In our second round of FREAK-quently Asked Questions, Steve Levitt answers some queries from listeners and readers.
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I now continue. The fight learn more at three m dot com, slash covert. What kind of questions you think what you think Life advice, stock adviser more like you know, boxers are Brisco question when they ask questions from freakin on its radio, here's your house Stephen that now so you know I'm just a writer and a radio host, but my free comics friend and co author, Steve Levitt, he's a genuine phd,
research, economist at the University of Chicago, so once in a while, I like to drag him in front of my microphone the field, some questions from you, our listeners and from readers of the frequent comics blog. We call it frequently asked questions in our previous instalment. Levitt talked about, among other things, the value of voting. The economist take voting, just isn't a rational way to spend your time and energy, and not surprisingly, quite a few of you objected pretty strenuously the Levis message. I'm guessing today's programme will upset just as many of you, if not more. If I had to predict which answer is most likely to set you off predicting the future by the way is impossible, but we human beings can't help ourselves. That's actually the theme of an upcoming radio, our making now, but anyway, if I had to predict which answer from today's episode is most provocative. That's aids! When Levitt assesses the recent health.
A reform bill. He also talks about whether college education is as valuable as its made out to be and does increased policing in brazilian slums actually help stop crime. We sat down together my office a couple weeks ago. Liver area feel about this prospect today never been more ready. I, like the confidence confidence bordering on cocky Do you know me all right will begin? Let me hear the question for you something I've heard you talk about a lot interesting, that you've done some research on yourself on gains to education, so a reader named Jonathan Bennett asks college, education, no longer a factor or even a disadvantage when it comes to employment Levitt. What say you I thought
that never has anyone made a statement more faster than Jonathan, but then I thought I had meant that education would be no help or a disadvantage in the modern economy. So that of all this topic, Sid economists have studied. I would take one we are most certain about. Are the returns to education in and the numbers of people come up with over and over and that every extra year of education you get will translate into an eight percent increase in earnings over your lifetime. So someone who graduate from college would earn about thirty percent more on average than someone who only graduate from high school and if anything they returns to,
Education have gotten larger overtime. There is big, as I've ever been an end. I think it makes sense that the returns to education, our higher than they ve ever been because of how the economy has changed. It used to be that with a low education, you could get a good manufacturing job, a lifetime employment, but now with the chinese competition, for instance, almost all them infection jobs are gone because our chinese workers willing to work were able to do these jobs at wages that are in a one fifth, one tenth of what an american worker would demand to do it. So I do I was in a taxicab a few days ago in this is a story that really exemplifies how the economy's changing over the two way. Radio, the dispatchers voice comes- and he says, gentlemen, I'm looking for someone to pick up. One extra shift on the night shift in new taxicab driver. If you know someone they need to have experience and also need a college education, and I thought to myself: if you need a college education
I have a cabin this country, which I don't you need to have a college education for all. Let me ask you this: how does an economist anyone go about measuring so the gainst education at you talked about when you talk about a relationship between an extra year of college or are graduating from cauldron? future income. How do you know that you're not just measuring the people who go to college or more motivated, smart to start with and how t tease out and in the data? It that's a great question because so much of what we do and for economic supervision comics is all about distinguishing Coralie from causality and what you worry about us at the people who would have earned money already are the ones who get more education so trick is finding what I would call an accidental experiment. So you need is a way in which two seemingly identical people, because if some quirk of nature fate one indemnity much more education than the other, so maybe the best example, those it somewhat of an old one, comes from the Vietnam draft lottery
back in Vietnam, men were entered into this draft lottery and if you got a very low number meant you were like that. Go to Vietnam of yet a very high number immature safe. There was a way, however, over to avoid service which was to go to court. So what happened was the men who were unlucky, got bear draft numbers. Many more of them went to college than did the people who got the high draft numbers nothin wouldn't go to college, otherwise they went only to avoid going to Vietnam, so what the economists have done as if compared people who got kind of medium draft numbers, so they weren't you they'd be drafted or not, but in the end they had it not been drafted, but many of those men still went to college and they compare that group of people who are identical in principle to the people who were lucky and got really Hydra numbers and those hydra number fuel. They didn't have to go to cause. To avoid Vietnam to many fewer went to college and consequently if you follow them through the lives of people with the medium to have members who didn't go to Vietnam, many more went to college and compare them to the people with the Hydra numbers.
Who neither went to Vietnam nor went to college, and you see, returns to education of those kinds of numbers. I mentioned before about a thirty percent increase in earnings by virtue of going to cod forces stopping at high school. So that's pretty fast, saying, but also its interesting to me. Is it for these guys who got a really bad Vietnam draft number that actually turned out to be a really good thing for the outcome of their lives and that a lot of them went to college who might not otherwise have and therefore melted in it, I mean it's a strange unintended consequence of the Vietnam WAR Draft yeah right. That's right, though they absence was there a lot more money now economists are her, don't always want to say just as you have more money at about eleven, these guys had to suffer through cause. You guys you didn't want to be in college and and maybe possibly they would have been happier living a life where they earn less money and didn't entered this for years to go. You know right around hippy stuff or something like that. Who knows if there really better off, they certainly are more money.
coming up. Levitt shares this opinion on healthcare reform and it will not make his friends in the Obama administration very happy. Also A look at brazilian policing. Man can some many times. Thanks to Pennsylvania, lottery, scratch, ass, pennsylvanians or scratching their way to find and with new
every month, big top rises and second chance, drawings, excitements, always in order so try Pennsylvania, lottery, scratch, offer your ticket to fund and get yours. Did I keep on scratch? It must be eighteen or older. Please pay responsibly benefits older pennsylvanians every day. For economics radios brought to you by square. If you run a business. Oh, how important it is to have a healthy cashflow. That's why we. take payments with square either in person or online. You get your money fast access it instantly vs, where card a free business. Debit card or transfer it to your bank, account on you reschedule see all the ways Square can health at square dot com slash, go slash freak though nonsense, Economics, radio sponsored by wonder is business movers podcast when cocoa will it change their recipe to what they called new Coke in nineteen,
five: the backlash was swift and severe, and yet the man who drove the change Chairman Robert Goya's wetter pulled new coke from the shelves. in a matter of months, wonder is business movers explores boys what is controversial decision and the public response, but the real story of new Coke is far more human and complex list. To wonder. Is business movers podcast on Apple, podcast, Amazon, music or add free in the wondering Athens from W and Y see and eight p M american public media. This is free economics, radio, here's, your host, Stevens, Abner, replay, another one. Hey my name is heavily I'm from Denver Colorado. I have a question for you. What do you think of the Healthcare reformed pact in two thousand and ten? Thank you
Where are my friends in the Obama administration can be very happy with me, but I'd with here, I don't think it solved any of the important problems that were facing with healthcare. So virtually every economist would tell you that there were two things you needed to do to healthcare reform to materially improve the situation. The first was to break the link between the provision of health care and employment, and that is just an archaic element of our health care system, which really makes no tents and yet because of tax subsidies, its away that most help people get their healthcare through their employer aid. It shouldn't be, there's no good economic justification for it. And yet, if anything, I think this healthcare reform bill actually strengthen that links eyeing the very disappointing
economists in that regard, just explain why that Tibet idea so so people say why doesn't it make sense to have health care tied to employment? Well, yes, we want to turn the question around and say why, in the world of your starting from scratch, would you link it to implementing these no good reason? I mean for one thing: many people don't work, and so you are left with the situation with their people, work who get a boy who get healthcare through the employer and the people who don't work and they don't have an employer until you have to have these dual systems. There really is no intrinsic reason why your employer should provide healthcare other than the fact that we started doing a long time ago, and there are enormous tax subsidies to to doing so. At least it was called job lock it's difficult to change jobs and it leads to circumstances where we have to have these overlapping systems which are inefficient. Why,
There are also insurance not tied to your employer. I mean no one in the right moment. I will well my automobile insurance for retired, my ploy or the. Why would my health care and transport time employee just there's no fundamental reason why it should be done and what is it due to employers to make them have to be the people who d Shout healthcare? In other words there all these large firms that was begun at one thing, making software making cars whatever, but then also they need to devote an increasingly large share of their resources in their bandwidth to running an insurance programme for their employees as well. I think this is the right that did. You would think that if you heads firms,
specific jobs where they provide health care insurance that they'd be better than giving Fredo Layer, GM or whoever. It is in a good at making chips into Gonna make cars. Why should they be good at making healthcare? So so that's one piece of why you didn't like the healthcare reform, because it did nothing to weaken the link between employment and health care. What's the other reason in even bigger problem with healthcare today, which was not addressed at all. In the reform bill is that people aren't paying for the services they get its virtually the only partly calming where I can go out and get. any service? I want cancer treatment. Open heart surgery have a war, remove whatever it is, and I pay three dollars four to five dollars for it or nothing, even if it costs fifty thousand a hundred thousand dollars. And imagine if you had the same situation with automobiles, where I could show up at the car dealership- and I could say I wanted the Mercedes for free movement
so you can have them days for free. You gotta pay fifty thousand dollars worth you say why not? I have a in the alley, the right to free health, you're right. Why don't? I haven't inalienable right to to free Mercedes and to me it makes no sense that that health care is just like any other good in the economy and because we aren't charging people for it. What it costs to produce. People are inefficiently, consuming at their did, making the wrong choices, and you can tolerate that if it were small part of the economy, but now the healthcare feel fifteen twenty percent of GDP. We have to start treating it like what it is, which is another good people hate to talk about this trade off between your health and life in money. But but the fact is that, if not today, but sometime in the not too distant future, we're going to have to make trade offs
such as my grandmother is in a vegetative state being kept alive by machines pumping her heart and instead of the staff, paying for that they're gonna say: well, look you gonna pay for some of this. You can either take the huh Fifty thousand eyes will keep your grandmother line and use it for that or you can get you put, your kids were caught your choice and people gonna have to start making those Tufto and they won't be pretty and it won't be fun or happy, but it is just an economic society of scarcity and in a world where health care becomes more more costly, the scarcity is going to be more and more binding. We have
this tough choices said that are imbued with this more element, but nonetheless, it economic choice. When you get down to it, I didn't regatta Castro calling from some power in Brazil at the end of two thousand and ten, an army and the related police went up into this lumps defied truck dealers. They took a lot of weapons and drugs from them. Some say they lost millions of dollars over a period of two days. I what happens should we expect crime to decrease because of all the police repression, or should we expect I'm to actually increase, goes drug wars, affright refiners, robberies, crimes, best regards Ricardo. What he said actually occurred. I think neither of your predictions will come true. I think a third predicting will come true. My perspective is that the drug dealers
selling drugs and these values have a tremendous incentive to keep those areas safe. Nobody wants a goblin by drugs in a place where people again shod over their fate of getting mugged in so far more than the police. You don't really have that strong and set it when you think about it to keep crime low. The drug dealers need lawn order until I actually think two things will happen when you, cracked, on the Douglas, will really three for sure you make a lot harder on the drug dealers to sell drugged. So you will have that effective of reducing the number of drugs that are sold. My guess is so. If you go back to these neighborhoods, you will find that the amount of crime will have gone up dramatically after the please come with me.
then, before, and that both because the drug dealers will no longer have incentive to keep things clean and safe agenda and protect the buyers because they no longer beside the drugs, their number to the violence that surrounds drug dealing is all about the property right. It's about the drug dealers fighting with other drug dealers to find a place where they can sell their droughts. If you, if you make it impossible for these drug dealers to sell drugs in the fidelity of already established in then they're gonna, go find some other place to try to sell drugs and that can lead to conflict between gangs. I think there should be a spike of violence as a sword out trying to figure who's. Gonna have the right to sell drugs in the new place that their selling drugs, and so I think, in the short run, definitely you're going to see
more crime, rather less crime associated with the police coming in to these areas and an even more so because, as I remember, our brazilian police and brazilian police and not well known for their honesty and dedication to duty, in fact, I wouldn't be surprised based on what I didn't know what I know and in talking to people who were study brazilian place that indeed many of these police officers who are now gardens. Vessels are quite familiar with these areas, because the standard job of many brazilian police offers, when they're off duty, is to work for the drug dealers in developed, serving a security guard, fuzzy coupling of duties and laws that, does it our second instalment of frequently asked questions what they do another one, sometimes thanks for ever, one who sent in questions and sorry we could only get to a few of them free
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Transcript generated on 2021-03-17.