econlife - Who Will Sacrifice Civil Liberties During a Pandemic? by Elaine Schwartz

 

In a new NBER paper, a group of Harvard and Stanford scholars investigated how much of our civil liberties we would trade for better health conditions. Their data came from 370,000 individuals in 15 countries. Given to participants between March and October 2020, the surveys were ongoing.

As a teacher, I could not resist beginning with a quiz. Before seeing the results of the survey, do give it a guess. Starting with the country least willing to sacrifice civil liberties for better health conditions (#1) and ending with the place most willing (#14), please create a 1-14 ranking. (In this part of the survey, one of the 15 countries, Sweden, was excluded because of different data.)

The countries:

Australia, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Singapore, Spain, South Korea, The United Kingdom, the United States

The answers are in the five graphics that precede “Our Bottom Line.”

Civil Liberties Tradeoffs

Asked about the tradeoff through survey questions, 80 percent of the participants were willing to trade off some civil liberties for better health conditions. However, as you might expect there was a big difference between the United States and China. During a major crisis, four times as many U.S. respondents as those from China were unwilling to give up civil liberties. Among the Chinese participants, only five percent were unwilling to sacrifice rights.

The researchers, though, cited individual differences.  For certain people, as worry about the health risk went up–especially those most susceptible to COVID-19–so too did their willingness to give up liberties. Others valued civil liberties above all, They also found that individuals with less education, less attachment to the labor force, and (in the U.S.) racial and ethnic minorities were less willing to trade liberties. As for the time factor, initially, there was less willingness to give up liberties. Then, after June, attitudes plateaued.

Quiz Results

For the quiz results, it all depends on which civil liberty you select. The length of the bars reflects individuals’ unwillingness to give up that civil liberty. You can see that China is definitely last and respondents from Singapore (SGP) and India wound up with shorter bars. I found it interesting that “Endure Economic Losses” had the least resistance.

Sacrifice Own Rights and Relax Privacy Protections:

Suspend Democratic Procedures:

Sacrifice Free Press and Endure Economic Losses:

Our Bottom Line: Trade-offs

As always, looking at trade-offs through an economic lens, we can say that, “Choosing is refusing.” Furthermore, we should always keep in mind that every decision has a cost. Defined economically, cost is a sacrificed alternative that need not be money.

My sources and more: Today’s post was based on this new NBER paper. Ninety pages long, it has much more than I presented. I suggest taking a look. It is un-gated.

Our featured image is a National Park Service photograph of the Liberty Bell that is located in Independence National Historical Park.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - Six Handy Economic Ideas That Describe Our Coronavirus Response by Elaine Schwartz

Six ideas can summarize any basic economics course. They also can describe our response to the coronavirus pandemic.

Coronavirus Economics

1. Opportunity Cost

This is the big picture. Because the opportunity cost of a decision is what you decided not to do, choosing is always refusing. With coronavirus policy, some say we are choosing between the economy and safety– our wealth or our health.

Not so.

We’ve looked at a study from economist Austin Goolsbee. He and others have shown us statistically it’s not the lockdowns that slow the economy. It is the fear of illness. So, rather than a tradeoff, our health will fuel our wealth during the pandemic.

2. Demand

Defined economically, demand is an entire schedule of price quantity pairs. It is what we are willing and able to buy at each price. Naturally, thinking of saving money, we are willing and able to buy more at lower prices.

Now with the coronavirus, our demand has shifted. Whether looking at the U.S., India, the U.K., or Canada, demand for groceries, household goods, and medicines is up. The surveys took place on June 27th.

The U.S.:

India:

The U.K.:

Canada:

3. Supply

Defined economically, supply is an entire schedule of price quantity pairs. It is what producers are willing and able to provide at each price. Naturally, thinking of potential profits, they are willing and able to make more available at higher prices.

Now, with the coronavirus, supply has shifted. One example is the rerouting of the supply of food and paper goods from bulk buying institutions to individual households.

At econlife, toilet paper was one example. Imagine a fork in the road for our toilet paper supply. A part of it goes to commercial establishments from one group of paper mills. Those shipments typically move on huge pallets with more “utilitarian” recycled paper in larger rolls. Meanwhile, what we buy in the supermarket is typically 100 percent virgin fiber. It feels and looks better.

We could say that one market is commercial and the other is consumer. The problem though is that each has a different supply chain. Toilet paper is not alone. The bananas destined for restaurants and school cafeterias are smaller than what we buy in grocery stores. Indeed, all that used to flow through our restaurant and institutional supply chains have nowhere to go.

4. Monetary Policy

A country’s monetary policy relates to its supply of money and credit. During normal times, the money and credit supply matter. They matter because there needs to be a balance between what we can spend and what we produce. Sort of like the Goldilocks and the Three Bears, if there is too much to spend then prices rise. If there is too little, then we diminish production. The goal is “just right.”

It used to be simple to explain the Federal Reserve’s monetary policy. The Fed raises and lowers the discount rate that it charges banks for loans. It targets interest rates and the money supply by buying and selling government securities. And rarely, it changes financial institutions’ reserve requirements.

Now, because of the coronavirus, the Fed has become a lender of last resort by providing loans to banks so that they can loan money to you and me. Also, they are buying assets that help money market funds deal with withdrawals. In addition, the Fed is helping to implement the CARES Act stimulus programs and helping riskier businesses borrow money.

5. Fiscal Policy

Congress and the President are responsible for the spending, taxes, and borrowing that we call fiscal policy. During the pandemic, the fiscal policy headline has been the March 27, 2020 CARES Act. The following Wall Street Journal graphic makes it look very neat and clean. We should note that it was not.

But this was the plan for the Coronavirus Aid, Relief, and Economic Security Act:

6. International Trade

When it comes to medical supplies, international trade is especially relevant.

In 2018, the medical supplies we need for COVID-19 represented many billions of dollars of world trade: However, buying what we need for the COVID-19 pandemic has become increasingly difficult. By March 21st, 54 governments had declared export restrictions. The curbs included bans, government approvals, more stringent licensing rules, and state agencies cornering the market. All are examples of obstacles that block foreign purchases.

Globalization helps to increase our medical equipment supply. Even if restrictions temporarily increase local availability, ultimately, manufacturers have less incentive to ramp up production because their market is limited. Furthermore, the expense of restrictions can be costly for governments that need to allocate limited finances toward fighting the outbreak. Most crucially though, export curbs diminish the cooperation and trust that can help everyone.

And of course, I think of David Ricardo’s comparative advantage. Here, he would surely hope that nations with the lowest opportunity cost produce masks or ventilators. Only then will we optimize the worldwide output that we so badly need.

Our Bottom Line: Behavioral Economics

If we dug more deeply into each of our six ideas, we would see the change in our behavior. Nobel Laureate Richard Thaler would say that we are receiving nudges. Those tiny shoves are incentives that have transformed our daily lives.

My sources and more: Thanks to WSJ’s Andy Kessler for giving me the idea for this post. From there, I’ve returned to past econlife posts.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - What Our Time Costs Us by Elaine Schwartz

According to “The Time You Have (In Jelly Beans),” with one jelly bean for each day, 28,835 jelly beans represent all the days in an average life. Then in that life, 8,477 jelly beans show how much we sleep, 3,202 reflect how long we work, and 1,635 indicate the total days we devote to eating and preparing our food.

I do recommend using 2 minutes and 44 seconds (from the 42 million minutes in a typical life) for this jelly bean video:

So yes, we sleep for the equivalent of 8,477 days and work during 3,202 days. Now though, let’s take a closer look at how our our time use differs from the averages.

The Cost of Spending Our Time

In his new book, Spending Time, economist Daniel Hamermesh compares the ways that different groups of people allocate their time. The title is intentional. Just like money, the time we spend has a cost. Using it for one activity means sacrificing it for an alternative. The cost is the sacrifice.

Dr. Hamermesh starts out by telling us that a typical 79-year lifetime has 42 million minutes. From there, he creates a slew of distinctions. Depending, for example, on our affluence, where we live, and our age, we use those 42 million minutes differently. (Dr. Hamermesh did look at gender but so too did we at econlife, here.)

Income

Faced with time choices, those with more affluence have more alternatives. Here, Dr. Hamermesh selected the top 5% who earn close to $300,000 annually.

Earning more creates the incentive to work more. You would see a professor working six hours more each week than the U.S. average. At 10 hours more, doctors work even longer than is typical and for lawyers, the extra weekly time is three hours.

But, by working longer, there is less time for other activities. It means fewer hours are available for “home production” since preparing a meal and cleaning up afterwards are time intensive while eating take-out or going to a restaurant are not. However, they do require more money. The top 5% also sleep fewer hours, watch TV less than the rest of us, and spend more time on other leisure activities.

From there, Dr. Hamermesh observed a demographic that does not work. In the U.S., non-workers who are quite well-to-do spend fewer hours in front of the TV than those with less. The more affluent who don’t work also sleep less.

Country

People in the U.S. work more than individuals in most other developed countries. German workers on average are on the job eight hours less per week than we are while for the French, it’s six hours less. Perhaps correspondingly, the U.S. labor force takes less vacation time.

Age and Geography

When Dr. Hamerhesh looks at age, he points out that as people age from 60 to beyond age 85, they do less paid work. Then, with the time available, they watch more TV and sleep more. Interestingly, “home production” diminishes with age.

He also compares those of us who live in rural areas to those in the city and suburbs. Here, the people in our biggest cities work longer hours and do less TV watching. The one statistic that stands out for the rural demographic is more home production than the other two groups and less time for other leisure and personal activities.

Our Bottom Line: Opportunity Cost

Putting it all together, we wind up in familiar economic territory. It takes us back to opportunity cost and the elusive free lunch. Time use decisions always require a sacrifice. Called opportunity cost, choosing is refusing the next best alternative. When someone takes you out to lunch, you might have used that same time reading your email. Watching Netflix could mean you did not talk on the phone.

And when you earn more, spending time in the kitchen can become too expensive.

My sources and more: As did I you might enjoy reading (actually skimming and focusing on certain chapters that grabbed me) the Hamermesh book. But, for the short version, this interview conveys what he says. If you are choosing though, this Econtalk podcast has the lowest opportunity cost.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - How We Use Our Time by Elaine Schwartz

When we see our lives as a box of jelly beans, 79 years would equal 28,835. So yes, after the first year, we’ve used up 365. Then, setting aside 8,477 jelly beans for sleeping, we still have thousands left for work, preparing our meals, watching TV.

Do take a look at this 2013 jelly bean video to see how we allocate the hours of our lives. It uses data from the annual BLS (Bureau of Labor Statistics) American Time Use Survey (ATUS):

And here is the most recent survey from June 2018:

Where are we going? To a closer look at our leisure time.

Leisure

Since the 2017 ATUS, Americans increased their leisure time by seven minutes. The reason though is that we are older. And as you might expect, employed men had 33 more leisure minutes than women. As for what we did, it was probably watch TV although grandma and grandpa spent the most time in front of the set. Instead, it appears that computers and playing video games occupy close to an hour each day for 15-24-year-olds but only 13 minutes if you are 35-44 years-old. Sadly, reading is attracting less time among the young.

As the age group that works the least, people over 65 had the most leisure time. Meanwhile, their 35 to 44 year-old children had more than three hours less to watch TV, relax, read, and think:

Our Bottom Line: Opportunity Cost

Time use decisions always require a sacrifice. Called opportunity cost, choosing is refusing the next best alternative. When you eat pizza for lunch, you might have refused a salad. Watching a video could mean you did not talk on the phone. And picking up a penny prevents you from using those seconds for something else.

Similarly, whether it involves the work we could have done or exercising rather than reading, leisure always has a tradeoff. And whatever we did not do would have had benefits that we decided to forego.

Thinking of those tradeoffs, you might want to compare your time use to the averages:

My sources and more: For some extra detail, do take a look at this ATUS summary. Then, if you want even more, this is the entire survey and a blog that provides some additional insight. 

Meanwhile, the WSJ report provides some history.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - More on the Mom Penalty by Elaine Schwartz

During February, we had lots to say about the mommy penalty. Now there is more.

Our first stop is a cartoon and then a study from Denmark.

The Cartoon

In “You Should’ve Asked,” French cartoonist Emma perfectly sums up the mommy penalty in two words: Mental Load.

Emma tells us that, “When a man expects his partner to ask him to do things, he’s viewing her as the manager of household chores…So it’s up to her to know what needs to be done and when…” And to cope with home as her second full-time job.

This is a brief excerpt from a much longer (phenomenal) cartoon:

The Denmark Study

To remember the quantitative side of the mental load, just think, “20%.” From 1980 to 2013, the long run gender pay gap averaged close to 20%.

Who

Although the data is from Denmark, it is not just about them. Initially, the Scandinavian countries did have less of a gender pay gap. Then though, their progress slowed, others accelerated, and all of us are close to the same spot now.

Below, the convergence is evident:

Why

Asking why that gap continues, the authors of this study say it is the children. Women switch to more family friendly firms and jobs. They work for fewer hours. Their pay dives– initially down close to 30%. Meanwhile for men, no change.

You can see the drop for women right after a first child was born. Even 20 years later, it never bounced back:

Furthermore, this study’s authors emphatically believe that we have causation here, not correlation.

Our Bottom Line:  Human Capital

Because we are also talking about raising children, we can ask if it’s good or bad for them that women are drawn to the home.

If you support the “good” side, then comparative advantage comes into play. Thinking traditionally, you believe that women are more suited to childrearing.  Consequently, they should be doing more of it and accept the opportunity cost.

On the other hand, blaming outdated social norms, you could believe that moms who work should not be tethered to the home. The data below is from 2002 but might still prevail:

Whichever, your side, we can all agree that most women have more of a mental load in the home than their partners.

My sources and more: If you go to just one link after econlife, do see the entire cartoon. But if you do continue to the academic side, this paper is a possibility.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.