Hunger-Free Kids Act” that directed the USDA “rewrite the nutrition standards of the $13.6 billion National School Lunch Program for the first time in 15 years. The department soon required more fruits and vegetables, more whole grains, and lower sodium levels. . . . In many ways this was a frontal assault on dairy: Cheese, especially the American kind popular on burgers, is high in sodium. The new rules even told schools to make water available with every meal—after decades when the only beverage kids were routinely offered was milk.” All this has changed with the Trump administration, and the 2017 appointment of Sonny Perdue as Secretary of Agriculture. Perdue, the “ex-Georgia governor who made his fortune in the grain business and was once a consultant to milk producers,” has eased restrictions on lunchroom food. Higher-fat chocolate milk is back, as is more white bread and pizza. Commenting to grade schoolers, with whom he ate lunch while announcing his changes, Perdue noted, “I wouldn’t be as big as I am today without chocolate milk.”
——–Changes brought about the USDA have been “a victory for many of the big food companies that count on schools as a steady source of revenue and see them as an opportunity to shape the buying habits of future consumers. The win is especially sweet for the $200 billion U.S. dairy industry, which has been in a self-declared crisis for years because of declining milk consumption. The shift has particularly unwelcome consequences for the one-third of American kids considered overweight or obese. It underscores the contradiction at the heart of the meals program, which is simultaneously trying to feed schoolkids healthful food while supporting agribusiness that want to pack the menu with their own products.”
********The article does a good job of laying out the conflicting aims of the USDA’s school lunch program, as well as showing how economic interest play a role. I did miss discussion, though, of the various purveyors no longer selling their products to schools. Were these smaller and perhaps more local, or what? The 2008 book School Lunch Politics: The Surprising History of America’s Favorite Welfare Program, by Susan Levine, looks like a promising entry into a deeper understanding of this subject. Levine is the Director of the Institute for the Humanities and Professor of History at the University of Illinois at Chicago.
(11 January 2019): “When Death was Women’s Business” JSTOR Daily
——–In early nineteenths century Pennsylvania, “care for the dying and dead fell mostly to women. In those years . . . watchers or watch-women—sometimes also referred to with the more generic term ‘nurse’—tended to the dying. These might be friends, family members, or hired help.” Over time, however, “women’s death work declined. Increasingly, people died in hospitals rather than at home. With the Civil War came the need to transport Union soldiers’ bodies home, inspiring the rapid growth of undertaking as a business—often a father-and-sons affair. Now families had a one-stop shop for coffin, burial plot, hearse, and the care and preservation of the body.” In an 1867 Philadelphia directory, there were “listed 125 male undertakes, one female undertaker, and four female layers out of the dead. The death industry as we know it today had been born.”
********Livia Gershon’s post is build upon the article, “’Painful Leisure’ and ‘Awful Business’: Female Death Workers in Pennsylvania,” by Karol K. Weaver, which can be downloaded at the end of the post. Interesting to see how the hospitalization of death and the Civil War helped change the nature of services provided and the gender of those providing the services.
(11 January 2019): “How Does Bail Work, and Why Do People Want to Get Rid of It?” The New York Times
——–“In 2017, around 33,000 criminal defendants in New York couldn’t post bail at their initial hearing. They went straight from a courthouse to jail simply because they were poor.” How does bail work? “After they are arrested, criminal defendants ordinarily see a judge within 24 hours. Judges have a number of choices for determining what happens next. The most lenient option is releasing defendants with a promise to return for their trial. The severest is ordering defendants, if they are deemed a flight risk, to be detained in jail until a trial verdict or plea deal. Bail provides a middle path: Defendants remain free but fact the threat of a financial penalty.” In the state of New York, “judges can choose from nine different types of bail, some of which require no upfront payment. Typically, however, judges favor cash bai, which calls for immediate payment to the court. If the court’s requirements are met, the bail money is returned to whoever put it up.”
********The article provides a clear look at some of the factors affecting the setting and paying of bail bonds and provides an articulate statement from someone in the bail bond industry of how they work. Changing the law, as California recently did, “creates levels of risk based on likelihood to show up in court and threat to the public, with some defendants guaranteed time in fail before their case id decided. Since these judgments are based on criminal history, and the criminal justice system has been riddled with bias,” risk assessment are “inherently bringing forward that racism and that discrimination.” So, although judges have a lot of leeway in making bail decisions, they are not without their problems. You can learn more about bail and what one nonprofit is doing the address it, using a revolving bail fund, here.
(14 January 2019): [SR] ’The Age of Surveillance Capitalism’ Review: The New Big Brother” The Wall Street Journal
——–Shoshana Zuboff’s The Age of Surveillance Capital: The Fight for a Human Future at the New Frontier of Power is the “rare volume that puts a name on a problem just as it becomes critical—in this case the quandary raised by Google and Facebook when they figured out how to fashion the data exhaust of our everyday lives into, as she puts it, ‘prediction products’: little oracles that anticipate our intentions and offer then up to anyone willing to pay.” According to Ms. Zuboff, the companies of surveillance capitalism “scoop up the date we leave behind as we go about our digital lives and use it to their own commercial ends. Our leftover data trails make up the resource she calls ‘behavioral surplus,’ a by-product that’s key to the success of two of the world’s most highly valued companies, Alphabet (Google’s parent) and Facebook, and increasingly Amazon and Microsoft.”
********Shoshana Zuboff is a “retired Harvard Business School professor.” The reviewer notes that “this book’s major contribution is to give a name to what’s happening, to put it is cultural and historical perspective, and to ask us to pause long enough to think about the future and how it might be different from today.” An earlier expression of Zuboff’s ideas is much shorter than the 525 pages of text (and many more of documentation) appeared in 2015: “Big other: surveillance capitalism and the prospects of an information civilization” Journal of Information Technology 30,1 (March 2015): 75-89. Although only the Abstract and References are available free of charge, they are sufficient to indicate the importance of Google Chief Economist Hal Varian as providing the “primary lens” for Zuboff’s analysis.
(16 January 2019): “Supreme Court ruling gives truckers a victory and a new weapon in labor war at L.A. ports” The Los Angeles Times
——–The U.S. Supreme Court in an 8-0 decision—Justice Kavanaugh did not participate—cleared the way “for drivers to sue trucking companies” even if the companies “consider them to be independent contractors rather than employees.” In the case at issue, New Prime Inc. v. Oliveira, New Prime “contended that its drivers could not sue because they had signed contracts agreeing to arbitrate any claims privately, waiving their right to go to court.” The Supreme Court noted, however, in a decision written by Justice Neil M. Gorsuch, “that the 1926 Federal Arbitration Act clearly carved out an exception for ‘workers engaged in foreign or interstate commerce.’ The exception was written into the law because Congress had enacted a different path for transportation worker disputes at the time.”
********The article goes on to note, “What is yet to be determined is whether the ruling has a much broader impact—specifically, whether is will influence pending federal class-action lawsuit against Amazon, Grubhub, Doordash, Postmates and other app-based platforms that classify drivers as independent contractors.” You can read the text of the 20-page decision here.
May you have a good week!