May 20, 2007

The Myth of the Rational Economist

George Mason U. economist Bryan Caplan, author of The Myth of the Rational Voter: Why Democracies Choose Bad Policies, asks on EconLog:

I've often heard opponents of Latin American immigration complain that they're lowering our average IQ. ... Question: [If] this is the real concern, why not just advocate additional "compensatory" immigration from high-IQ countries like China and Korea?

This logic could be used equally well in many other situations:

Used Car Salesman: "You should buy this red car."

Prof. Caplan: "But this red car is a piece of junk."

Used Car Salesman: "Well ... that blue car over there is in great shape. Hey, you could buy both the bad red car and the good blue car and that would be kind of like having one average car!"

Prof. Caplan: "Wow, that's terrific thinking ... I'll take both! Where do I sign?"

Or:

Prof. Cowen: "Which applicant should we hire for the Assistant Professor job in our Econ department: the really dumb guy or the really smart guy?"

Prof. Caplan: "Tough question, tough question ... I know! Let's hire both!"

Why is it that smart economists' IQs drop 50 points when they try to think about immigration?


My published articles are archived at iSteve.com -- Steve Sailer

32 comments:

REO Spudwhacken said...

Recently, having came across this winner in the local library;

More Sex Is Safer Sex: The Unconventional Wisdom of Economics

http://www.amazon.com/More-Sex-Safer-Unconventional-Economics/dp/1416532218

I'd guess the IQ dropoff is closer to 75 points.

SFG said...

It's political correctness. They can't oppose immigration without being called racists. You know that, Steve.

One of the reasons I advocated focusing on economic reasons was as a workaround; you can always go back at your questioner and accuse them of being an elitist who doesn't care about the poor.

Horatio said...

We aren't buying immigrants. We are using them.
A guest worker program with little chance of obtaining citizenship and no automatic citizenship for children born here would be better than the current suggestions. Naturally, the guest workers should not be subject to paternalistic government regulations.

Why do paleocons lose 3 sigmas of IQ and 4 sigmas of rationality when discussing immigration? The same arguments were used to restrict immigrants from Southern and Eastern Europe. Those Poles sure have made a mess of Chicago haven't they?

Anonymous said...

Bryan Caplan probably doesn't want massive numbers of immigrants who will compete with his own social group. Imagine how difficult it would be to get into a good college if we let 200 million Asian kids of the sort who spend their weekends practicing the violin and studying math instead of having fun in,

Anonymous said...

Honest question:

It's not like the Irish, Southern, and Eastern Europeans who flooded the US from the mid 19th to early 20th century were the rocket scientists of their era. Yet a generation or two of good nutrition, public education, and assimiliation into the prevailing attitudes regarding work and education, and they turned out fine. Is the current wave of immigrants really that different qualitatively from the Irish, Sicilians, and Poles that preceded it?

Mark said...

Why is it that smart economists' IQs drop 50 points when they try to think about immigration?

Why? It's probably like the old cartoon with a giant equation on the blackboard but a hole in the middle. And the economist says: "Here, a miracle happens."

But more realistically, I can see quite clearly why economists think immigration is so great: to them, immigrants are just another random variable in an equation. If you can have an unrestricted labor supply, the economy can bend and twist any way they like; it can grow without bound. It's like the classical mechanics problems where you consider the effects of gravity without drag, or motion on a plane without friction.

The real problem is that it's not the ECONOMY that matters, it's the QUALITY OF LIFE for Americans that does, and I suspect economists don't like thinking about that because it's pretty hard to define. The economy is a tool; but the goal is quality of life.

Anonymous said...

It's the power of racially sensitive political correctness.

TabooTruth said...

Haha, as an economics student I could definetely see one of my professors saying that in order to brush aside the arguments and focus on useless graphs and equations.

Regardless, if the average mexican's IQ that immigrates is 90, then we'll need to import 2 asians (IQ=105) for each mexican. So...that would be 24 million asian people to compensate for all the illegal mexicans. I don't know if that's quite feasible.

The problem is that nothing in economics literature is yet to discuss HBD. Who will be the first courageous one to refute the utopia potential of liberalism?

Mark said...

Who will be the first courageous one to refute the utopia potential of liberalism?

The same guy who always refutes it: his name is REALITY. His wife, FACTS, will be there, too.

The same arguments were used to restrict immigrants from Southern and Eastern Europe. Those Poles sure have made a mess of Chicago haven't they?

Yes, and they said that Jews were stupid, but Jews already had a reputation for intelligence and shrewdness. Immigrants back then were coming from the more advanced countries but from parts of them where there was less opportunity. Immigrants today are coming from backwards countries, period.

Hispanics have already been here for several generations, and we already know that " a generation or two of good nutrition, blah, blah, blah, snzzzzzz" doesn't help.

Anonymous said...

"Those Poles sure have made a mess of Chicago haven't they?"

Ah, extrapolation at work! Problem is, unlike the Poles, Hispanics empirically don't assimilate well (or rather, they assimilate towards african-american levels on most major social variables) even after three generations. Reality trumps half-baked historical allegory. (Munich! Churchill! Churchill!)

But what the hell, that's just like a 100 years of data or so - let's just invite another couple of tens of millions and hope for the best!

/wsc

tommy said...

Hah! And like I wrote to you previously, Steve:

Free traders argue that we need more unskilled immigrants to compete with Third World rivals. Yet the presence of more unskilled immigrants and their descendants in our educational system, driving down standards, making it harder for more intelligent native-born citizens to get a decent education, and creating a larger pool of unskilled citizens who's needs must be met, necessitates importing more skilled immigrants they also argue.

The free traders' bargain: you can lose out to foreigners abroad or foreigners here at home. It is your choice, but you must lose.

horatio,

We aren't buying immigrants. We are using them.
A guest worker program with little chance of obtaining citizenship and no automatic citizenship for children born here would be better than the current suggestions.


First, let us be careful with that word 'we.' I'm not running a meatpacking plant or a construction company. I don't have hundreds of acres of vineyards in California either. I'm cool with paying a dime or two more for a head of Romaine. I suspect most of Steve's readers, along with most other citizens in this country, are in the same boat.

Your idea would undoubtedly be better than an amnesty, but given the fact that wages have actually declined in the industries where illegal immigrants tend to congregate over the past few decades, I don't see why we even need that.

Naturally, the guest workers should not be subject to paternalistic government regulations.

Namely? I'll be honest, Horatio, I'm not too concerned about paternalism in regard to Third World immigrants. They usually don't come from cultures where individualism and self-responsibility are high priorities.

Those Poles sure have made a mess of Chicago haven't they?

Unlike Mexicans, who are lagging even after four generations (and show little indication of making dramatic improvements in subsequent generations either), the Poles largely assimilated to the educational and economic norms of the middle class after no more than two or three generations, as did practically all Europeans.

Besides, last I checked, Hispanics, along with blacks, really had made a mess of Chicago.

xxiv said...

Horatio posted the following comment on another site:

"I am the son of an illegal immigrant but my father did not come here because he needed work. I come from the (mostly) white ruling class of Latin America and my father would have been more financially secure in his native country. It was the war that drove him out. He came illegally because it was easier than jumping through hoops for the government."

Horatio's ancestors mismanaged their own country so horribly they were forced to flee to the U.S. Now, instead of returning to the 3rd world, Horatio wants us to bring the 3rd world here so he can enjoy his birthright of lording it over little brown people, without fearing for his life (for now, anyway).

rast said...

Is the current wave of immigrants really that different qualitatively from the Irish, Sicilians, and Poles that preceded it.

The evidence is overwhelming: Yes, they are different and worse.

Artanis Artemis said...

I'm half Polish and I have to admit-Poles (or, as I was raised to call us, Polacks) DID make a mess of South Chicago, by letting in the you-know-who's. And by making Chicago safe for corrupt politics.

Poles are often good engineers, skilled tradesmen, etc. but are not that great at statecraft. I'm convinced government should be left to Scandinavian, Finnish, North German, Dutch, German Swiss and Anglo-Saxon Britons. Not Celts, not the Ulster Scots, not the Gauls and not the Eastern Europeans.

Despite our high IQ in some ways we have to be kept from ourselves in others. How much more true that is for Mexicans and Blacks.

Anonymous said...

Inferring from average IQ to "Don't let any Mexicans or Blacks in!" is racist. If this is about IQ, why aren’t you promoting "high IQ immigration"? Everybody with an IQ of 100 and more gets in, everybody below gets deported. Why using race, an imprecise indicator of IQ, if you can test people directly?

Horatio said...

xxiv wrote
"Horatio's ancestors mismanaged their own country so horribly they were forced to flee to the U.S. Now, instead of returning to the 3rd world, Horatio wants us to bring the 3rd world here so he can enjoy his birthright of lording it over little brown people, without fearing for his life (for now, anyway)."

I should have written professional class rather than ruling class. My ancestors were not generally in government. They were professionals who knew most of the powerful people in government. My ancestors were driven out of Latin America by a war between the two main flavors of paternofascism (yours and Stalins) and two generations earlier were driven out of Spain by a war between those same two flavors of paternofascism. I recognize the mistakes of those forms of government and I don't want to them repeated here in the US. Most of Latin America follows an immigration policy more akin to what you support.

tommy said...

Inferring from average IQ to "Don't let any Mexicans or Blacks in!" is racist. If this is about IQ, why aren’t you promoting "high IQ immigration"? Everybody with an IQ of 100 and more gets in, everybody below gets deported. Why using race, an imprecise indicator of IQ, if you can test people directly?

Well, maybe we don't need anymore people from anywhere. Still, if we are going to have immigration, I would support enacting an IQ test to ensure that we aren't allowing people with low intelligence into the country as one of the requirements for entry (along with excellent English proficiency and a decent education). However, since we are a long way from such a customized approach to immigration, I would prefer to minimize the immigration of low IQ ethnic groups in the mean time.

Peter G. Klein said...

Steve, are you completely unfamiliar with the principle of comparative advantage? Smart people benefit from trading (e.g., exchanging labor) with dumb people, as long as each person specializes according to his comparative advantage.

You seem to treat "jobs" as a homogeneous category. The dumb guy is taking away a job from a smart guy! But all jobs are not created equal. And yes, of course GMU economics professors benefit from hiring people with IQs lower than their own. They're called secretaries, custodians, repairmen, etc.

Department Head: "I'd like to hire Bob as a janitor, but he doesn't have a college degree."

Professor Sailer: "No way, that would lower the department's average IQ! I'll pick up the trash myself."

Steve Sailer said...

"Steve, are you completely unfamiliar with the principle of comparative advantage?"

Are you completely unfamiliar with the economic concept of externalities? Most libertarian autistics act like they have never heard of that Econ 101 concept.

REO Spudwhacken said...

I used to be a libertarian autistic. Now I'm a racial nationalist with Tourette's.

Every people that can rightly view itself as a people, ahould as far as is practical govern itself and receive to itself the beneficience or curse its own actions, attributes and policies bring.

I must have Tourette's because I can't stop repeating it.

Blacks, mestizos, Scots-Irish, ideally all would have their own nationhood. Those who explicitly desire multiculturalism and extended partially inbred family mixing should have a place to do it. But as with gays and people who eat boogers, I shouldn't have to watch them do it.

My feelings have changed a lot on this since, roughly, 2002. I am not sure why.

Peter G. Klein said...

If you want to bring up externalities, fine, but this has nothing to do with the points you raised against Caplan in your post.

So you want to change the subject. OK. One can certainly construct a reasonable argument against immigration based on negative externalities from crime, loss of domestic culture, and the like. (If you refer to so-called "pecuniary externalities" -- a reduction in domestic wages due to an increased supply of labor -- than the argument is bogus. No one's rights are violated when he is out-competed in the labor market.)

I doubt the average economist is unaware of the potential negative externalities from immigration. Rather, they believe that such externalities are vastly outweighed by the positive externalities resulting from comparative advantage.

Look, the principle of comparative advantage and the resulting gains from trade is one of the most solidly established concepts in economics. It underlies all arguments for free trade, whether trade in goods or services (i.e., labor). Arguments based on externalities are far more tentative. Externalities are ubiqitous, no one knows how to measure them, and they are generally a weak foundation for public policy.

So, do you deny comparative advantage altogether? Or do you accept it but think the costs of crime and Telemundo are far greater? If so, what's the basis for this cost-benefit analysis?

Steve Sailer said...

In other words, economists like to think about comparative advantage and don't like to think about externalities, and think public policy should be based on what they like to think about not what they don't like to think about.

Gee, my faith is renewed in the economics profession!

Peter G. Klein said...

Um, not exactly. Economists think they know a lot about comparative advantage and that no one knows a lot about externalities, and that public policy should be based on things we know rather than idle speculation.

Well, this exchange has done little to renew my faith in the journalism profession.

Steve Sailer said...

Yes, economists prefer to ignore externalities and orate about the glories of comparative advantage.

Fortunately, voters are more openminded. When I was growing up in LA, the smog (a classic externality) wracked by lungs when I went out to play. So, the voters put restrictions on the full play of comparative advantage in the name of reducing pollution externalities. It was expensive, but it worked. The air my children breathe is much cleaner.

tommy said...

Granted, I'm no economist, so I may not properly understand this concept of externalities. The impression I get is that externalities are simply consequences, positive or negative, that lie outside of the transaction being discussed.

Um, not exactly. Economists think they know a lot about comparative advantage and that no one knows a lot about externalities, and that public policy should be based on things we know rather than idle speculation.

Are externalities things we don't know much about and should not even bother examining or just things libertarians would rather not think about?

Can you imagine if we applied this autistic approach toward externalities to areas other than immigration. Take a few examples of negative externalities mentioned by Wikipedia in its article on the subject:

Pollution by a firm in the course of its production which causes nuisance or harm to others.

We should do nothing about pollution because we do not know much about its externalities. Let us not engage in "idle speculation" at its consequences.

The harvesting by one fishing company in the ocean depletes the stock of available fish for the other companies and overfishing may result. This is an example of a common property resource, sometimes referred to as the Tragedy of the commons.

But we should do nothing about over-harvesting because we do not know much about externalities. You never know, things might work out better by depleting all of our resources. You just never know.

Individuals collectively choose to use a public transportation resource (such as roads), imposing congestion costs on all other users.

Who cares? We don't know enough about externalities to deal with congestion. It's complicated, you see?

Of course, we do know that nations with low IQ scores correlate strongly with nations that are impoverished. (The only low IQ, high-income nations are a few oil-rich Arab microstates like Bahrain.) We know that Hispanics remain poor and poorly educated generation after generation and that they do not contribute nearly as much as white citizens do in taxes. We know that the medical, criminal, and educational costs of immigrants and their children are not borne directly by their employers, but are frequently picked up by the taxpayers. I hope it would be obvious that a First World economy cannot be sustained when an ever-diminishing percentage of the population is capable of tasks much more intellectually demanding than meatpacking, mowing lawns, landscaping, construction, and selling fruit from a stand on a street corner, all of which are capable of being performed by the population of any Third World nation anywhere in the world.

If the precise outcome of externalities is in debate, how about substituting a little common sense and employing some comparative reasoning rather than pretending externalities simply don't exist and acting as though we can safely ignore them? Besides, it would seem to me that the existence of externalities in any given situation is dependent on the frame of reference being used. Klein and his ilk may prefer to turn every economic situation into a situation concerning an individual employer and a potential employee, but I think most people with an ounce of commonsense realize there is more to the story than that.

New libertarian motto: If it's complicated, it is of no consequence.

Perhaps if Klein has so much faith in immigration, he might want to abandon the United States and settle in a new country. I would suggest a location somewhere in Africa where he can hire plenty of uneducated people. I can see it now....

Peter G. Klein: The Man Who Might Be King of Ethiopia.

May his comparative advantage policies carry him far.

Anonymous said...

"However, since we are a long way from such a customized approach to immigration, I would prefer to minimize the immigration of low IQ ethnic groups in the mean time."

If you accept that judging individuals on the average performance of their group is racism, then your statement translates into: I would prefer to be a racist in the mean time.

This is America? I always thought one of the basics of Western Civilization is individualism.

tommy said...

If you accept that judging individuals on the average performance of their group is racism, then your statement translates into: I would prefer to be a racist in the mean time.

This is America? I always thought one of the basics of Western Civilization is individualism.


Then I would prefer racism (as you define it) for the sake of maintaining Western Civilization and America as we currently know it. Sorry, I just don't see Latin America as being the pinnacle of Western Civilization or much else.

My definition of 'racism' is different than your definition of 'racism,' however. To me, racism only applies when making a decision about a person where you have every opportunity to judge a person as an individual but you prefer to judge them by their race instead. So, if I'm an employer and I agree that a black applicant has outstanding qualifications for a job and is better suited for the job than anyone else and I decide to disregard everything I know about him personally and refuse him the job based on his race, then I am being racist. Immigration policy involves decisions about groups and since we are dealing with groups I would prefer to take into account average group characteristics when making decisions about immigration.

Peter G. Klein said...

Tommy, economists -- libertarian and otherwise -- have written, oh, I don't know, about a gazillion articles on externalities. You'll find externalities (and market failure more generally) covered extensively in every elementary textbook. I've been teaching them at the university level for almost two decades.

Many economists strongly favor taxing activities thought to generate negative externalities (e.g., Greg Mankiw with his "Pigou Club") and subsidizing those thought to generate positive externalities (e.g., education). But it is widely acknowledged that absent an appropriate understanding of their nature and magnitude, trying to "do something" about externalities -- gosh, we don't want to "pretend they don't exist"! -- often makes the inefficiency worse, rather than better. (Try Googling the "theory of the second best," and maybe skim some of Hayek's writings on dispersed knowledge -- that's Friedrich, not Salma.) Moreover, many economists, particularly libertarian ones, are wary of empowering government bureaucrats (Sailer seems to think that "voters" determine policy toward externalities, with perfect efficiency I guess) to tax and subsidize as they see fit, in the name of promoting the common good. Public choice theory -- not to mention common sense -- tells us that such powers will tend to benefit politically connected special interests, not the amorphous "public good." Do you favor putting Al Gore in charge of industrial policy? Or letting the NEA decide federal education spending?

To return to the main point: Steve, you've made several good arguments in the past against Caplan, Cowen, etc. on various points. Your criticisms of Steve Levitt have been particularly on target. But on this particular point -- the silly used car example -- you misfired. Admit it and move on.

tommy said...

But it is widely acknowledged that absent an appropriate understanding of their nature and magnitude, trying to "do something" about externalities -- gosh, we don't want to "pretend they don't exist"! -- often makes the inefficiency worse, rather than better.

And sometimes doing nothing will result in it remaining bad or getting even worse. Immigration is a deadly serious business because it is essentially irreversible. If you screw this up, you cannot get back to where you were.

Moreover, many economists, particularly libertarian ones, are wary of empowering government bureaucrats (Sailer seems to think that "voters" determine policy toward externalities, with perfect efficiency I guess)

I'm certain that is an exaggeration of Sailer's position, just as it would be an exaggeration of the libertarian position that, absent government controls, markets work exactly as they should 100% of the time. In fact, I'm sure your characterization of Sailer's remarks is a far greater exaggeration.

Do you favor putting Al Gore in charge of industrial policy? Or letting the NEA decide federal education spending?

Of course not, but that doesn't mean I prefer doing nothing about climate change or never increasing educational spending. It means that I look at all sides of the issue and make a decision. The idea of externalities is another rubric in many senses. You're lumping a whole bunch of things together and treating it as a uniform category for the purpose of argument, but the fact is negative externalities do differ in the reversibility of the problem they involve, whether or not they are primarily economic in nature, the information we have available to make a decision about them, and whether or not we have past experience to draw from in handling them. Another part of the problem in dealing with externalities is the complete unwillingness of most decision makers (and economists) to take inherent differences into account in the first place, even when we have sufficient information to believe they exist. We all know the sort of impoverished, politically correct thinking that underlies "No Child Left Behind," for instance. Call me crazy, but yes I think we can make some decisions, if we are honest, about what sort of educational approaches might work better than NCLB. I don't think making decisions about matters like that is necessarily intractable.

Sailer's own analogy comes pretty close to my "Jews in Ethiopia" thinking:

Used Car Salesman: "You should buy this red car."
f
Prof. Caplan: "But this red car is a piece of junk."

Used Car Salesman: "Well ... that blue car over there is in great shape. Hey, you could buy both the bad red car and the good blue car and that would be kind of like having one average car!"

Prof. Caplan: "Wow, that's terrific thinking ... I'll take both! Where do I sign?"


You can deport all the Ashkenazic Jews in America to Ethiopia and Ethiopia might have more high IQ individuals than modern Germany, which has almost no Jews. You can play comparative advantage to a hilt, but when all is said and done, Ethiopia is still going to look pretty much like Ethiopia (even assuming the Ethiopians don't grow to dislike the Jews and expel or kill them) while Germany remains a successful First World country. The reason why life is better in Germany is pretty simple: there are few low IQ people in Germany and there are many low IQ people in Ethiopia.

Now tell me where you would rather live?

Anonymous said...

"To me, racism only applies when making a decision about a person where you have every opportunity to judge a person as an individual but you prefer to judge them by their race instead."

I agree.

"Immigration policy involves decisions about groups..."

I disagree. It would be easy to organize immigration by judging individuals. If you can do it and prefer not to, that's racism by your own definition.

By the way, affirmative action is racism, too.

"Sorry, I just don't see Latin America as being the pinnacle of Western Civilization or much else."

That's not the point. All I'm saying is by judging people on their group performance we behave like a non-western culture. Not to be racist is part of our heritage.

If -and only if- high IQ is a necessary condition for integration into Western culture then we should have immigration policy based on IQ, but not on race. Right?

tommy said...

I disagree. It would be easy to organize immigration by judging individuals. If you can do it and prefer not to, that's racism by your own definition.

It would be easy for me to do so. However, getting our policymakers to do so is a different story. At this point, I would be happy simply to halt immigration as much as possible regardless of the racial characteristics of immigrants.

That's not the point. All I'm saying is by judging people on their group performance we behave like a non-western culture. Not to be racist is part of our heritage.

I think my point is that we aren't going to have much of a heritage, whatever you think may be included within it, if we allow the current situation to continue. Alas, we may be lost and gone, but at least our principles are still intact!

Martin said...

Bryan Caplan is a fundamentalist idealogue. Sorry to say. But his book is full of illogical and contradictory arguments, mangled terms, cultural prejudice, and a whole lot of other weaknesses. It’s also pretty scary when you really think about what he is arguing for. Like a lot of cloistered academics, he’s hermetically sealed inside his own thinking and theories, and totally unhinged from the real world... past and present. I won’t recap the whole list of objections here... but it’s on my site. (literalmayhem.com)