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Anti-Semitism and Anti-Americanism in the UK

John Farren, one of my British readers, and I swapped emails about C arol Gould's widely discussed screed in the Guardian on anti- Americanism and anti-Semitism in the UK. I liked John's thoughtful email so much, I wanted to share it with you: My initial reaction is that I am ashamed, angered, and apologetic about the behaviour of some of my fellow citizens. It is not so much the political views on display, though they are unpleasant enough, but the incredible discourtesy with which they were expressed which leaves me appalled. I have not been in London for 20 years, but I can only hope the most extreme behaviour is atypical. The taxi driver quoted just leaves me dumfounded; I can only suggest sheer idiocy coupled with a vile nature. The behaviour of 'Lady E' on the bus and the shopkeeper suggest to me that they are, frankly, mentally disturbed. In my recollection, most Londoners would go to almost any lengths NOT to interact with anyone else on public transport. Which may explain the failure of other passengers to intervene. Congratulations to the lady who finally pushed that obnoxious woman away. As for the shopkeeper, apart from being unbalanced, I would take him for a rather nasty specimen of anti- Semitism, who frankly needs a rather physical lesson in manners. In regard of Ms. Gould's more general experiences, I think at least part of the explanation may be her social milieu. She mentions, for instance, "a Human Rights Conference at my local synagogue", and "my trade union, the National Union of Journalists". It is in precisely those circles that far-left idiocy is likely to be particularly prevalent. Certainly the NUJ and at least one teachers union, the NUT, which is the one I suspect she refers to, have both tended to very high levels of SWP and other neo-communist/Trotskyite activity. And as a playwright I suspect her acquaintances from the metropolitan arts establishment would have a MUCH higher than average ratio of moonbats. I would venture to suggest that similar levels of a rather different extremism, i.e. anti-Bush or even anti-"capitalist Amerika" might be found in similar circles in Manhattan or San Francisco, for example. As regards anti-Semitism as a force in Britain, I think Ms. Gould is mistaken. She states: "Europe has always been a seething hotbed of anti-Semitism. England, sadly, has the distinction of being the very first country to expel its Jews and initiate the Blood Libel." As Briton, and having due regard for Ms. Gould's distress, I have to say I take extreme exception to being linked to "the Holocaust, the Inquisition and other genocides." It is at least as unfair as, say, linking the United States to the Conquistadores in Mexico, or other events in Latin America, on grounds of relative geographic proximity. Yes, granted, England did expel the Jews in 1290; a shameful episode, and emblematic of the influence of anti-Semitism in Medieval Christendom, but that was an entirely different society. We are indeed its heirs, for good and ill, but I would argue no more and no less than all the other heirs of that civilization, among which I would include the USA. That Cromwell did readmit the Jews, and subsequent regimes never, as far as I am aware, considered reversing this, must go some way to argue against perpetual and innate Jew-hatred. That Jews feel they worship only at the dispensation of the sovereign is a complaint I have NEVER heard before. Technically, it may be true (I would need to check the law) but I suspect only insofar as ALL religions and denominations other than Anglicans are only tolerated by Act of Parliament (NOT royal whim). Practically this has been irrelevant since the effective end of Anglican legal political ascendancy in early 19th Century, and arguably since the advent of toleration in the 18th. For the situation in Britain today, consider politics. The main opposition party, the Conservatives, are lead by Michael Howard, who is Jewish. Considering the desire of the Conservatives regain office, it is unlikely that they would have chosen Howard as leader if they thought this would damage their chances. Again Howard is an ambitious politician. If he had reason to believe that a majority of the population was anti-Semitic - and his pollsters would most certainly have told him so - he would hardly have chosen Oliver Letwin, also Jewish, as Shadow Chancellor. I have NEVER heard anyone cite Howard's or Letwin's Judaism as reason not to vote Conservative (and I've heard LOTS of other reasons against.) Again, under Margaret Thatcher and John Major, numerous senior ministers, including two Chancellors, were Jewish. Not a peep, AFAIK. Not even from died-in-the- wool Labour opponents. For that matter, Benjamin Disraeli, of a Jewish family converted to Christianity, was P.M. under Queen Victoria. If Britain were as anti-Semitic as Carol Gould suggests, would any of this be possible? I am not saying anti-Semitism is unknown in Britain; sadly it is not. And I am disturbed by the extent to which criticism of Israeli policies, of which I have in the past been highly critical myself, can shift into degrees of anti-Zionism, and thence to outright anti- Semitism, or at least providing 'cover' for it. Anti-Zionism is a difficult area. If it means arguing that Israel must withdraw to the 1967 frontiers, and that the West Bank settlements are illegitimate, then it is hardly beyond the pale, albeit incredibly unrealistic, given the lack a credible negotiating partner for the Israeli's to make a settlement with. If it means that, historically, the foundation of Israel involved injustice to the pre-existing inhabitants of the Palestine Mandate, and that the Balfour Declaration was a mistaken and rather irresponsible ploy, that too, I think, is an acceptable historical judgement. But if it means the rejection of Israel's legitimate statehood and right to exist NOW: the line of outright anti-Semitism is crossed, I believe. Many of the proponents, especially on the Left, would passionately deny anti-Semitism, and indeed I think they genuinely believe this to be true. In reality, though, they are ignoring the implications of their positions, and consequences if they were to be implemented, perhaps out of sheer intellectual laziness and moral self- satisfaction. Also, this viewpoint rapidly tends to involve extreme conspiratorial explanations of the role of the "Jewish lobby" or "neo-cons" or "fundamentalists" etc. in American politics. This can be seen among elements of both left and right, and readily blends with strains of anti-Americanism. This in turn tends to lend legitimacy to the really severe, violent anti-Semitism seen in some fringe groups of the Far Right i.e. neo-Nazis ? a very, very tiny minority, but nasty (the 'Combat 18' thugs and such scum); and certain radical/jihadi Muslims - a minority of the Muslim population, but a worryingly large minority among Muslim youth in some locales. The expression of such attitudes in the media has definitely followed a rising trend over the last 20 years or so, and I think shown a marked upturn since the start of the 'Second Intifada'. Similarly, there has been some elements of rumbling anti-Americanism on left (re. economics, Cold War, NATO) and a fringe of the old right (culture, imperialist nostalgia) since 1945. This fringe anti-Americanism continued in a steady undercurrent of lurid portrayals of the US during the 1990's, regarding say, corporate capitalism and globalization, or caricatures of scary fundamentalists and 'gun-nuts', or 'trash culture and junk food', or (on a few marginal fringes of the left and right) American 'imperialism' in the Gulf War or Bosnia/Kosovo. I think on the left, there was an increasing strain of bitterness that the old models of socialism had collapsed, and a growing search for a new way to challenge the triumph of the West and liberal market-capitalism: anti- globalism and extreme environmentalism among them. On the other hand, the "progressives" were often split; for example, while a fringe attacked Clinton's move to intervene in Yugoslavia, other were in favour. Then comes the Bush administration, the denunciations become ever more frantic: and remarkably similar among the far left here and in the US. Then of course 9/11, G.W.O.T., 'axis of evil', Afghanistan, the UN farrago, Iraq. And US/UK 'unilateralism' becomes suddenly an approach all progressives condemn, with Kosovo vanished down the memory hole. Why? I'm still not sure. Because it's Bush not Clinton? Because the jihadis are somehow the 'wretched of the earth', the 'third world other'? Because of world poverty (as expressed by a Saudi millionaire and his a Because of the oil-twitch of anti-globo's and greens? Because its to do with the Middle East so it MUST be all because of Israel? Because (insert favoured neo-con related conspiracy here). Because (insert favoured 'ask yourself why they hate you' line here). A storm of noise. But how much more influence with the public at large, compared to previous times? Not that much, I would argue. Sure, there have been anti-war protests. But there were the massive anti-NATO protests and sustained campaigns, back in the 80's, to name but one. How much did that represent or mobilize a politically potent movement of public opinion? In reality it was a marginal and ineffective movement that got attention out of all proportion to its depth of support, simply because it became fashionable in certain circles. These views, anti-American or anti-Israel, are NOT generalized among the British people, but among the "progressive" or "liberal" (largely metropolitan) elite. In my experience, with regard to Israel most folk are of a "none-of- our-business, let-them-get-on-with-it" inclination. Negative views of Israel have probably increased with the presentation of the news by the BBC and certain other elements of the media. As for America, generally it has been seen as a valuable ally, albeit with peculiarly different politics, with a (usually) dynamic economy and general standard of living to be aspired to, a pioneer of science and technology, an intriguing and innovative source of popular culture from which elements could be selected and modified for ourselves. On the whole the working class were more enthusiastic about adopting and adapting American cultural innovation, the traditional middle classes -because more comfortable in the Old Order - less so, but resigned to having to adapt to change. (The position was often reversed with regards to adoption of American models in business, industry and economics.) Gould states: "Open loathing of both groups (Americans and Jews)...dominates daily life outside the United States today." Well, it's news to me. Perhaps because I have just missed it, but I have had only one (short) conversation with a person I would categorize as definitely anti-Semite; and only a few who I would place as most likely anti-American. (I am discounting here those, still a fairly small number, who are inclined to say something like "Americans, mean well but a bit naive", or similar.) A few more rather extremely anti-Israel but not necessarily anti-Semitic. A handful, all told. Perhaps this is because, as a rule, most ordinary English, in my experience, would rather chew off an arm than discuss politics outside their closest circles. (That goes double for religion, most of the time.) I suspect the London "progressives" may differ in this, as in other things. Also (some)university students. Or it may be because I am a moderately educated person of English Midlands working class/lower middle class background, whose friends, family and acquaintances are mostly of the same sort. I would argue, likely a more representative sample of the majority of the population than the Arts/Media types Ms. Gould most likely moved among. As she says: "What is significant about this rage is that it emanates not from the great unwashed but from the educated and intellectual classes." ("Great unwashed", eh? Memo to self, must wash more often.) I will now introduce a pet theory of mine as to WHY extreme anti- Israel, and varying degrees of anti-American sentiment is so prevalent among the "progressives" (and thus why Carol Gould was highly likely to encounter them in her circles). Israel along with "anti-globalization" has become the last of the "grand international causes" of the "progressives" in the UK; causes that were particularly prominent in student politics. Anti-Vietnam war, anti-apartheid, CND, etc. etc. have come and gone, their objects either achieved or becoming irrelevant. But the "Palestinian cause" is a survivor, and "anti-globo" the newcomer. Why do I think this significant? Because for a someone from a "student radical" background, probably with a good case of middle-class guilt, now in a highly paid job in London in the media, the "creatives", the Arts Establishment, or similar, how can they maintain their self-image of being a "radical"? Old-style socialism of nationalized industries, command economy, punitive taxes is dead, and in any case economic leftism is a little uncomfortable to contemplate when one is living well above the national average. What better than personally painless radical poses: "Green" positions that may impact the industrial working class in the provinces, but not the "weightless economy" in the capital; and/or Israel and/or the USA's positions as sources of "injustice" and "tensions" in the world. The very disconnection with the practical consequences encourages a slide towards extremes, and the lack of practical political power to effect them seems to induce an increasingly hysterical emotional tone and abandonment of rationality. For instance, Margaret Drabble in her infamous article from about year and a half ago - can't find the URL, but part of the article is in a clipping file somewhere ...Here it is: "My anti-Americanism has become almost uncontrollable ... I now loathe the United States and what it has done to Iraq and the rest of the helpless world.... the ... image, of a row of American warplanes, with grinning cartoon faces painted on their noses. Cartoon faces, with big sharp teeth. It is grotesque. It is hideous." So it is, Margaret, but perhaps not quite the way you think. As I say, hysterical, irrational. And there is plenty of it, in columns in the Guardian and Independent, and indeed distorting their news coverage too. One only has to consider the "news" reports of Robert Fisk, in which I can recall numerous direct linkages of the Vietnam War, Israel/Palestine, Central America in the 80's and American policy today. And similar attitudes are, I think, distorting the news coverage by the BBC too; it is not that they think themselves unobjective: it is rather that "right-on", "PC" attitudes have become almost universal, de rigueur, in their circles. An example of these people's attitudes may be seen in the 'Question Time' audience Carol Gould refers to. However, it is a big jump from these circles to the majority of the public. One only has to consider how far opinion polls diverge from "progressive" stances on a whole range of issues. Not just views of the US (to which some of this group may profess at least formal "friendship", if only the Americans would elect a more agreeable government...Kyoto...ABM...ICC...UN...blah, blah, blah), but on such domestic issues as, say, capital punishment, punitive treatment of criminals, right to self-defence etc. In fact I think the increasingly shrill pronouncements are a symptom of their failure to shift public opinion or government policy as much as they would like. They have had effects, often damaging ones, especially in conditioning fashionable attitudes, but are constrained by the political limits on their power. The bulk of the population just ignores them, for most of the time, but any steps that would damage material or national security interests could provoke a sharp reaction. Therefore any government with political antennae, like the present one, even if based on a party with a significant constituency of activists and politicians sympathetic to "progressive" positions, will calculate potential electoral consequences carefully. To be clear, I am personally from a traditional Labour background, and though I have moved towards the centre, especially on economic policy, my position on a lot of issues, the war on jihadism aside, would likely be at considered at least "liberal" if not "far left" in America. (I might be classed as a "Hitchensite" perhaps?) However, I have nothing but contempt, even when I agree with their policy preferences, for comfortable upper-middle class elites playing at being "radical", who all too often regard the views of the majority of their fellow citizens with barely disguised scorn. Practically, those who treat serious matters of the national interest and national security as secondary to maintaining the "correct" political stance or the internal politics of various institutions are failing their country. Ethically, those who place opposition to Israel, or the US in general, or the Bush administration in particular, above opposing fascistic tyranny, theocratic backwardness, terror and mass-murder, appear to me to be outside the honourable traditions of British liberalism and the Labour movement, and not "progressive" at all. (OK, and Conservatism too.) They ignore the pragmatic lessons of history, and the requirements of both morality and necessity. I cannot believe they will ever gain the ascendancy in my country. I hope I am not being over-optimistic.

Is the Supreme Court Coherent?

In today's NYT, Harvard law prof (and Reagan-era SG) Charles Fried argues that the Supreme Court under Rehnquist has consistently pursued a policy of promoting classical liberalism:

Since the mid-1970's the Supreme Court has been fashioning a series of doctrines that have been characterized as conservative, though I would call them liberal with a small l, the liberalism of classic individualism. These decisions - about race, free speech and campaign finance, property rights, constitutional criminal procedure, religion and federalism - have not, as their opponents have caricatured them, been extreme or lacking in nuance. ...

BS. Yale law prof and blawgger Jack Balkin correctly points out the rather simple error in Fried's analysis:

What decisions like Casey v. Planned Parenthood, United States v. Lopez, and Hibbs v. Department of Social Services have in common is not they are are all classical liberal decisions. What they have in common is that Justice O'Connor joined in them or wrote them. So perhaps Charles is really saying that he wishes that O'Connor was more of a classical liberal, and that she has disappointed him in Grutter (the affirmative action case) and McConnell (the campaign finance case). Fair enough. But one shouldn't expect a swing Justice like O'Connor to match a particular coherent political ideology. That's simply not what such Justices do. And don't expect a Court whose decisions depend on what swing Justices do to produce a coherent political ideology. That's not what multimember bodies do, either.

Exactly right. My professional life is devoted to studying a multimember decisionmaking body called the board of directors. Multimember decisionmaking bodies have a very hard time hewing to a coherent policy with respect to widely disparate decision opportunities. For one thing, group members often vote strategically. Vote trading is common on boards (and presumably on multimember courts of judicial biographies are to be believed). As I pointed out in my article, Why a Board? Group Decisionmaking in Corporate Governance, although we might assume that group decision making has a moderating influence, social dilemma experiments demonstrate that groups actually make more extreme decisions than individuals. Finally, basic collective action problems, such as Arrow's Impossibility Theorem, suggest that group decisionmaking can often cycle between competing preferences. In sum, Supreme Court decisions reflect the personal policy preferences of a temporary and often-shifting alliance of 5 or more justices, but cannot be expected to consistently reflect a dominant ideology in the absence of a much more cohesive grouping than exists on the Court today.

Beaulieu Vineyard Chardonnay (Carneros) 2002

Toasty oak, pineapple, green apples, and a touch of nutmeg. Excellent value for the money (I paid $11), which bumped the grade up a notch. Grade: B

E. Guigal C�tes-du-Rh�ne (C�tes-du-Rh�ne) 2001

In 2001, Guigal's basic C�tes-du-Rh�ne is a deep ruby. The nose is clean and somewhat complex, evoking wild blackberries, prunes, lilacs, and dusty herbs. The palate offers up similar flavors, as well as a strong suggestion of game and anise. Excellent mid-week quaffer at a very reasonable price (I paid $12). Grade: B

Are We All Behaviorists Now?

My latest TCS Daily column

The Wall Street Journal (sub. req'd) recently published a fascinating article on the debate between efficient capital markets theorists (exemplified by Eugene Fama) and behavioral economists (exemplified by Richard Thaler). As the Journal explained:

For forty years, economist Eugene Fama argued that financial markets were highly efficient in reflecting the underlying value of stocks. His long-time intellectual nemesis, Richard Thaler, a member of the "behaviorist" school of economic thought, contended that markets can veer off course when individuals make stupid decisions.

In May, 116 eminent economists and business executives gathered at the University of Chicago Graduate School of Business for a conference in Mr. Fama's honor. There, Mr. Fama surprised some in the audience. A paper he presented, co-authored with a colleague, made the case that poorly informed investors could theoretically lead the market astray. Stock prices, the paper said, could become "somewhat irrational."

Coming from the 65-year-old Mr. Fama, the intellectual father of the theory known as the "efficient-market hypothesis," it struck some as an unexpected concession. For years, efficient market theories were dominant, but here was a suggestion that the behaviorists' ideas had become mainstream.

"I guess we're all behaviorists now," Mr. Thaler, 59, recalls saying after he heard Mr. Fama's presentation."

The debate between Thaler and Fama matters a lot -- a whole lot.

The efficient capital markets hypothesis (ECMH) is one of the most basic -- and influential -- principles of modern corporate finance theory. During the 1980s, for example, the Securities and Exchange Commission (SEC) relied on the ECMH to justify many deregulatory initiatives. In the capital markets, acceptance of the ECMH by investors drove the burgeoning popularity of indexing as an investment strategy. The ECMH's validity thus has enormous implications both for the way in which we invest and how the government will regulate the capital markets. As the Wall Street Journal put it, the debate affects a host of "real-life problems, ranging from the privatization of Social Security to the regulation of financial markets to the way corporate boards are run."

The ECMH's fundamental thesis is that, in an efficient market, current prices always and fully reflect all relevant information about the commodities being traded. As applied to stock markets, the ECMH thus has two principal implications. First, stock prices follow a random walk. Put another way, the ECMH predicts that price changes in securities are random. Randomness does not mean that the stock market is like throwing darts at a dart board. Stock prices do go up on good news and down on bad news. Randomness simply means that stock price movements are serially independent: future changes in price are independent of past changes. In other words, investors can not profit by using past prices to predict future prices.

Second, the ECMH posits that current prices incorporate not only all historical information but also all current public information. This form predicts that investors can not expect to profit from studying publicly available information about particular firms because the market almost instantaneously incorporates information into the price of the firm's stock.

The ECMH assumes investors are rational actors whose behavior is consistent with that predicted by the rational choice model. Over the last decade or so, behavioral economists (such as Thaler) have drawn on experimental economics and cognitive psychology to identify systematic departures from rational decisionmaking, even in market settings. Put another way, behavioral economics claims that humans tend to make decisions in ways that systematically depart from the predictions of rational choice.

The ECMH has been one of the behavioralists' favorite targets. Thaler and others have argued that markets are made of human actors, who bring to bear their own individual foibles. Idiosyncratic valuations generate noise that may skew the market's valuation of stock prices. (Just as it is hard to carry on an accurate conversation in a noisy room, it is hard to accurately value stocks in a noisy market.) Research in cognitive psychology suggests that investor idiosyncrasies do not always cancel one another out. Instead, investors sometimes act like a herd all running in the same direction, which can produce pricing errors. Large speculative bubbles that appear out of nowhere and crash without apparent reason are the most visible form of this phenomenon.

The behavioralists have also identified a host of lesser anomalies that are hard to explain in ECMH terms. Stocks tend to suffer abnormally large losses in December and on Mondays. Stocks with low price/earnings ratios tend to outperform the market, as do stocks of the smallest public corporations. Big round numbers (like 10,000) tend to act as psychological barriers. And so on.

So is Thaler right? Are we all behavioralists now? Well, perhaps not quite.

There is considerable evidence that markets adapt to investor irrationality over time. If investor irrationality produces pricing errors, it becomes possible to profit by taking advantage of them. At one time, for example, the capital markets showed a systematic bias against small cap firms. As a result, it was possible to earn abnormal returns by investing in a portfolio weighted towards small caps. Over time, many investors did so, including a substantial number of mutual funds that specialized in small cap investing. As a result, the small cap anomaly gradually faded to the point at which it was no longer possible to systematically beat the market by investing in them. We have observed much the same with respect to other anomalies. Hence, there is considerable evidence that experienced traders can learn their way out of the irrational behavior patterns that lie at the bottom of so many market anomalies.

Accordingly, while the ECMH may not be perfect, it still probably does a better job of predicting market behavior over time than any of the behavioral theories. Indeed, Richard Thaler apparently admitted as much to the WSJ:

Mr. Thaler ... concedes that most of his retirement assets are held in index funds, the very industry that Mr. Fama's research helped to launch. And despite his research on market inefficiencies, he also concedes that "it is not easy to beat the market, and most people don't."

So where are we? It is clear that behavioral economics can identify instances in which the capital markets are inefficient, some of which persist for very long periods and /or across many market sectors. Yet, on balance, the capital markets still appear to be pretty efficient, if not perfectly so.

What then should investors and regulators do? As for investors, they should still treat Burton Malkiel's Random Walk Down Wall Street as the investment bible. In the last section of Random Walk, Malkiel distills ECMH and the related concept of portfolio theory into an eminently practical life-cycle guide to investing based on two propositions. First, diversification. Second, no one systematically earns positive abnormal returns from trading in securities; in other words, over time nobody outperforms the market. Mutual funds may outperform the market in 1 year, but they may falter in another. Once adjustment is made for risks, every reputable empirical study finds that mutual funds generally don't outperform the market over time. Malkiel's recommendation therefore is that you should put your money into no-load passively managed index mutual funds, which by the way appears to be precisely where behavioralist Thaler puts part of his money even though he also operates a investment advisor that uses behavioral principles.

As for regulators, because the ECMH is often brought to bear as a justification for deregulation in politically charged policy disputes, such as mandatory corporate disclosure and insider trading, those who support regulation of such areas find comfort in the behavioral critique. One problem with such arguments, of course, is that it takes a theory to beat a theory, and no behavioralist theory yet advanced does a better job of explaining the vast bulk of stock market phenomena than the ECMH.

Assume, however, that markets frequently behave irrationally due to behavioral biases. The mere existence of such a market failure does not -- standing alone -- justify legal intervention. In addition to the standard prudential arguments in favor of limited government, which counsel caution in concluding that a purported market failure requires government correction, behavioral economics itself argues against presuming the desirability of intervention. As NYU law professor Jennifer Arlen observed in a Vanderbilt Law Review article:

"Proposals designed to address biases generally entail the intervention of judges, legislators, or bureaucrats who are [themselves] subject to various biases. The very power of the behavioralist critique -- that even educated people exhibit certain biases -- thus undercuts efforts to redress such biases. In addition, the decisions of government actors also may be adversely influenced by political concerns -- specifically interest group politics. Thus interventions to "cure" bias-induced inefficiency may ultimately produce outcomes that are worse than the problem itself. "

In other words, the claim that law can correct market failures caused by decisionmaking biases or cognitive errors treats regulators as exogenous to the system. Once the state is indigenized, however, regulators must be treated as actors with their own systematic decisionmaking biases. It thus becomes evident that behavioral economics loops back on itself as a justification for legal intervention.

My bottom line? Put your money in passively managed index funds and vote for free markets.

Liveblogging Lindgren

Volokh Conspirator (and NU law professor) James Lindgren is here at UCLA today to present a paper on Chasing Cherished Superstitions About Conservatives to the Federalist Society. I'm a big fan of Lindgren's work, which is widely acknowledged to be fair and balanced in assessing empirical data. His talk today is a reply to the "study" by John Jost et al. that "found," as Byron York put it, that "conservatives are crazy."

Lindgren points out some flaws with the data Jost et al. used. First, they use a definition of conservative that includes people like Hitler and Stalin. Second, the data they rely on claims that women are more conservative than men, while Lindgren points out that every major survey find the opposite. Third, the surveys used in the Jost et al. meta-analysis assume that conservatives are less well-educated than liberals, while the widely used General Social Survey finds the opposite.

An email by Lindgren that was quoted some months ago by a blogger summarizes some of the many other data points Lindgren offers as rebutting the Jost analysis:

The Jost article claims that conservatives are angry and fearful and it builds on a literature that claims that conservatives are unhappy. I find this strange, given the decades of superb data showing the opposite. In the NORC General Social Survey (a standard social science database, second only to the U.S. Census in use by U.S. sociologists), the GSS asks the standard survey question about happiness in general. In the 1998-2002 GSS, extreme conservatives are much more likely to report being "very happy" than extreme liberals--47.1% to 31.6%. Earlier years show a similar pattern.

This conservative happiness carries over into most other aspects of life as well. Conservatives usually report being happier in their jobs than liberals. In the 2002 GSS, for example 65.2% of extreme conservatives report being "very satisfied" with their jobs in general, while only 50% of extreme liberals report being very satisfied. When the question is broadened to satisfaction with job or housework, a similar pattern obtains. In the 1998-2002 GSS, 61.0% of extreme conservatives reported being very satisfied, compared to 53.6% of extreme liberals.

As to finances, in the 1998-2002 GSS 34% of extreme conservatives report being satisfied with their finances compared to 26.4% of extreme liberals. More extreme liberals (34.5%) than extreme conservatives (25.8%) report being "not at all satisfied" with their finances.

Conservatives usually tend to report less marital unhappiness than liberals. In the 1998-2002 GSS, 5.1% of those who report being "slightly liberal" say that they are "not too happy" in their marriages, compared to 0.9% of those who are "slightly conservative." Ordinary liberals (3.7%) and extreme liberals (8.9%) also differ from ordinary conservatives (2.4%) and extreme conservatives (4.1%) in the levels of reported marital unhappiness. Indeed, in the 1998 GSS, 18.2% of extreme liberals reported that their marriages were "not too happy," while only 1.6% of extreme conservatives reported marital unhappiness.

Earlier General Social Surveys found that conservatives were more satisfied with their health, their friendships, their family life, and the city or place they live--all in all, a remarkably consistent picture.

Another claim in the Jost paper is that conservativism is driven by anger and fear. Again, their claims conflict with some of the highest quality data available. In the 1996 GSS, questions were asked about anger and fearfulness. Extreme conservatives were much less likely to report being mad at someone every day in the last week--7.3% to 24.2% for extreme liberals. Extreme conservatives were also less likely to report being fearful in the last week--32.5% to 56.3% for extreme liberals. In other words, a staggering one-quarter of extreme liberals report being mad at someone EVERY DAY and most extreme liberals report being fearful at least once a week.

I am surprised that the Jost group was not aware of the very strong and remarkably consistent data that conservatives report being happier than liberals about their lives in general, their jobs, their finances, their health, their friendships, their family life, and where they live. Nor does the Jost group deal with the less extensive data suggesting that conservatives are less fearful and less angry than liberals. I will have to look into more of the studies that Jost cites to see why these fairly obvious patterns are missed. I wonder whether Jost relied too much on studies that either used unrepresentative samples (such as undergraduates) or used biased questions or indices -- asking about issues on which conservatives tend to be unhappy but not about issues on which liberals tend to be unhappy. In either event, the Jost group seems to have missed decades of very high quality survey data that undercut their thesis.

More by Lindgren on this topic here. See also non-Lindgren commentary here.

All of this does raise an interesting question: what makes someone a liberal or conservative? Nature or nuture? Environment, education, or economic success/failure? My guess is that conservatives and liberals tend to be born, not made. Doubtless factors like environmental and class play into it, but my guess is that we tend to be hardwired for one side or the other. (When I asked Lindgren this question, he suggested looking at twin studies, which apparently are the classic way of doing nature versus nurture studies. A post over at the 2Blowhards discusses a twin study that seems to confirm the nature hypothesis.)

Sidenote: Lindgren notes that he can't study libertarian attitudes is because the number of people who self-report to the GSS as libertarians is so small that they don't even collect the data. Heh.

Liveblogging Lindgren

Volokh Conspirator (and NU law professor) J ames Lindgren is here at UCLA today to present a paper on Chasing Cherished Superstitions About Conservatives to the Federalist Society. I'm a big fan of Lindgren's work, which is widely acknowledged to be fair and balanced in assessing empirical data. His talk today is a reply to the "study" by John Jost et al. that "found," as Byron York put it, that "conservatives are crazy." Lindgren points out some flaws with the data Jost et al. used. First, they use a definition of conservative that includes people like Hitler and Stalin. Second, the data they rely on claims that women are more conservative than men, while Lindgren points out that every major survey find the opposite. Third, the surveys used in the Jost et al. meta-analysis assume that conservatives are less well-educated than liberals, while the widely used General Social Survey finds the opposite. An email by Lindgren that was quoted some months ago by a blogger summarizes some of the many other data points Lindgren offers as rebutting the Jost analysis:

The Jost article claims that conservatives are angry and fearful and it builds on a literature that claims that conservatives are unhappy. I find this strange, given the decades of superb data showing the opposite. In the NORC General Social Survey (a standard social science database, second only to the U.S. Census in use by U.S. sociologists), the GSS asks the standard survey question about happiness in general. In the 1998-2002 GSS, extreme conservatives are much more likely to report being "very happy" than extreme liberals-- 47.1% to 31.6%. Earlier years show a similar pattern.

This conservative happiness carries over into most other aspects of life as well. Conservatives usually report being happier in their jobs than liberals. In the 2002 GSS, for example 65.2% of extreme conservatives report being "very satisfied" with their jobs in general, while only 50% of extreme liberals report being very satisfied. When the question is broadened to satisfaction with job or housework, a similar pattern obtains. In the 1998-2002 GSS, 61.0% of extreme conservatives reported being very satisfied, compared to 53.6% of extreme liberals.

As to finances, in the 1998-2002 GSS 34% of extreme conservatives report being satisfied with their finances compared to 26.4% of extreme liberals. More extreme liberals (34.5%) than extreme conservatives (25.8%) report being "not at all satisfied" with their finances.

Conservatives usually tend to report less marital unhappiness than liberals. In the 1998-2002 GSS, 5.1% of those who report being "slightly liberal" say that they are "not too happy" in their marriages, compared to 0.9% of those who are "slightly conservative." Ordinary liberals (3.7%) and extreme liberals (8.9%) also differ from ordinary conservatives (2.4%) and extreme conservatives (4.1%) in the levels of reported marital unhappiness. Indeed, in the 1998 GSS, 18.2% of extreme liberals reported that their marriages were "not too happy," while only 1.6% of extreme conservatives reported marital unhappiness.

Earlier General Social Surveys found that conservatives were more satisfied with their health, their friendships, their family life, and the city or place they live--all in all, a remarkably consistent picture.

Another claim in the Jost paper is that conservativism is driven by anger and fear. Again, their claims conflict with some of the highest quality data available. In the 1996 GSS, questions were asked about anger and fearfulness. Extreme conservatives were much less likely to report being mad at someone every day in the last week--7.3% to 24.2% for extreme liberals. Extreme conservatives were also less likely to report being fearful in the last week--32.5% to 56.3% for extreme liberals. In other words, a staggering one-quarter of extreme liberals report being mad at someone EVERY DAY and most extreme liberals report being fearful at least once a week.

I am surprised that the Jost group was not aware of the very strong and remarkably consistent data that conservatives report being happier than liberals about their lives in general, their jobs, their finances, their health, their friendships, their family life, and where they live. Nor does the Jost group deal with the less extensive data suggesting that conservatives are less fearful and less angry than liberals. I will have to look into more of the studies that Jost cites to see why these fairly obvious patterns are missed. I wonder whether Jost relied too much on studies that either used unrepresentative samples (such as undergraduates) or used biased questions or indices -- asking about issues on which conservatives tend to be unhappy but not about issues on which liberals tend to be unhappy. In either event, the Jost group seems to have missed decades of very high quality survey data that undercut their thesis.

More by Lindgren on this topic here. See also non- Lindgren commentary here. All of this does raise an interesting question: what makes someone a liberal or conservative? Nature or nuture? Environment, education, or economic success/failure? My guess is that conservatives and liberals tend to be born, not made. Doubtless factors like environmental and class play into it, but my guess is that we tend to be hardwired for one side or the other. (When I asked Lindgren this question, he suggested looking at twin studies, which apparently are the classic way of doing nature versus nurture studies. A post over at the 2Blowhards discusses a twin study that seems to confirm the nature hypothesis.) Sidenote: Lindgren notes that he can't study libertarian attitudes is because the number of people who self-report to the GSS as libertarians is so small that they don't even collect the data. Heh.

The Behavioral Challenge to the ECMH

Great article today in the WSJ($) on the debate between efficient capital markets theorists (exemplified by Eugene Fama) and behavioralists (exemplified by Richard Thaler). Here's a sample:

For forty years, economist Eugene Fama argued that financial markets were highly efficient in reflecting the underlying value of stocks. His long-time intellectual nemesis, Richard Thaler, a member of the "behaviorist" school of economic thought, contended that markets can veer off course when individuals make stupid decisions.

In May, 116 eminent economists and business executives gathered at the University of Chicago Graduate School of Business for a conference in Mr. Fama's honor. There, Mr. Fama surprised some in the audience. A paper he presented, co-authored with a colleague, made the case that poorly informed investors could theoretically lead the market astray. Stock prices, the paper said, could become "somewhat irrational."

Coming from the 65-year-old Mr. Fama, the intellectual father of the theory known as the "efficient-market hypothesis," it struck some as an unexpected concession. For years, efficient market theories were dominant, but here was a suggestion that the behaviorists' ideas had become mainstream.

"I guess we're all behaviorists now," Mr. Thaler, 59, recalls saying after he heard Mr. Fama's presentation.

Well, perhaps not quite. The ECMH is central to both many SEC policy debates and investment techniques. Its validity is thus a critical question. I plan to address the continued validity of the hypothesis in a TCS column (assuming Nick takes it). In the meanwhile, check out these old blog posts:

• Random stock traders and the ECMH; with a review of Malkiel's Random Walk
• Dow 10000, Psychology, and the ECMH

Using Game Theory in Legal Analysis

Larry Solum has a great post entitled Game Theory & the Prisoner's Dilemma. As Larry explains:

One of the most useful tools in analyzing legal rules and the policy problems to which they apply is game theory. The basic idea of game theory is simple. Many human interactions can be modeled as games. To use game theory, we build a simple model of a real world situations as a game. Thus, we might model civil litigation as a game played by plaintiffs against defendants. Or we might model the confirmation of federal judges by the Senate as a game played by Democrats and Republicans. This week's installment of the Legal Theory Lexicon discusses one important example of game theory, the prisoner's dilemma.

I used the prisoner's dilemma to model the behavior of sovereign debtors vis-a-vis creditors in my article Comity and Sovereign Debt Litigation: A Bankruptcy Analogy:

Abstract: On repeated occasions in the post-war period, the cumulative effects of policy mistakes, recessions, inflation, and other economic problems have made it difficult for sovereign debtors to service their external debt. Unlike a domestic U.S. private debtor, who may resort to formal bankruptcy procedures in the event of insolvency, a defaulting sovereign debtor has no formal mechanism for triggering a restructuring of its debt.

In some cases, sovereign debtors have resorted to a moratorium on debt payments. This article argues that U.S. courts ought to give effect to such moratoria under the international law principle of comity. Using standard game theory methodology (the so-called "creditors dilemma" variant of the famous "prisoners dilemma"), the article argues that creditors of such debtors would agree in advance to give effect to such a moratorium provided it neither repudiated the sovereign's debts not gave preference to certain creditors. A legal test for granting comity to sovereign debt moratoria is therefore proposed.

Joseph Phelps Merlot (Napa Valley) 2001

Medium-deep dark ruby. Good nose suggesting dark fruits and rich flowers. On the palate, this young wine has Merlot's typical accessibility with just enough tannin on the finish to suggest a few years of aging potential. Having said that, the forward, ever-so- slightly jammy fruit makes it very hard to resist now. Grade: B++

Donaldson's SEC

James Glassman nails SEC Chairman William Donaldson:

When President Bush admitted in Friday's debate that he had "made some mistakes in appointing people," he certainly had in mind someone with the initials P.O'N. But perhaps he also was thinking of someone with the initials W.D.

William Donaldson, who last year became chairman of the SEC, the nation's top financial regulator, had all the right credentials: co-founder of a Wall Street investment firm, dean of the Yale School of Management, chairman of the New York Stock Exchange, CEO of Aetna, Under Secretary of State to Henry Kissinger.

Yet, to put it mildly, Donaldson, 73, has been a disappointment. It's hard to believe his is the Bush Securities and Exchange Commission. More and more, policies reflect the views of a hard-line Democrat, Harvey Goldschmid, a Columbia University law professor who was SEC general counsel during the Clinton Administration.

Glassman then goes on to rip one SEC policy after another.

Noble Rot

From a N ew Yorker review:

Somewhere in the middle pages of ?1984,? Winston Smith is being inducted into the shadowy and, as it turns out, nonexistent ?Brotherhood? of resistance to Big Brother, and, to celebrate, the Inner Party member O?Brien pours him a glass of wine. Winston has never had wine before, but he has read about it, and he is desperately excited to try it, since he expects it to taste like blackberry jam and to be instantly intoxicating. Instead, of course, the wine tastes the way wine tastes the first time you taste it?a bit acidic and bitter?and a single sip, or glass, isn?t intoxicating at all. The intensity of this experience as a model of disappointment was significant enough for Orwell so that he inserted it in his dystopia right there among all the greater horrors?as though the future weren?t bad enough, that whole wine thing will go on, too.

Fifty years later, we live in a wine world where, for the first time, there are wines that do taste like blackberry jam and are instantly intoxicating, or nearly so, and how these wines came into being is the subject of a new book, ?Noble Rot? (Norton; $24.95), by William Echikson. The book tells the story of the wine life of the Bordeaux region of France over the past twenty years, and, though Echikson does not quite have the narrative skills to assemble it, he lays out all the pieces of a first- class Henry James comedy about the brutality of American innocence, the helplessness of French sophistication, and the need for intoxicants that are always called by some other name and claimed for some other purpose.

Thanks to Vintage Bob for the tip. I'm about halfway through Noble Rot and I'm finding it quite fascinating. It does a very fine job of exploring the modern wine industry and, in particular, the highly controversial role of über-wine critic Robert Parker.

Schmid on Conflict and Cooperation

My vocational interests focus on ec onomic analysis of the law of public corporations. Although my training at UVa emphasized the tools of neoclassical economics, I have since concluded that institutional economics and, to a somewhat lesser extent, behavioral economics have considerably greater explanatory power. As a result, I'm always looking for good overviews of those fields. I recently came across Allan Schmid's relatively new book Conflict and Cooperation: Institutional and Behavioral Economics, which is unusual in combining these two important fields. Schmid has done a great job of explaining the insights these areas of economics can provide for understanding not only economic questions, but also legal and policy issues. I'm finding it highly useful and recommend it to anyone with an interest in law and economics.

Chateau Gloria (St. Julien) 1996

A medium deep ruby starting to show a touch of brick at the edge. A big nose, with an intense bouquet of leather, dark fruits, and a touch of the humidor. The palate offers cedar, currant jam, dark fruit leather, and herbs. Grade: A--

Schramsberg Blanc de Noirs (Napa Valley) 1994

A lovely golden wine with a slight salmon hue. Buttered toast, roasted almonds, cherries, apples, and a whiff of chocolate. Grade: B++