Jim Heckman's interview with Gonazlo Schwartz at the Archbridge Institute is making the rounds of economists. I admire it for how much the interviewer and Heckman pack in so little space, so pithy, well expressed, and so happy to trounce on today's pieties. (As blog readers will have noticed, short does not come easily to me.) It's hard to summarize a Haiku -- go read the whole thing. But I'll try.
Gonzalo Schwarz: Many commentators have said that it is not possible to achieve the American Dream any more in the United States. Do you think the American Dream is alive and well?
Dr. James Heckman: Ask any immigrant. They are grateful for the chances that America has given them. Many came with nothing. They live in decent neighborhoods and their families have better lives than they could have before coming here. Their children go to college and integrate into American society. The progress of African Americans over the past century is staggering. Many have shaken off the legacies of poverty and discrimination....Social mobility:
G: ...what do you think are the main barriers to income or social mobility?...
H: The main barriers to developing effective policies for income and social mobility is fear of honest engagement in the changes in the American family and the consequences it has wrought. It is politically incorrect to express the truth and go to the source of problems.... Powerful censorship is at play across the entire society....The family is the source of life and growth. Families build values, encourage (or discourage) their children in school and out. Families — far more than schools — create or inhibit life opportunities. A huge body of evidence shows the powerful role of families in shaping the lives of their children. Dysfunctional families produce dysfunctional children. Schools can only partially compensate for the damage done to the children by dysfunctional families.He is right on the fact, how blissfully it is ignored by those wishing more "policies" to address inequality and other social programs, and censorship against those who say it.
On "current academic and policy discussion on income mobility and inequality, "
The current research in the field is shoddy. It has gained traction because it appeals to the negative image of American society held by leading opinion makers like the New York Times and the Atlantic. In truth, the evidence based on the IRS data is deeply flawed and has been incorrectly analyzed. ... The same can be said of the academics who write about the growth of the Top 1%. Careful studies show much less growth in disparity than what is picked up in the popular press and by populist politicians.Economists thrill to "shoddy", one-big-star-disparages-other-big-stars inside baseball. But the fact is true -- inequality statistics are horrendously badly calculated, and are often used and abused even in academic circles to push a political agenda.
A new “wisdom” has emerged: large samples more than compensate for faulty or missing data. The wisdom of this crowd is that sample size trumps careful data analysis.Again roman-a-clef if you care to know who he is talking about. And they might answer that identification is hard in small samples too, and that they acknowledge the limits of what one can infer from well estimated correlations, so "wisdom" is a bit of straw man. A precisely estimated correlation is also an interesting stylized fact. But putting aside inside baseball, it is an important point for everyone to remember in the big-data age.
I attended Jim's econometrics PhD class when I was an assistant professor at Chicago. He started with this: What are the three most important issues in Econometrics? 1) Identification 2) Identification 3) Identification.
