Assignment #5

Last year, as an assignment for one of my classes, I spent a substantial amount of time tutoring students at the local elementary school.  The county that this school is located in has one of the highest poverty rates in all of Pennsylvania.   While tutoring there, I had time to talk with the principal and interview her about the affects of poverty on the children at her school where she revealed a lot of interesting information to me. 

In Chapter 5 of Poor Economics, the authors examine what they believe to be the reasons behind the problems in education in developing countries.  They discover that these societies only allow certain students, usually of a higher economic background, to succeed in school for a number of reasons while the poorer students slip through the cracks and get deprived of their valuable educations.  

In a Washington Post article titled, Public educations biggest problems get worse, The author comments on the intellectual potential of the poor, “There is always a big hullabaloo when American students score average on international tests, but the fact is that American kids in very low-poverty schools score as high or higher than anybody else on the planet.”  The authors of Poor economics touch upon a very similar topic in their section about “wastes of talent.”  The story of “Rangaswami”, the young man with little formal education who performed well on an intellectual test and became a leader in one of India’s biggest IT giants shows that talent exists in poverty just as much as it does for the lucky ones who can afford to be properly educated.  But the problem that both these pieces of writing bring to light is that stories like Rangaswami’s are rare, and recognizing the intellectual ability of the poor in the real world does not happen very regularly.  In other words, just because the poor have the same talent or intellectual ability as their richer competitors does not translate into real world success for them.  Most children of poverty who have not had the opportunity for proper education never find opportunities like the one that Rangaswami found.

So if education is the stepping-stone out of poverty, what keeps poor children form succeeding academically? The book and the article offer different views as to what is the right answer to this question.  Even though the article speaks only about poverty and education in the US, I believe it is still worth comparing the two.  One of the main arguments of the book is that teaching hinders the academic achievement of the poor because it is designed for the elite rather than for the regular children who attend schools. It offers supportive and convincing statistics that back its argument.  On the other hand the article offers a different opinion with regards to teaching, “But we need to face facts: Problems in schools would remain even if every teacher were magnificent”.  This is where the article seems to diverge from its initial similarities with the text above.  It says that poor teaching, and unreasonable curriculums are major hindrances to the poor’s success with education.  But poverty itself causes problems that are external to education, and even if the affects of teachers were perfect or held constant, these external factors would still cause problems.  I think both the article and the book offer different but valid arguments in what really hurts the poor with education.  While the book offers a very interesting case about the importance of good teaching, it would have been interesting for them to address other factors such as home life besides the monetary aspects of the ability of parents to afford education. 

During my interview with the Principal of the local elementary school, she told me that one of the biggest problems with poverty and education is the lack of help at home by parents.  What a child learns at school is very important but it is just as important that the information learned at school is reinforced and planted into the child’s brain at home. This absence of help at home stems from a range of problems, such as unreal expectations by parents that teaching should be left to the school only, or the inability of parents to help their children because of a lack of education themselves due to poverty. 

So is it outside the responsibility of the teacher for a child’s success if it is impossible for a child to learn at home? According to the Principal it is not, she said  that you can try your hardest to improve the home life for a child but ultimately it is the schools responsibility for the academic success of the child, “45 percent of the kids are eligible for free and reduced lunch.  No one knows who these kids are.  But if we just said, ‘well their parents can’t help them so they’re just not going to do well.’... would we really want half of the kids in the school not to make it?  So we have to find ways to give them those tools so that they can believe they can make it.” 

So it seems that both good teaching accompanied with addressing external factors outside of the classroom that hinder poor children such as home life are both important in helping children reach their full potential, and the more of these factors the school can account for, the more improbable success stories like Rangaswami’s will come true. 

Article link

http://www.washingtonpost.com/blogs/answer-sheet/post/public-educations-biggest-problem-gets-worse/2011/09/13/gIQAWGz2RK_blog.html

Assignment #4

In Poor Economics and Freakonomics we learned that the conventional wisdom is not always the truth.  What seemed like logical and probable conclusions often are not.  Could this be the case with unemployment insurance?

Unemployment is one of the most relevant, studied and debated topics in the U.S economy today.  It is a major measurement of how our economy is preforming.  Unemployment rates have reached great heights in the last few years and have been the main focus of most policy makers and economists. Having said that, I thought now would be an interesting time more than ever to see what really helps the unemployed find employment and what hinders them. 

The benefits from unemployment insurance come in the form of payments made by the government to people who register themselves as unemployed.  These benefits act on a timeline, and at a certain point, their beneficiaries stop receiving them.  In the application process to receive benefits from unemployment insurance, recipients must state that they will seek work and provide proof of current employment

While unemployment insurance seems like a good way for the government to bring financial stability to the unemployed, could it also be creating disincentives for the unemployed to find work? Or put differently, could monetary handouts cause the unemployed to have an incentive to stay unemployed for a longer duration of time?  This is the question I am hoping to answer through my research. 

The policy implications might be that maybe the government should create other incentives besides monetary ones for the unemployed.  Maybe giving handouts isn’t the right way to motivate discouraged workers and that in fact it promotes unemployment. 

 Most of the data I have found so far on this topic are of a micro-economic sort.  One of the data sets shows the relationship between persons unemployed for 27 weeks as a percentage of total unemployment.  This data set should give me a good idea of the average duration of unemployment.  Another data set that should be informative about the duration of employment is on the average duration vs. the total U.S unemployment annual rate.  For data about unemployment benefits I will look at a set of data that shows the average duration of unemployment of persons collecting unemployment insurance benefits.  Most of this data dates back from 1970 - 1950 to 2012. 

What might make estimating the affects of unemployment insurance on the duration of unemployment difficult is the amount of other factors that might go into the job search.   I imagine it would be difficult to account for psychological factors in my regression model such as the presence of mental barriers like being discouraged.  Also during recessions, when the demand for labor becomes much smaller, it might be harder to see if unemployment insurance really has an effect. 

Assignment # 3

Levitt and Dubner make an interesting argument that it is difficult to break away from “conventional wisdom.”  How often do we simply take as truth what we are told? When you listen to the news or read a statistic do you really question the validity of that statistic?  If that statistic reaffirms a belief that you have already developed it is even harder to question its validity. 

In “Drug Dealers Living with Their Moms”, the authors attempt to show that “conventional wisdom” or what is thought to be true as portrayed by the media can often be false.  Whether it is for a political motive, or an advertising ploy, individuals or groups often manipulate or exaggerate data for the purpose of their own self-interest. In the case of drug dealing in the inter-city of Chicago, the authors show that the media’s portrayal of “crack dealing as one of the most profitable jobs in America”, is wholly inaccurate.  But by creating an image of “millionaire crack dealers” destroying their communities, the media was able to focus and amplify public outrage on illegal drug distribution in he U.S.  However, by first questioning the conventional wisdom of the crack street dealer’s life style and then by examining the data recorded by firsthand observation of these low level crack dealers, the authors come to completely different conclusions about the life style and profitability of crack distribution by the street dealer.  Interestingly, the crack dealing business structure does not look too different than some of the corporate structures we see in the U.S. today. 

Four statistics that support the author’s conclusion are:

1.  “His three officers, meanwhile, each took home $700 a month, which works out to about $7 an hour.  And the foot soldiers earned just $3.30 an hour, less than the minimum wage”(100).

2.  “The top 120 men in the Black Disciples gang represented just 2.2 percent of the full-fledged gang membership but took home well more than half the money”(100).

3.  “In 2003, Texas put to death twenty-four inmates-or just 5 percent of the nearly 500 inmates on its death row during that time”(102).

4. “Fifty-six percent of the neighborhood’s children lived below the poverty line…Fewer than 5 percent of the neighborhood’s adults had a college degree; barely one in three adult men worked at all”(102).

The first statistic’s placement is imperative to the story because it provides a fact that quickly refutes the conventional wisdom that was conveyed by the media that drug dealing is a highly profitable endeavor.  With this one earnings statistic the authors are able to illustrate to the reader that not only is crack dealing not very profitable but in fact most American drug dealers are paid well below the minimum wage.  By using the first statistic to show that the conventional wisdom is wrong they can then move to the question of why is crack dealing unprofitable? 

The authors then present the second statistic to show that similar to many career paths in a capitalistic system, that large financial incentives lure people into a system to deal crack cocaine but the vast majority of these incentives are reserved for the people at the top of the operating hierarchy.  Even though the majority of crack dealers do not make it past the status of “foot soldiers”, the majority still dream that one day they will make it to the highly profitable top 2.2%.  So this capitalistic dream to rise to the top creates a high demand for crack dealers but a low amount of financially successful ones.  I found it very interesting when the authors related this idea of incentives in crack dealing to football players trying to rise to the NFL.  Even though the football career path is both legal and is not life threatening it still proves to be an improbable goal in bringing financial success except to a very minute percentage of football players.  At the same time so many men in poverty spend their time trying to reach this top financial bracket (whether in the NFL, NBA, MLB, or even a professional soccer league in less developed countries).  It would be interesting to see a study about this relationship between professional sports, income, and poverty. 

The next statistic about the amount of deaths that occur on death row in Texas is used as a comparison to the amount of deaths in crack dealing.  By making this comparison they can reinforce how undesirable the crack dealing profession should be.  Jobs that have high danger and risk usually pay better than low risk jobs, but crack dealing is incredibly high risk and pays very low. 

By using statistics to show that crack dealing is both an unprofitable and incredibly dangerous profession they then pose the question of why would anyone seek such a profession.  This question allows them to then insert a statistic that sheds light on their economic and cultural environment.  Because of their bleak environmental circumstances the poor are forced to grow up in, high paying legitimate jobs are not accessible to them.  Instead they see, reach for and start climbing the crack dealer corporate ladder. Many poor see it as their best possible option to climb out of poverty. 

Assignment # 2

Before reading this chapter I had never fully contemplated the amount of overlooked health benefits that I take as given living in The U.S.  These seemingly standard benefits such as having clean water in my house do not exist for the poor in developing countries.  I place my health in the hands of my doctor and trust that he is going to do what is right for me.  On the other hand, the poor have to add clean water, child immunization, and many other things that don’t pose a problem to the typical American to their already enormous list of tribulations in their daily lives. 

Similar to the discussions about nutrition as a hindrance to the economic improvement of the poor in the previous chapter, the authors identify disease and sickness as a major reason for cyclical poverty in developing countries and attempt to give an understanding of why they cant escape this cycle. The authors argue that the choices the poor make to spend their money on quick cures to diseases and sicknesses rather than to invest in prevention keeps them locked in poverty.  They also attribute this problem to that of under qualified doctors in the health care system that services the poor.   The authors show that things such faulty belief systems and procrastination keep the poor from getting immunized which is vital to their health.

One of the statistics that I found most interesting was in the section about how doctors in developing countries tend to under diagnose and overmedicate their patients.  The authors introduce certain statistics when talking about the low qualifications of public and private doctors in developing countries and how ineffective they are at helping their patients.  After this broader theme is introduced they then jump into the specifics of the doctor visits, “In our health survey in Udaipur, we found that a patient was given a shot in 66 percent of the visits to a private facility and a drip in 12 percent of the visits. A test is performed in only 3 percent of the visits.”

From this statistic they go on to hypothesize that the there is a problem with the public health system and the qualifications of the doctors that service the poor.  Instead of taking the proper steps to help their patients prevent illness in the future, doctors are instead looking for easy solutions such as antibiotics and steroids that hurt their patients’ immune system in the long run. 

While I completely agree that the under qualification of doctors in poor countries is a major issue, I wonder whether there other factors that cause doctors to overmedicate?  Could it be that the poor themselves understand the importance of preemptive steps but still demand quick solutions to their illnesses instead? Or, possibly the system is so over taxed that health care providers are constantly in the position of reacting to the serious illness that stand before them and they have little time for education and prevention. 

These questions go to the heart of the section of the reading about procrastination.  The poor probably understand that they should be getting immunized but often are too busy or just can’t find the time to actually get it done.  Every year when it comes time for flu season, I dread going and getting my free flu shot.  Even though I understand the benefits that I will receive from getting the shot, I often end up procrastinating and getting it at the last minute.  According to the CDC (The Centers for Disease Control and Prevention),“Last flu season, about 130.9 million Americans, or 43 percent of the U.S. population, received a flu shot.”  Assuming that it is not a lack of understanding about immunization, shouldn’t the U.S. as a first world country be 100% vaccinated?

So maybe the poor are not as unaware of preventative medicine as the authors make it seem.  Maybe the poor weigh the risks of forgoing leisure time or time that could be spent working against possible discomfort associated with catching the disease and make a rational decision not to act.  It may not seem rational to us to forgo disease prevention in the West.  But maybe in developing countries where the poor are forced to deal with all of the problems that are already solved for us they simply cannot find the time to take all of the steps to improve their health.