The question is: if peer effects are important, why don’t they show up in adoption studies?
Generally speaking, when I search for literature on peer effects, the information is sparse and confusing. I’m not too surprised, since such effects are much more difficult to disentangle than heritability and shared environment.
My working hypothesis is that:
Peer effects matter a lot, but only up to a certain threshold of peer quality, and this threshold is basically what people intuitively perceive as sufficiently respectable company for their kids. So, basically, underclass peers will ruin your kids, but upper-class or genius peers won’t improve things relative to the company of ordinary middle-class kids. (Just like downright abuse will ruin them, but helicopter parenting won’t improve them.)
In order to quality for adoption, people must pass through sufficiently strict checks that they are highly unlikely to provide an environment below this threshold. So there aren’t any good natural adoption experiments that expose kids to underclass peer groups.
I’d be curious to hear about any contrary evidence, though.
I sometimes get a very “politics” vibe from your comments [...] For example, [the middle paragraph in the above comment] reads a lot like standard political rants.
Maybe it does, but this really is my honest impression of what the situation looks like to a typical person aspiring to a middle-class lifestyle these days. I’m curious if you would disagree with any of the following statements, which seem to be roughly equivalent to what I wrote above (all given in the context of contemporary North America):
A house in a place where your kids will grow up with—and, in particular, go to school with—kids from respectable middle-class families is very expensive. In many places, and especially prosperous centers of economic activity that offer good career opportunities, it is somewhere around an order of magnitude above the median yearly household income.
Unless one is extraordinarily wealthy, to obtain such a house, one has to get into debt that is, just like the house price, enormous relative to one’s income.
Such debt, due to its sheer size, can’t be repaid in any time shorter than several decades. Just to pay the interest, let alone to make any dent in the principal, one must part with a significant part of one’s income during this period. In this situation, a plausible bad luck scenario like job loss, health problems, etc. can easily push one into insolvency.
Worse yet, this situation implies that the bulk of one’s net worth is completely non-diversified and invested in a single asset—of a sort that is notoriously prone to bubbles and price crashes. Even worse, the occurrence of such crashes is positively correlated with bad economic conditions that make job loss and decreased earning power especially likely.
Even with a minimalist approach to parenting, raising kids is expensive. Each additional kid makes it less likely that one will manage to remain solvent under the above described conditions.
Sufficiently bad financial ruin can plausibly put one into a situation where one is no longer able to afford to ensure a peer group for one’s kids that will be above the threshold where bad peers exercise significant bad influence. Also, generally speaking, below a certain class threshold, all sorts of social pathologies are rampant to a degree that seems frightful to a typical middle-class person—and, again, bad financial ruin can make one unable to afford to insulate oneself from people that fall below this threshold.
Taken together, (1)-(6) makes for a rather stressful existence, in which having more kids will seem to a lot of people like an additional burden in an already difficult situation, and an additional risk in an already uncomfortable gamble.
I’d be really curious to see where exactly our opinions diverge here.
Even with a minimalist approach to parenting, raising kids is expensive. Each additional kid makes it less likely that one will manage to remain solvent under the above described conditions.
I think Caplan is correct that this is not the marginal analysis that parents do in considering whether to have another child; that the relevant margin is their time.
More tangentially, I generally think your description is too prescriptive and not an accurate description of how people think, leading to predictions that don’t match the world. In particular, I don’t think we see a clean line between acceptable and unacceptable neighborhoods. People don’t just seek out acceptable neighborhoods free of bad influences, but bid up ever more exclusive neighborhoods, sometimes in the name of good schools and sometimes not. People take on a lot of debt not just to get into acceptable schools, but to get into these exclusive neighborhoods. On the other hand, I think people are much less stressed than you describe, largely because they are irrationally optimistic about debt, employment stability, and real estate as an investment.
In particular, I don’t think we see a clean line between acceptable and unacceptable neighborhoods. People don’t just seek out acceptable neighborhoods free of bad influences, but bid up ever more exclusive neighborhoods, sometimes in the name of good schools and sometimes not. People take on a lot of debt not just to get into acceptable schools, but to get into these exclusive neighborhoods.
You’re right that I oversimplified things in this regard. Besides the minimum acceptable neighborhood quality, there are also many expensive status games people play that they could in principle cut back on without any negative consequences for their kids. On the other hand, the difficult question is how much you can really cut back on status games without jeopardizing your social status in ways that could damage your career and make your life generally unpleasant. (It’s a difficult topic, but it seems to me like it’s hard to escape the effect where higher income comes with the requirements of more intense and expensive status signaling, thus significantly reducing the increase in one’s truly discretionary spending power.) On the whole, I’m not quite sure what to think about all this.
On the other hand, I think people are much less stressed than you describe, largely because they are irrationally optimistic about debt, employment stability, and real estate as an investment.
Could be. Except for your closest friends who will presumably speak their mind to you, it’s hard to figure out what people really think behind the socially expected facade of radiating success and optimism. I strongly suspect that the events of recent years have shaken a great many people out of their optimism, though.
Yes, the exclusive neighborhoods could be a form of social signaling, but so too could the helicopter parenting. I think people feel the same kind of pressure towards the two.
Is leasing so uncommon, though? My mom always taught me that buying a house was retarded, admittedly contra what I took to be common wisdom.
ETA: Actually, I think it might have been me always teaching my mom that buying a house was retarded. I think even at ten years old I was better than my mom at economic rationality.
What is it about people with practical-worldly-knowledge that causes their speech to be littered with so many un-PC words and phrases?
The same thing as with people who don’t have practical worldly knowledge that causes their speech to be littered with so many non PC words. But I would estimate to a lesser degree on average.
In the contemporary North America, buying a house definitely looks to me like a raw deal. On the other hand, the popular wisdom is indeed the opposite, i.e. that renting is a raw deal, suitable only for people whose tarnished reputation makes them unable to get credit. (The whole issue could be approached by asking some simple and obvious questions suggested by basic economics, but puzzlingly, nobody seems to be asking them.)
On the whole, however, I definitely have the impression that among the great bulk of people who aspire to live a middle-class lifestyle, home ownership is considered as an essential goal for any serious person, let alone family. A contrarian on this issue is likely to face enormous pressures from friends, family, spouse, etc., and risk coming off as seriously weird. (Maybe I am overestimating this phenomenon in the wider society by extrapolating from my own social circles. But it certainly exists to a significant degree.)
In the contemporary North America, buying a house definitely looks to me like a raw deal.
So, perhaps this is a sign of how brainwashed by the status quo I am, but I don’t see how this is obvious, nor indeed how it could be obvious, given that everyone who is renting a house is renting it from someone who bought it, who is presumably not losing money on the deal. (Or is that a false presumption? Do landlords typically spend more to purchase and maintain their property than they make in rental income? How could that possibly be true?)
So I would love some more explanation here. Is the idea here that buying a house N years ago was a good idea, but buying one in 2012 is not?
[E]veryone who is renting a house is renting it from someone who bought it, who is presumably not losing money on the deal. (Or is that a false presumption? Do landlords typically spend more to purchase and maintain their property than they make in rental income? How could that possibly be true?)
You can also ask a different question. If you borrow money to buy a house, you must find a lender willing to lend you at some interest rate. The interest rate is nothing but the price of renting money. So if it costs less to borrow (i.e. rent) the money to buy a house than to just rent the house directly, then how can the lender possibly be willing to lend you the money instead of investing it into a house himself and earning a rent higher than your interest?
When I make this argument, people usually try to argue that somehow you profit from buying by building equity with time. But if the money rent, i.e. interest, is equal to the house rent, then to build equity, you must make payments to the lender above this basic rent/interest rate—otherwise you’ll just keep renting the same amount of money indefinitely. And if you rent the house instead of making these higher payments, you can save and invest this difference, with the same positive effect on your net worth (which will also have an effect equivalent to the reduction in payments as the principal gets lower). Of course, this isn’t true if the interest is lower than the rent, but then we get to the above question of why anyone would be so irrational as to lend at such terms. It also isn’t true if the house price grows faster than any alternative investment—but even ignoring the lessons from recent history, this again gets us to the question why someone would ever lend you the money at this cheap interest rate instead of investing the money himself into these fast-appreciating houses.
What these considerations show is that according to the textbook spherical-cow microeconomics, on a free market for housing, renting and buying should be equally good deals, since in efficient markets there is no possibility of arbitrage. And buying can be profitable over renting only if there is a strange opportunity for arbitrage where it’s cheap to rent money but expensive to rent a house, even though money and houses are readily convertible into each other. A similar argument can of course be made against the possible advantage of renting—except for the issues of risk-aversion and asset diversification, which decisively favor renting over owning.
In reality, of course, these simple spherical-cow models don’t work, and there are lots of complicated and ill-understood factors involved, including all sorts of people’s biases and signaling issues, high transaction costs, Knightian uncertainties, exuberant speculation, and not the least of all, huge government interference in the market by various subsidies, regulations, and other convoluted and dubious enterprises. The result is a complicated mess in which an accurate analysis of what’s really going on is practically impossible, and in which there may indeed be possibilities for arbitrage.
However, regardless of all that, it seems to me that buying has some tremendous drawbacks, for which I can’t see comparable upsides under any realistic circumstances. The first and foremost is that you’re investing the bulk of your net worth (and on top of that a huge pile of borrowed money) into a single non-diversified asset, which seems like a crazy idea by the most basic principles of sound personal finance. [1] For various other drawbacks, one could perhaps argue that they are offset by the downsides of renting (though I would disagree), but this one really seems to me by itself like a decisive argument against getting into house ownership.
[1] Note that this is one possible solution to your landlord puzzle. The tenant may want to pay a premium to avoid placing most of his net worth into this asset because of risk-aversion, while for the (rich or corporate) landlord, it’s just another item in a large portfolio with the risk well spread.
The renter is paying the landlord to assume the risk of tenant mobility. That is, if the renter needs to move, they can do so and the landlord could be stuck with a vacant unit. On the other hand, someone who owns a home and needs to move, needs to find a buyer for the old place, and incurs material (~7%) transaction costs. People who want to stick around for a long time have no reason to pay a premium for an option they won’t use, so longer-term residents tend to buy and not rent.
On the other hand, as long as they can make mortgage payments, homeowners almost never get kicked out of their homes. If you want to bring up kids and build memories/accumulate sentimental value in one place over your whole life, a rental is probably not for you. If you want to customize your home and/or make capital improvements, a rental is also probably not for you.
There’s a kind of pooling equilibrium, and very little incentive to live in the “wrong” arrangement.
It’s also a mistake to compare nominal rent with nominal mortgage payments, as you also have to consider tax deductibility, maintenance costs (which people often underestimate), heating/cooling/electricity/water bills, real estate taxes, and mortgage amortization.
However, regardless of all that, it seems to me that buying has some tremendous drawbacks, for which I can’t see comparable upsides under any realistic circumstances.
Before I bought my house I ran the numbers and came to the same conclusion, that home ownership would not maximize my net worth and would increase certain types of risk. As a result I see home ownership as a luxury, not as an investment. I bought my house because I wanted it as a luxury and believed I could manage the risk.
If mortgage interest is tax-deductible but rent isn’t, then you have to pay higher rent in order for it to be converted into an interest payment that would come out of pretax income. I think this is how Michael Vassar said the market got so messed up, though I don’t know if I’m correctly attributing it to him, or if the notion is unique to him (I expect not).
In booming real estate markets, rent may in fact be cheaper than the interest on the equivalent house price even considering the tax break. I suppose this is because people count on appreciation, but we know how good that assumption is.
The lack of mortgage interest tax breaks in Canada doesn’t make people’s attitudes towards renting vs. buying any different than in the U.S. The only observable effect, as far as I know, is that Canadians on average struggle to pay off their mortgages more quickly.
I’m not sure I understand what “conversion” you’re talking about, but it sounds like you might be saying that the landlord has no mortgage interest deduction, so they need to receive a larger rent payment to break even, than it would cost the renter to own the same property. If that’s not your point, then disregard the rest of this comment.
To the landlord the mortgage interest is a business expense and can typically be deducted. So there’s (ceteris paribus) no difference between the net cost of the mortgage to the landlord, and to a homeowner.
What I’m saying is that you can either pay $2000 of rent using post-tax income or $2000 of mortgage using pretax income. This might work out to the difference between a $3300 mortgage payment (pretax income) or a $2000 rent payment (after the $3300 has been taxed at an e.g. 39% marginal rate by state and feds).
To the landlord the mortgage interest is a business expense
Actually, to a business all of the mortgage is a business expense (as well as property taxes, upkeep costs etc.), and all of the rent is a revenue. Then you have to account for amortization, depreciation and what not. So, there is a lot of difference between a business and an individual homeowner, and no ceterus paribus to speak of.
Owning a house has the advantage that, even in extreme contingencies, you will still have your Maslovian need for shelter under control. Same reason someone would eagerly trade gold for an equal weight of grain in a sufficiently severe famine.
This is true if you actually completely own your house. However, many “homeowners” don’t; they have mortgages which they are not yet in a position to pay off completely. Given sufficiently extreme contingencies (which needn’t, actually, be all that extreme) they could find themselves without shelter as easily as their renting peers.
Paying the mortgage involves a marginal step toward that desirable condition of true homeownership in a way that rent does not. Essentially, a mortage is rent + a commitment to investing part of your income every month, which many people would not otherwise have the willpower to do.
Yes, the structure of a home mortgage loan helps someone save when they might not have otherwise. But your original comment was that home ownership was helpful because it increased your security that you would have shelter—which is a different point.
If you lose your job and the mortgage has not been completely paid off, you are not in an appreciably better situation re: shelter if you own vs. rent. I suspect that the foreclosure process is more time consuming for the party trying to evict you than the landlord eviction procedures—but 1-3 months vs. 9-12 months* is probably not that useful a difference in the grand scheme of your life.
*These numbers are a guess, but I think the relative difference in time is roughly accurate.
Having three or four or twelve times as long to search for alternative sources of income can make an enormous difference in the grand scheme of your life.
Let’s say it’s 3 months for eviction, 9 months for foreclosure, and it takes six months of searching to obtain a new job. Someone who was renting would have to complete the second half of that search while homeless, a condition which brings with it many unpleasant, life-altering complications. Social capital must be burnt on preserving life and limb when it could have been spent to aid the search itself, or hoarded against future calamities.
Comparing monthly costs is a bit misleading. There are a whole bunch of less-direct costs and benefits to ownership. A bunch of these depend on your estimation of future economic conditions and of your future desires.
1) If you own a house, you’re incurring the risk that you have to move for personal or professional reasons, and then can’t easily sell. Landlords typically don’t have to sell on short notice—it’s perfectly possible to be an absentee landlord. Not an absentee resident.
2) As a landlord, you can potentially hold the house as one asset in a portfolio. As a homeowner, you’ve locked up a lot of your potential capital in that high-risk illiquid asset; you’re much more exposed if property values go down.
On the flip side:
1) Residents with a mortgage get a tax break that landlords don’t.
2) Being an owner means you don’t have the risk of future rent increases, and can profit if property values go up.
3) Being an owner entitles you to make structural or other changes—repainting, say—that a tenant can’t easily.
Being an owner means you don’t have the risk of future rent increases...
That is true, but as far as I can tell, rent increases don’t follow soaring house prices during real estate booms. Rather, the price to rent ratio tends to go out of whack. (Check out these graphs—I can’t vouch for the accuracy of their numbers, but they are consistent with what I observe on the ground. Since I’ve been renting my current house, my rent hasn’t gone up by a single cent, not even to compensate for inflation, while the house prices where I live have gone up by something like 40%.)
Moreover, the standard ways in which mortgages are done leave one exposed to the risk of future interest rates increasing, and they can go up much faster and higher than rent. (And as far as I can tell, one must pay a huge premium to get a permanent fixed rate and avoid playing this financial equivalent of Russian roulette.)
In the US, the large majority of mortgages are fixed rate. Until about 10 years ago, virtually all were. I think mortgages are a lot more popular in the US than in Europe. I’m a bit surprised that fixed rate mortgages haven’t spread into Canada simply by proximity. Maybe they’re propped up by Fannie Mae.
I have no idea what the ultimate reasons for it are, but in Canada, I don’t think it’s even possible to fix the rate for more than ten years. When Canadians speak of “fixed rate,” they typically mean fixing it for only five years or so.
All Canadian banks offer up to 10-year fixed rate terms, none do longer. “A typical mortgage in Canada has a 5-year term with a 25-year amortization period.” Not sure what is so scary about that...
Regarding 1… can’t a resident of a home, should the need arise to move on short notice, become an absentee landlord on the same property? If the monthly costs of renting equal or exceed the monthly costs of owning, presumably the rental income covers the cost of owning the property, and the former resident can go rent property wherever they happen to need to be.
I would add to your second list: 4) Owning the property means I get more upside if property values go up. 5) Renting the property means I am subject to the owner’s whims in addition to my own.
It’s interesting to see that the common-sense view is now that buying a house is a bad idea. Just a few short years ago anyone questioning the wisdom of buying a house was seen as mentally deficient, if not downright evil.
This just as prices have reverted close to fair value and buying is starting to make a lot of sense compared to renting. [As long as you have the capacity to pay the loan and you are not likely to move soon.]
This I take to be a sign we are close to the bottom in housing.
This I take to be a sign we are close to the bottom in housing.
Absent some very extraordinary insider information, there’s never any good reason to believe that. At any moment, prices are where they are because they could go either way.
In the contemporary North America, buying a house definitely looks to me like a raw deal.
In US, a 3000-dollar-per-month mortgage lowers your taxable income by 36000 dollars. The standard deduction for a married couple (perhaps renting a house for 3000/mo) is 12000. Can’t this go a longer way toward explaining it than peer pressure?
Of course, property taxes are high in good school districts.
Honestly, I think that for the overwhelming majority of people, these tax issues are way over their heads. (I have no confidence that I understand them myself. In finance, reliable and accessible information is very hard to find.) So I think that such considerations, while not completely irrelevant, are easily trumped by the combination of peer pressure, deeply ingrained but obsolete folk wisdom, the sheer emotional appeal of home ownership, the intuitively appealing but fallacious view that renting means giving away money while paying a mortgage means saving it, and the irrational optimism about future trends in house prices (which has abated in recent years in the U.S. but is still rampant in Canada).
On the other hand, the counterargument about asset diversification seems to me unassailable. Putting all your eggs into one basket is correctly considered as a crazy financial strategy, and a fortiori, putting a bunch of borrowed eggs along with them is crazier still. Yet houses are somehow considered an exception.
[Edit to add: Looking at this a bit more, I realize I didn’t even know there was such a straightforward tax deduction for mortgage interest in the U.S. However, this only strengthens my point, since no such thing exists in Canada, but people still think and act the same way.]
As phrased above, your position seems like a reasonable starting point for a discussion, and I probably would not have made my comment if you had first commented with something closer to that.
I was trying to comment on the way you presented the argument before rather than argue that your object level point is mistaken, since I don’t have strong views here. It’s not a serious issue, just something I thought you might like to be aware of. The more I think about this, the less ‘justifiable’ it seems to bring this up.
You used several adjectives with a normative tinge “enormous debt”, “edge of solvency” and colorful imagery “precariously holding onto a rope above a pond full of crocodiles”, which sound like they’re designed to get the reaction “Oy My God! What has America (or pick your favorite country) come to?!”, rather than the reaction “buying a house in an expensive area sounds risky”.
Does that make things clearer?
On the object level topic, your argument seems very focused on debt, do you think renting a house in a similar area substantially lessens the burden?
You used several adjectives with a normative tinge “enormous debt”, “edge of solvency” and colorful imagery “precariously holding onto a rope above a pond full of crocodiles”, which sound like they’re designed to get the reaction “Oy My God! What has America (or pick your favorite country) come to?!”, rather than the reaction “buying a house in an expensive area sounds risky”.
I have no problem with your comment, and I’m glad to explain the reason why I made my original comment that way. The reason why I used such emotional imagery is that I wanted to depict the way people feel about their situation, which is the relevant thing in this context, even if the way they feel is unrealistic and biased. (Since the way they feel, and not some ideally objective evaluation of the situation, will ultimately determine their decisions about having kids.)
(By the way, do you really think that “enormous debt” and “edge of solvency” are not perfectly realistic descriptions of how many, if not most people in their child-bearing years live these days?)
On the object level topic, your argument seems very focused on debt, do you think renting a house in a similar area substantially lessens the burden?
I’m probably over-focusing on debt, since I myself consider any serious indebtedness with horror. I would guess that debt by itself is probably a much lesser source of worry to most people.
Now, when it comes to the issue of renting vs. buying, this is one of those things where people, including otherwise smart and successful people, tend to have opinions that seem seriously crazy to me. As far as I can tell, among the North American middle classes, it seems to be near-universal belief that a basic prerequisite for serious family life is owning a house, so the idea of renting is a non-starter. There is also the near-universal belief that renting is somehow a raw deal compared to buying, so that renting sends a strong signal that you’re either stupid or, more likely, can’t be approved for credit because of some shameful history you’re hiding (and all the bad qualities it likely implies).
All this despite the fact that basic economics strongly suggests that renting should be a better deal for nearly everyone. (Unless perhaps the relevant markets are distorted to an enormous degree by subsidies, regulations, and perhaps also status signaling games, but in reality I see only the latter in sufficiently strong form.)
However, this gets us to the more general issue of various other expensive status games that one is supposed to play in order to be accepted among one’s social group nowadays. This is a difficult and complicated topic, but on the whole, it seems to me that for a variety of reasons, these signaling requirements tend to expand as one’s career and income advance, so in the end, it’s difficult to avoid the situation where one is constantly walking on the edge financially. Needless to say, all this certainly isn’t conductive to having kids.
I wanted to depict the way people feel about their situation, which is the relevant thing in this context, even if the way they feel is unrealistic and biased.
So it seems we all agree that your crocodile-pit description does not necessarily reflect reality.
It depends on the concrete place and people we’re talking about. There are ways to escape falling into the underclass even with very little money, but that requires luck and talent that many (and I’d even say most) people don’t have.
Well, in 15 years I’ll let you know whether my decision to live and reproduce in a city that has poor people has turned my kids into underclass wrecks.
It would be mere anecdotal evidence. I kind of feel you are trying to tell or signal something other than offering to eventually share with us the results of a long term experiment.
...you’re right, I’m not making housing and childrearing decisions with the main goal of providing a useful data point to LW 15 years in the future. And I am trying to signal that I think poor people are not a crocodile pit. Enough so that I am choosing to share a neighborhood with them.
I don’t think he was painting it as a crocodile pit, I read him as pointing out that negative effects on life outcomes are to be expected on average. It seems a highly probable hypothesis.
I don’t think he was painting it as a crocodile pit
How do you interpret “it means being thrown, together with your kids, right into the dreaded underclass in which all sorts of frightful social pathologies are rampant. It’s like precariously holding onto a rope above a pond full of crocodiles” ?
I think you are being unfair when you imply that I identify poor people (i.e. those who are merely not affluent) with the underclass (i.e. those social groups that display high levels of dysfunction). In a place where poor people are generally non-dysfunctional, so that a drastic fall in economic status means only that one will have to live frugally among others doing the same, clearly none of what I wrote applies. However, in a place with a large dysfunctional underclass, a similar fall in economic status is a much more dreadful prospect for someone who is used to the norms and customs of the middle class.
Now, I probably should have omitted the “above a pond full of crocodiles” part in the above quote. It came out when I was looking for a vivid metaphor for the situation of people who struggle to keep themselves above a certain level of economic status below which bad things will happen, with the crocodiles symbolizing a general feeling of fear and danger, rather than being a straightforward metaphor for underclass people. Now I realize that the way I wrote it, the latter reading is natural, but it wasn’t my intention. (It also suggests incorrectly that the main problem with falling into the underclass is the physical danger of crime.)
I think you are being unfair when you imply that I identify poor people (i.e. those who are merely not affluent) with the underclass (i.e. those social groups that display high levels of dysfunction).
As Julia said, people are offended by the suggestion to treat their own class position with extreme cynicism, and to believe that there’s, like, a separate species of people in their country—their compatriots, mostly, not just illegal immigrants—who are dangerous animals to be avoided at all costs. While certainly such a position could increase personal safety, I’m adamantly against it.
For fuck’s sake, I grew up in Russia in the 90s—a time of danger, opportunity and rampant inequality/unfairness—and no-one back then had a “bubble” (well, except for the top 0,1% maybe), so I mixed with kids from rough neighbourhoods and not-so-good families, was even friends with one (after we fought for years and then grew up a bit). Our school was an ordinary one, but well-run, with good and savvy teachers, so there was no violence outside of the usual scuffles and playing at gangs; I think that every one of us would be offended were our parents to try and “bubble” us away from the “underclass”.
Juliawise said she does not believe that she is throwing her kids into a pit of crocodiles. You seem to be saying that she has an obligation to throw her kids into a pit of crocodiles.
I’m saying that she has an obligation, whatever she does, not to think about her society as a pit of crocodiles (except hypothetically, for abstract arguments, etc—never in semi-conscious daily thinking, as a matter of “attitude”), because that’ll only increase the class divide and its problems. Society is affected by its members’ perception of it, and if everyone just wanted to maximize safety for themselves and their families… why, that society would be utterly helpless! What’s the difference between civic responsibility in the face of war or natural disasters and civic responsibility in the face of social division and alienation?
If the middle class just evacuates from everywhere where they have any contact with the “underclasses”, so that the latter are left in utter and visible isolation, like the “Untouchable” castes in India… do you think that spells any hope of survival for the American nation, its culture, its spirit?
I’m saying that she has an obligation, whatever she does, not to think about her society as a pit of crocodiles
If my society is a pit of crocodiles, I want to believe my society is a pit of crocodiles! I’m sure German Jews in the 1930s, or Cambodians intellectuals (or short-sighted people) in the 1970s would agree with me.
Society is affected by its members’ perception of it, and if everyone just wanted to maximize safety for themselves and their families… why, that society would be utterly helpless!
Nowadays the standard way of solving coordination/tragedy-of-the-commons problems is through the government; for example Singapore has quality public housings that house 85% of the population and have ethnic quotas to prevent self-segregation.
Singaporeans and Americans probably both want to maximize safety for themselves and their families, but the incentives in Singapore mean that sticking to “people like you” is not as attractive a strategy as it is in the US.
I’m saying that she has an obligation, whatever she does, not to think about her society as a pit of crocodiles (except hypothetically, for abstract arguments, etc—never in semi-conscious daily thinking, as a matter of “attitude”), because that’ll only increase the class divide and its problems. Society is affected by its members’ perception of it, and if everyone just wanted to maximize safety for themselves and their families… why, that society would be utterly helpless!
This sounds much like a tragedy of the commons. Remind me again what the rational response is if one has little hope of organizing measures to overcome it.
If the middle class just evacuates from everywhere where they have any contact with the “underclasses”, so that the latter are left in utter and visible isolation, like the “Untouchable” castes in India…
Where is the evidence that living with the underclass benefits the underclass more than it hurts the middle class? In case you haven’t notice the underclass has due to social changes nearly fully assimilated the wrecked working class that existed in the United States at one point and its cultural norms and dysfunction are spreading and becoming worse. I believe the non-blue collar middle class is next and nearly all social indicators seem to be moving in that direction.
For a brief overview of just how far the cultural class divides have grown I suggest reading Charles Murray’s “Coming Apart”. Why group such different cultures under the marker “American culture” in a sense beyond geographical designation?
Remind me again what the rational response is if one has little hope of organizing measures to overcome it.
= “Remind me again what the rational response is in non-iterated PD when you’re sure your partner is a stupid Defect-Bot.” And my answer to that is, if you value something beyond one-turn success, you’ll at least consider that the PD might be iterated after all, in the historic long run. But if no-one on the “reasonable” side acts like it’s iterated, it wouldn’t be, and the Defect-Bots will eventually tear apart everything you love.
How much can society last in such a way before the abandoned and despised “underclass” finally boils over? I don’t think that it’s more than a few generations. Would you want a somewhat nicer and safer life for your children without a future for their children?
= “Remind me again what the rational response is in non-iterated PD when you’re sure your partner is a stupid Defect-Bot.”
Indeed that was my intended message.
How much can society last in such a way before the abandoned and despised “underclass” finally boils over? I don’t think that it’s more than a few generations. Would you want a somewhat nicer and safer life for your children without a future for their children?
I think it is unavoidable. As to saving “everything you love” or rather salvaging the things I value about our civilization. I have spent a lot of time on this problem. Let us say that my current best hope is FAI. Any effort towards which I consider nearly certain to fail horribly, yet still think should be attempted.
What does this tell you? But let me try and put it another way, especially since you bring up the stupid always-defect-bot. Imagine you have a unfriendly self-improving AI. Now imagine it is built out of people’s brains, brains that you care about. Those brains have dreams and values of their own, but they are not the dreams and values of the uFAI that is running on them. It will continue running and self-improving making their dreams and values matter less and less for how the universe is ordered and indeed it will edit and change those values arbitrarily and unpredictably. Imagine the only alternative to this is that it pretty much blows itself up together with all the brains it contains.
But in that world, defecting to ensure your own short-term gain is best replaced with wireheading; nothing fragile survives anyway, so why rob and oppress other brains for a fleeting illusion of contentment? Therefore, we should find happiness in simple things, avoid increasing strife and competition for resources and, ideally, just stop being troubled by the whole mess.
I don’t need gains to be “eternal” or “non-fragile” to count. Remember our debate about the “Hansonian hell word”, where I pointed out that a few centuries of human minds living in plenty followed by aeons of alien minds isn’t really a “hell world” to me?
My conclusions about the world simply mean that I have centuries or decades instead of billions of years of minds I care about arranging matter. I don’t find such a shortening a convincing reason to embrace counterfeit utility with wire-heading.
So you’ve no reinforcing reasons to give up your own fleeting well-being for anyone else’s sake, especially that of far people? Well, at least that’s honest. But I still want to aim for more than temporary gratification when deciding what to do—partly because I still feel very irresponsible and worried when trying not to care about what I see in society.
Sure, of course you care. I meant, well, I’ll think of how to explain it. But basically I’m talking about quasi-religious values again. I have this nagging feeling that we’re hugely missing out on both satisfaction and morality for not understanding their true use.
Ok I hope you can write it out because it sounds interesting. But let me pose a query of my own.
You seem to think that over a period a few billion years means that real utility optimization should occur rather than going for wire-heading. And think that if limited to a few centuries counterfeit utility is better. How would you feel about 10 000 years of the values you cherish followed by a alien or empty universe? What about 10 million years?
If it makes you feel better if everything I cared was destined to disappear tomorrow I think I would go for some wire-heading, so I guess we are just on different spots on the same curve. Is this so?
I’m thinking. But keep in mind that I’m basically a would-be deontologist; I’m just not sure what my deontic ethics should be. If only I could get a consistent (?) and satisfying system, I’d be fine with missing out on direct utility. I know, for humans that’s as impossible as becoming an utility maximizer, because we’re the antithesis of “consistency”.
A lot of your posts leave me with the impression that you think the right wing has all the facts on its side, but it only means you need to oppose them that much more heroically. This is a terribly perverse point of view, all the moreso because there are some facts that support left wing opinions too.
For instance, you’ll note that Vladimir_M is perfectly open about the scarcity of scientific literature supporting his gut feeling about peer effects. A parent came along to say she wasn’t worried about peer effects for her own children, not that it was her moral duty to throw their safety to the wind.
I’m not actually a parent yet, but I do plan to have kids and to raise them in a mixed-income neighborhood (somewhere in Cambridge MA).
I do think peer effects exist. Having worked in a local school full of both “underclass” kids and professors’ children, which is the mix you get in Cambridge, I do think the poorer kids have a somewhat negative effect on the richer kids. I expect there will be some negative effects to my kids from not living in a bubble. However, I love the area and I think that living there will be good for the family, better than going into the kind of debt Vladimir_M mentioned to afford all-rich neighborhoods or private schools. We like living in a city, we like not owning a car, we having no debt. Those things mean living near some poor people.
I accept the correction, but now I don’t see a difference between your points of view. Certainly what you write above is more delicately phrased than “poor people are crocodiles”, but VMs comment was also more delicately phrased than that.
Huh? Um, perhaps you have a point here, but why did you reply with that to my comment above specifically? I thought that, of all things, cross-class solidarity and opposition to the splintered modern society can be construed as just as much of a right-wing value as a left-wing one. Hell, fascists used rhetoric similar to mine.
“What is to be done?” I often scan answers to this question as left-wing, but perhaps that heuristic is a hundred years out of date.
Whether or not “pro-crocodile” and “anti-crocodile” map to “left” and “right”, there is something perverse about saying: the evil anti-crocodiles have it exactly right, so we pro-crocodiles have our work cut out for us!
Let’s call it what it is, OK? IMO there are two related matters here: 1) What is the size of the groups you’re willing to empathize with? and how much relative concern you feel obliged to show for each—your family? neighbours? ethnicity? social class? compatriots? culture? religion? species? 2) What’s your attitude towards social alienation and various unsavoury processes that accompany it? Is it just an inevitable side of humanity, to be ignored if possible? Only to be ignored if you’re sure it’s not about to explode? A moderately tragic natural disaster? A concrete ethical evil, akin to not helping victims in an accident? A disease of the nation-organism, which ultimately concerns all its other parts? A profane/sinful Awful Thing that’s an affront to your preferred Grand Design? I don’t have a clear answer for myself, neither logically nor emotionally.
(Great. You try to break shit down into more manageable bits—aligned with LW’s mission, it is! - and there’s an instant downvote.)
What is the size of the groups you’re willing to empathize with?
I think this question is a bit misleading, as if size is the only important (or most important) information about any group.
Let’s ask instead: “What groups you are willing to cooperate with?” (Because the empathy should lead to cooperation, right?) Now the question is: Is the given group able and willing to cooperate with me? The answer does not depend directly on the size—I can imagine an enlightened galactical society where everyone cares about the well-being of others; and I can also imagine a small group of people harming their neighbors to achieve short-term gains. It is not about the size of the group; it is about what those people do, what they think like.
What’s your attitude towards social alienation and various unsavoury processes that accompany it?
I’d rather not have it, but merely pretending that it does not exist is not enough. In a long term, if I am able to help people in bad situations, I will try. In a short term, I care about my survival, and survival of my children.
Is it just an inevitable side of humanity, to be ignored if possible?
I don’t know. World changes; what was impossible yesterday, may be possible today; but sometimes what was possible yesterday is no longer possible today. Instead of asking whether it is inevitable or not, we should discuss specific strategies, their costs and probabilities of success. There is a difference between asking whether “there is a solution” or whether “a specific strategy X is a solution”. (In this specific case, X being: “living and raising your children among people of lower classes”.)
Perhaps this deserves a specific top-level thread in “Open Thread”. But we should start by trying to define what “social alienation” approximately is (maybe it is an unnatural category consisting of several different cases); then discuss relevant factors; and only then start suggesting solutions.
But we should start by trying to define what “social alienation” approximately is (maybe it is an unnatural category consisting of several different cases); then discuss relevant factors; and only then start suggesting solutions.
...[the] inequality generated by Capitalism is morally wrong, because it fragments society and prevents us from relating to one another. Can the tycoon in his luxurious penthouse relate to the pensioner shivering in her flat, or the unemployed man waiting for the bus in the rain?
Giving one example—a hugely mindkilling one—is not the same as providing a definition. It can help me understand your feelings about “social alienation”, but I still don’t know what exactly it means—where are the boundaries of this concept.
Is “social alienation” any kind of situation when one group of people has problems imagining themselves as members of another group? Or is it necessary to have some asymetry, where almost everyone agrees that it is better to belong to group A than to group B? Is there a difference whether belonging to group A or B is caused by family one was born in, or by one’s abilities, or by one’s decisions?
A too wide definition could lead to: “Any difference in anything (including opinions, hobbies, values) is morally wrong.”
For more specific definitions we could perhaps discuss the possible paradox of morally acceptable differences causing morally wrong differences later, and how could that paradox be solved.
And then, later, we could discuss speficic strategies that could be used to solve specific problems.
I’m willing, even eager, to empathize with every human being. But that includes Singaporeans, and Republican squares raising their kids in the suburbs. You seem to have a blind spot or worse when it comes to those folks.
I can’t think of a definition of “social alienation” where I would like to see more of it. But I don’t know what you’re asking me to sign on for when you ask me to help you thwart it. I don’t like the sound of it.
Watching from the sidelines, and not being an American, it seems to me you (plural) are close to arguing about definitions (what is to be called right wing?) but that is probably not your intent. If you taboo “left and right” what is left of your discussion?
Your comment has some similar features to what I commented earlier in this discussion (http://lesswrong.com/lw/col/review_selfish_reasons_to_have_more_kids/6onl?context=1#6onl).
We both grew up in late communist era. Non-elitarianism was both an official moral value, and it also was enforced by mixing up people geographically. The good neighbourhoods and bad neighborhoods were not so strongly different from each other as they are now. I started wondering for a while, if my attitude is caused by the regime I grew in… Maybe in some countries or areas there is almost nothing in the middle between good and bad neighborhoods. But people describing schools in Cambridge, where profesors’ kids mix up with the low class kids seem to have the similar experience as I have.
To summarize my opinion: Creating the bubble is usually unnecessary and deforms the mental image of the world for the child. The child chooses his peers as long as there is some variety available. If the child instinctively wants to go out with little criminals and do wrong things together, it is time to sit together at the table and discuss it in the family. One day the child will grow up and will have to choose his peers on his own, as well as make his own moral decisions. Of course, if reasoning would not work, I would probably proceed to creating a bubble eventually, as a last and desperate measure. But in most cases this stage will never happen, and I would not ruin myself financially to do the bubble thing as the first step.
I’m willing to assign significant probability that when you actually have kids and see them experience first hand the actual quality of the school, you’ll arrange for them to go to a charter and/or private school (or possibly even home-school).
I went to an inner city public school for several years. The last year I attended (I was pulled out and homeschooled afterwards), one of my teachers made a cell out of bookshelves to put students who had misbehaved. They were all black. When called on it, she said she was ‘getting them used to it.’ There was also a lot of petty vandalism, bullying, and the educational quality was pretty miserable. If it makes you feel any better, I’m almost certain this experience was an outlying data point.
I was. The experience was good. I learned to double-dutch jump rope, and play the dozens. I didn’t learn to dance the Cabbage Patch, no matter how many times my classmates tried to demonstrate it for me, but that was my failing and not theirs.
Then I took the SAT, got a good score, and on the strength of my high school and my zip code was offered a good scholarship to a private liberal arts college.
What I’m trying to say is: the piece Eugine_Nier is missing is how drastically parental wealth, income, and educational attainment affect the kids’ educational outcomes. If you look at the research, these factors drastically outweigh the quality of the school or the teacher. That’s not to say that teachers have no effect; but, so far as these things have been quantified, the family background is more important by an order of magnitude.
In other words—if you are doing relatively well, and if you read a lot of books, it almost doesn’t matter where you send your kids to school. In fact, sending them to a diverse “inner city” school could be very helpful from a social point of view.
I learned a lot in school, especially once my parents got me out of the public school system. I would argue that sending child to a school where they’re not going to learn anything is an example of a lost purpose.
At least in the US, there is a big subsidy for homeowning in that you can deduct the interest on you mortgage (I think this only applies to your first home ).
I wasn’t aware that the tax breaks on mortgage interest were so straightforward in the U.S. Here in Canada nothing similar exists.
There seems to be an interesting natural experiment here—in Canada, even though there is no such deduction, people’s attitudes and behavior with regards to renting vs. buying are still more or less the same as in the U.S. (In fact, the recent crash has probably left Americans less eager to buy on average.) So while the tax break changes the math in favor of buying significantly for people in high tax brackets, it looks like this isn’t the crucial factor motivating people to buy in practice.
A house in a place where your kids will grow up with—and, in particular, go to school with—kids from respectable middle-class families is very expensive.
This may be true in suburbs, but not everywhere. My mother grew up in a small college town in Kentucky. Her parents, and the parents of her friends, were mostly college educated but below national median income. They lived in small, inexpensive houses. Local kids had access neither to ballet and karate lessons nor drugs and gangs. Her social life focused around church and folk dancing. From what I understand, it was a high-quality, low-cost childhood.
I believe you, but places of the sort you describe are increasingly rare. For most people, I don’t see any plausible way how they could move to some place like that and organize their lives there.
I’d be curious to hear about any contrary evidence, though.
Perhaps another reason peer effects don’t show up is that situations consisting of one kid of upper class background completely surrounded by lower class kids and having no other options but them as a peer group are relatively rare. In most cases there are a number of other middle classish kids in the same boat to form a peer group with.
I base this conclusion on two pieces of evidence, the first is anecdotal, my own school background. My school had a variety of kids that included a large amount of lower class kids from a nearby trailer park and a large amount of respectable kids. For the most part nothing the trailer park kids did rubbed off on me or any of the other respectable kids because we rarely socialized with them, we naturally tended to interact with the kids we had something in common with (although most of the trailer park kids were friendly enough in class, I can’t really say that most of them were unpleasant to be around). The only long-term impact they had on me was to help me realize that the underclass are usually trying to be nice people, even if they fail at it a lot.
The second piece consist of articles (mostly by Thomas Sowell) I’ve read about various immigrant communities in poor neighborhoods and how kids from groups with middle-class values (i.e. Chinese, Jewish immigrants) tended to cluster together and interact with each other and not the poorer kids around them. So it seems plausible to me that the ability to form small clusters of like-minded peers might mitigate peer effects.
Also, I second jsalvatier’s points about some of your comments having a “political” feel. In particular it seems like you have a tendency to work in angry-seeming statements about how awful and unpleasant poor people are that can be rather off-putting, to say the least.
In particular it seems like you have a tendency to work in angry-seeming statements about how awful and unpleasant poor people are that can be rather off-putting, to say the least.
I didn’t say anything about poor people as such. In fact, I would bet that I have more experience with actually being poor myself than most people here (and almost anyone here who is posting from a first-world country).
Now, it certainly isn’t a source of any pleasure to me when I observe that in North America, and especially in many parts of the U.S., the class system has been evolving for several decades in a direction where there is an increasingly wide and severe chasm between the growing underclass and the middle classes, with rampant social dysfunction among the underclass, and increasing correlation between being poor and belonging to the underclass. (Note that I distinguish merely being poor, i.e. non-affluent, and belonging to the underclass, which is dysfunctional by definition.) But that’s what the actual situation seems to be.
You characterize my statements as “off-putting,” but you don’t indicate what exactly you find inaccurate about them. Do you believe that I’m exaggerating the above described phenomenon? Or do you think only that I should be expressing myself more diplomatically about it?
Sorry to take so long getting back to you, I’ve had internet problems all week.
Now, it certainly isn’t a source of any pleasure to me when I observe that in North America, and especially in many parts of the U.S., the class system has been evolving for several decades in a direction where there is an increasingly wide and severe chasm between the growing underclass and the middle classes
I’m somewhat familiar with Charles Murray’s research on this subject, I assume you are too. But he has argued that the middle-class’ efforts to separate themselves from the underclass make the situation worse, not better, because they make it harder to middle class culture to spread to the underclass, and he has advocated attempting to close the chasm in various ways. By contrast in your original comment you seemed distressed that it was so financially difficult for the middle class to separate themselves from the underclass and I got the impression you wished it was easier. Do you disagree with Murray, or was I drawing an incorrect inference from your comment? Feel free not to answer if you think doing so would break the “no discussing politics” rule.
You characterize my statements as “off-putting,” but you don’t indicate what exactly you find inaccurate about them. Do you believe that I’m exaggerating the above described phenomenon? Or do you think only that I should be expressing myself more diplomatically about it?
What I find off-putting is primarily that they sound rather political and we aren’t supposed to discuss politics at Less Wrong. If you were making the point at some politics forum I wouldn’t necessarily find it off-putting. Admittedly this sort of discussion is something of a gray area since it’s hard to discuss this type human social behavior without mentioning ideas that are parts of major political ideologies. I am reticent about voicing my personal opinion on the accuracy of your description is because I’m afraid I’m skirting the edge of political discussion already.
[Murray] has argued that the middle-class’ efforts to separate themselves from the underclass make the situation worse, not better, because they make it harder to middle class culture to spread to the underclass, and he has advocated attempting to close the chasm in various ways. By contrast in your original comment you seemed distressed that it was so financially difficult for the middle class to separate themselves from the underclass and I got the impression you wished it was easier. Do you disagree with Murray, or was I drawing an incorrect inference from your comment?
Well, even if we assume for the sake of the argument that it exacerbates the problem, this still doesn’t mean that it’s irrational for individual middle-class people to separate themselves from the underclass. All that this assumption would imply is that there is a tragedy-of-the-commons effect. But this doesn’t change the perspective and the incentives faced by individuals at all.
I am reticent about voicing my personal opinion on the accuracy of your description is because I’m afraid I’m skirting the edge of political discussion already.
Don’t worry. As long as your comments are polite, well-argued, and made in good faith, you won’t break any social norms here. Especially if the discussion is about general and long-standing social issues, and not about the ongoing political controversies from the headlines.
Upvoted. Why was it downvoted before ? Perhaps the last paragraph irritated someone ? Apart from that, all the other statements I consider a sheer wisdom :-)
I agree with you about peer effects but I think you assume without cause that they are lasting. Twin studies, despite their flaws, would seem to be the best way to establish that, whatever their influence now, differing peer groups and adolescent environments will not lead to different adult characteristics. Any efforts that parents take NOW to improve children’s peer groups, in order to improve current well-being, are valuable. But if the effect fades over time, then the harm is less than most parents think it is, and therefore on the margin children are less costly and Caplan’s conclusion is warranted.
Generally speaking, when I search for literature on peer effects, the information is sparse and confusing. I’m not too surprised, since such effects are much more difficult to disentangle than heritability and shared environment.
My working hypothesis is that:
Peer effects matter a lot, but only up to a certain threshold of peer quality, and this threshold is basically what people intuitively perceive as sufficiently respectable company for their kids. So, basically, underclass peers will ruin your kids, but upper-class or genius peers won’t improve things relative to the company of ordinary middle-class kids. (Just like downright abuse will ruin them, but helicopter parenting won’t improve them.)
In order to quality for adoption, people must pass through sufficiently strict checks that they are highly unlikely to provide an environment below this threshold. So there aren’t any good natural adoption experiments that expose kids to underclass peer groups.
I’d be curious to hear about any contrary evidence, though.
Maybe it does, but this really is my honest impression of what the situation looks like to a typical person aspiring to a middle-class lifestyle these days. I’m curious if you would disagree with any of the following statements, which seem to be roughly equivalent to what I wrote above (all given in the context of contemporary North America):
A house in a place where your kids will grow up with—and, in particular, go to school with—kids from respectable middle-class families is very expensive. In many places, and especially prosperous centers of economic activity that offer good career opportunities, it is somewhere around an order of magnitude above the median yearly household income.
Unless one is extraordinarily wealthy, to obtain such a house, one has to get into debt that is, just like the house price, enormous relative to one’s income.
Such debt, due to its sheer size, can’t be repaid in any time shorter than several decades. Just to pay the interest, let alone to make any dent in the principal, one must part with a significant part of one’s income during this period. In this situation, a plausible bad luck scenario like job loss, health problems, etc. can easily push one into insolvency.
Worse yet, this situation implies that the bulk of one’s net worth is completely non-diversified and invested in a single asset—of a sort that is notoriously prone to bubbles and price crashes. Even worse, the occurrence of such crashes is positively correlated with bad economic conditions that make job loss and decreased earning power especially likely.
Even with a minimalist approach to parenting, raising kids is expensive. Each additional kid makes it less likely that one will manage to remain solvent under the above described conditions.
Sufficiently bad financial ruin can plausibly put one into a situation where one is no longer able to afford to ensure a peer group for one’s kids that will be above the threshold where bad peers exercise significant bad influence. Also, generally speaking, below a certain class threshold, all sorts of social pathologies are rampant to a degree that seems frightful to a typical middle-class person—and, again, bad financial ruin can make one unable to afford to insulate oneself from people that fall below this threshold.
Taken together, (1)-(6) makes for a rather stressful existence, in which having more kids will seem to a lot of people like an additional burden in an already difficult situation, and an additional risk in an already uncomfortable gamble.
I’d be really curious to see where exactly our opinions diverge here.
I think Caplan is correct that this is not the marginal analysis that parents do in considering whether to have another child; that the relevant margin is their time.
More tangentially, I generally think your description is too prescriptive and not an accurate description of how people think, leading to predictions that don’t match the world. In particular, I don’t think we see a clean line between acceptable and unacceptable neighborhoods. People don’t just seek out acceptable neighborhoods free of bad influences, but bid up ever more exclusive neighborhoods, sometimes in the name of good schools and sometimes not. People take on a lot of debt not just to get into acceptable schools, but to get into these exclusive neighborhoods. On the other hand, I think people are much less stressed than you describe, largely because they are irrationally optimistic about debt, employment stability, and real estate as an investment.
You’re right that I oversimplified things in this regard. Besides the minimum acceptable neighborhood quality, there are also many expensive status games people play that they could in principle cut back on without any negative consequences for their kids. On the other hand, the difficult question is how much you can really cut back on status games without jeopardizing your social status in ways that could damage your career and make your life generally unpleasant. (It’s a difficult topic, but it seems to me like it’s hard to escape the effect where higher income comes with the requirements of more intense and expensive status signaling, thus significantly reducing the increase in one’s truly discretionary spending power.) On the whole, I’m not quite sure what to think about all this.
Could be. Except for your closest friends who will presumably speak their mind to you, it’s hard to figure out what people really think behind the socially expected facade of radiating success and optimism. I strongly suspect that the events of recent years have shaken a great many people out of their optimism, though.
Yes, the exclusive neighborhoods could be a form of social signaling, but so too could the helicopter parenting. I think people feel the same kind of pressure towards the two.
Is leasing so uncommon, though? My mom always taught me that buying a house was retarded, admittedly contra what I took to be common wisdom.
ETA: Actually, I think it might have been me always teaching my mom that buying a house was retarded. I think even at ten years old I was better than my mom at economic rationality.
Your mom seems to have instilled in you a politically incorrect and sometimes offensive word usage!
What is it about people with practical-worldly-knowledge that causes their speech to be littered with so many un-PC words and phrases?
The same thing as with people who don’t have practical worldly knowledge that causes their speech to be littered with so many non PC words. But I would estimate to a lesser degree on average.
Well shucks; why didn’t I think of that?
In the contemporary North America, buying a house definitely looks to me like a raw deal. On the other hand, the popular wisdom is indeed the opposite, i.e. that renting is a raw deal, suitable only for people whose tarnished reputation makes them unable to get credit. (The whole issue could be approached by asking some simple and obvious questions suggested by basic economics, but puzzlingly, nobody seems to be asking them.)
On the whole, however, I definitely have the impression that among the great bulk of people who aspire to live a middle-class lifestyle, home ownership is considered as an essential goal for any serious person, let alone family. A contrarian on this issue is likely to face enormous pressures from friends, family, spouse, etc., and risk coming off as seriously weird. (Maybe I am overestimating this phenomenon in the wider society by extrapolating from my own social circles. But it certainly exists to a significant degree.)
So, perhaps this is a sign of how brainwashed by the status quo I am, but I don’t see how this is obvious, nor indeed how it could be obvious, given that everyone who is renting a house is renting it from someone who bought it, who is presumably not losing money on the deal. (Or is that a false presumption? Do landlords typically spend more to purchase and maintain their property than they make in rental income? How could that possibly be true?)
So I would love some more explanation here. Is the idea here that buying a house N years ago was a good idea, but buying one in 2012 is not?
You can also ask a different question. If you borrow money to buy a house, you must find a lender willing to lend you at some interest rate. The interest rate is nothing but the price of renting money. So if it costs less to borrow (i.e. rent) the money to buy a house than to just rent the house directly, then how can the lender possibly be willing to lend you the money instead of investing it into a house himself and earning a rent higher than your interest?
When I make this argument, people usually try to argue that somehow you profit from buying by building equity with time. But if the money rent, i.e. interest, is equal to the house rent, then to build equity, you must make payments to the lender above this basic rent/interest rate—otherwise you’ll just keep renting the same amount of money indefinitely. And if you rent the house instead of making these higher payments, you can save and invest this difference, with the same positive effect on your net worth (which will also have an effect equivalent to the reduction in payments as the principal gets lower). Of course, this isn’t true if the interest is lower than the rent, but then we get to the above question of why anyone would be so irrational as to lend at such terms. It also isn’t true if the house price grows faster than any alternative investment—but even ignoring the lessons from recent history, this again gets us to the question why someone would ever lend you the money at this cheap interest rate instead of investing the money himself into these fast-appreciating houses.
What these considerations show is that according to the textbook spherical-cow microeconomics, on a free market for housing, renting and buying should be equally good deals, since in efficient markets there is no possibility of arbitrage. And buying can be profitable over renting only if there is a strange opportunity for arbitrage where it’s cheap to rent money but expensive to rent a house, even though money and houses are readily convertible into each other. A similar argument can of course be made against the possible advantage of renting—except for the issues of risk-aversion and asset diversification, which decisively favor renting over owning.
In reality, of course, these simple spherical-cow models don’t work, and there are lots of complicated and ill-understood factors involved, including all sorts of people’s biases and signaling issues, high transaction costs, Knightian uncertainties, exuberant speculation, and not the least of all, huge government interference in the market by various subsidies, regulations, and other convoluted and dubious enterprises. The result is a complicated mess in which an accurate analysis of what’s really going on is practically impossible, and in which there may indeed be possibilities for arbitrage.
However, regardless of all that, it seems to me that buying has some tremendous drawbacks, for which I can’t see comparable upsides under any realistic circumstances. The first and foremost is that you’re investing the bulk of your net worth (and on top of that a huge pile of borrowed money) into a single non-diversified asset, which seems like a crazy idea by the most basic principles of sound personal finance. [1] For various other drawbacks, one could perhaps argue that they are offset by the downsides of renting (though I would disagree), but this one really seems to me by itself like a decisive argument against getting into house ownership.
[1] Note that this is one possible solution to your landlord puzzle. The tenant may want to pay a premium to avoid placing most of his net worth into this asset because of risk-aversion, while for the (rich or corporate) landlord, it’s just another item in a large portfolio with the risk well spread.
Here are some complicating factors:
The renter is paying the landlord to assume the risk of tenant mobility. That is, if the renter needs to move, they can do so and the landlord could be stuck with a vacant unit. On the other hand, someone who owns a home and needs to move, needs to find a buyer for the old place, and incurs material (~7%) transaction costs. People who want to stick around for a long time have no reason to pay a premium for an option they won’t use, so longer-term residents tend to buy and not rent.
On the other hand, as long as they can make mortgage payments, homeowners almost never get kicked out of their homes. If you want to bring up kids and build memories/accumulate sentimental value in one place over your whole life, a rental is probably not for you. If you want to customize your home and/or make capital improvements, a rental is also probably not for you.
There’s a kind of pooling equilibrium, and very little incentive to live in the “wrong” arrangement.
It’s also a mistake to compare nominal rent with nominal mortgage payments, as you also have to consider tax deductibility, maintenance costs (which people often underestimate), heating/cooling/electricity/water bills, real estate taxes, and mortgage amortization.
Before I bought my house I ran the numbers and came to the same conclusion, that home ownership would not maximize my net worth and would increase certain types of risk. As a result I see home ownership as a luxury, not as an investment. I bought my house because I wanted it as a luxury and believed I could manage the risk.
If mortgage interest is tax-deductible but rent isn’t, then you have to pay higher rent in order for it to be converted into an interest payment that would come out of pretax income. I think this is how Michael Vassar said the market got so messed up, though I don’t know if I’m correctly attributing it to him, or if the notion is unique to him (I expect not).
There are two puzzling observations here, though:
In booming real estate markets, rent may in fact be cheaper than the interest on the equivalent house price even considering the tax break. I suppose this is because people count on appreciation, but we know how good that assumption is.
The lack of mortgage interest tax breaks in Canada doesn’t make people’s attitudes towards renting vs. buying any different than in the U.S. The only observable effect, as far as I know, is that Canadians on average struggle to pay off their mortgages more quickly.
This is a common notion among econobloggers.
I’m not sure I understand what “conversion” you’re talking about, but it sounds like you might be saying that the landlord has no mortgage interest deduction, so they need to receive a larger rent payment to break even, than it would cost the renter to own the same property. If that’s not your point, then disregard the rest of this comment.
To the landlord the mortgage interest is a business expense and can typically be deducted. So there’s (ceteris paribus) no difference between the net cost of the mortgage to the landlord, and to a homeowner.
What I’m saying is that you can either pay $2000 of rent using post-tax income or $2000 of mortgage using pretax income. This might work out to the difference between a $3300 mortgage payment (pretax income) or a $2000 rent payment (after the $3300 has been taxed at an e.g. 39% marginal rate by state and feds).
OK, that’s what I thought you meant, thanks for clarifying.
Actually, to a business all of the mortgage is a business expense (as well as property taxes, upkeep costs etc.), and all of the rent is a revenue. Then you have to account for amortization, depreciation and what not. So, there is a lot of difference between a business and an individual homeowner, and no ceterus paribus to speak of.
OK. Thanks for clarifying.
Owning a house has the advantage that, even in extreme contingencies, you will still have your Maslovian need for shelter under control. Same reason someone would eagerly trade gold for an equal weight of grain in a sufficiently severe famine.
This is true if you actually completely own your house. However, many “homeowners” don’t; they have mortgages which they are not yet in a position to pay off completely. Given sufficiently extreme contingencies (which needn’t, actually, be all that extreme) they could find themselves without shelter as easily as their renting peers.
Paying the mortgage involves a marginal step toward that desirable condition of true homeownership in a way that rent does not. Essentially, a mortage is rent + a commitment to investing part of your income every month, which many people would not otherwise have the willpower to do.
Yes, the structure of a home mortgage loan helps someone save when they might not have otherwise. But your original comment was that home ownership was helpful because it increased your security that you would have shelter—which is a different point.
If you lose your job and the mortgage has not been completely paid off, you are not in an appreciably better situation re: shelter if you own vs. rent. I suspect that the foreclosure process is more time consuming for the party trying to evict you than the landlord eviction procedures—but 1-3 months vs. 9-12 months* is probably not that useful a difference in the grand scheme of your life.
*These numbers are a guess, but I think the relative difference in time is roughly accurate.
Having three or four or twelve times as long to search for alternative sources of income can make an enormous difference in the grand scheme of your life.
Let’s say it’s 3 months for eviction, 9 months for foreclosure, and it takes six months of searching to obtain a new job. Someone who was renting would have to complete the second half of that search while homeless, a condition which brings with it many unpleasant, life-altering complications. Social capital must be burnt on preserving life and limb when it could have been spent to aid the search itself, or hoarded against future calamities.
How important the difference between 1-3 months and 9-12 months is in that scenario depends a lot on how long it takes me to find another job.
Comparing monthly costs is a bit misleading. There are a whole bunch of less-direct costs and benefits to ownership. A bunch of these depend on your estimation of future economic conditions and of your future desires.
1) If you own a house, you’re incurring the risk that you have to move for personal or professional reasons, and then can’t easily sell. Landlords typically don’t have to sell on short notice—it’s perfectly possible to be an absentee landlord. Not an absentee resident.
2) As a landlord, you can potentially hold the house as one asset in a portfolio. As a homeowner, you’ve locked up a lot of your potential capital in that high-risk illiquid asset; you’re much more exposed if property values go down.
On the flip side:
1) Residents with a mortgage get a tax break that landlords don’t.
2) Being an owner means you don’t have the risk of future rent increases, and can profit if property values go up.
3) Being an owner entitles you to make structural or other changes—repainting, say—that a tenant can’t easily.
That is true, but as far as I can tell, rent increases don’t follow soaring house prices during real estate booms. Rather, the price to rent ratio tends to go out of whack. (Check out these graphs—I can’t vouch for the accuracy of their numbers, but they are consistent with what I observe on the ground. Since I’ve been renting my current house, my rent hasn’t gone up by a single cent, not even to compensate for inflation, while the house prices where I live have gone up by something like 40%.)
Moreover, the standard ways in which mortgages are done leave one exposed to the risk of future interest rates increasing, and they can go up much faster and higher than rent. (And as far as I can tell, one must pay a huge premium to get a permanent fixed rate and avoid playing this financial equivalent of Russian roulette.)
In the US, the large majority of mortgages are fixed rate. Until about 10 years ago, virtually all were. I think mortgages are a lot more popular in the US than in Europe. I’m a bit surprised that fixed rate mortgages haven’t spread into Canada simply by proximity. Maybe they’re propped up by Fannie Mae.
I have no idea what the ultimate reasons for it are, but in Canada, I don’t think it’s even possible to fix the rate for more than ten years. When Canadians speak of “fixed rate,” they typically mean fixing it for only five years or so.
Wow. Yeah, signing up for a mortgage I expected to pay off over thirty years would frighten me with that arrangement.
All Canadian banks offer up to 10-year fixed rate terms, none do longer. “A typical mortgage in Canada has a 5-year term with a 25-year amortization period.” Not sure what is so scary about that...
Regarding 1… can’t a resident of a home, should the need arise to move on short notice, become an absentee landlord on the same property? If the monthly costs of renting equal or exceed the monthly costs of owning, presumably the rental income covers the cost of owning the property, and the former resident can go rent property wherever they happen to need to be.
I would add to your second list:
4) Owning the property means I get more upside if property values go up.
5) Renting the property means I am subject to the owner’s whims in addition to my own.
No, that sounds about right.
It’s interesting to see that the common-sense view is now that buying a house is a bad idea. Just a few short years ago anyone questioning the wisdom of buying a house was seen as mentally deficient, if not downright evil.
This just as prices have reverted close to fair value and buying is starting to make a lot of sense compared to renting. [As long as you have the capacity to pay the loan and you are not likely to move soon.]
This I take to be a sign we are close to the bottom in housing.
Absent some very extraordinary insider information, there’s never any good reason to believe that. At any moment, prices are where they are because they could go either way.
In US, a 3000-dollar-per-month mortgage lowers your taxable income by 36000 dollars. The standard deduction for a married couple (perhaps renting a house for 3000/mo) is 12000. Can’t this go a longer way toward explaining it than peer pressure?
Of course, property taxes are high in good school districts.
Honestly, I think that for the overwhelming majority of people, these tax issues are way over their heads. (I have no confidence that I understand them myself. In finance, reliable and accessible information is very hard to find.) So I think that such considerations, while not completely irrelevant, are easily trumped by the combination of peer pressure, deeply ingrained but obsolete folk wisdom, the sheer emotional appeal of home ownership, the intuitively appealing but fallacious view that renting means giving away money while paying a mortgage means saving it, and the irrational optimism about future trends in house prices (which has abated in recent years in the U.S. but is still rampant in Canada).
On the other hand, the counterargument about asset diversification seems to me unassailable. Putting all your eggs into one basket is correctly considered as a crazy financial strategy, and a fortiori, putting a bunch of borrowed eggs along with them is crazier still. Yet houses are somehow considered an exception.
[Edit to add: Looking at this a bit more, I realize I didn’t even know there was such a straightforward tax deduction for mortgage interest in the U.S. However, this only strengthens my point, since no such thing exists in Canada, but people still think and act the same way.]
As phrased above, your position seems like a reasonable starting point for a discussion, and I probably would not have made my comment if you had first commented with something closer to that.
I was trying to comment on the way you presented the argument before rather than argue that your object level point is mistaken, since I don’t have strong views here. It’s not a serious issue, just something I thought you might like to be aware of. The more I think about this, the less ‘justifiable’ it seems to bring this up.
You used several adjectives with a normative tinge “enormous debt”, “edge of solvency” and colorful imagery “precariously holding onto a rope above a pond full of crocodiles”, which sound like they’re designed to get the reaction “Oy My God! What has America (or pick your favorite country) come to?!”, rather than the reaction “buying a house in an expensive area sounds risky”.
Does that make things clearer?
On the object level topic, your argument seems very focused on debt, do you think renting a house in a similar area substantially lessens the burden?
I have no problem with your comment, and I’m glad to explain the reason why I made my original comment that way. The reason why I used such emotional imagery is that I wanted to depict the way people feel about their situation, which is the relevant thing in this context, even if the way they feel is unrealistic and biased. (Since the way they feel, and not some ideally objective evaluation of the situation, will ultimately determine their decisions about having kids.)
(By the way, do you really think that “enormous debt” and “edge of solvency” are not perfectly realistic descriptions of how many, if not most people in their child-bearing years live these days?)
I’m probably over-focusing on debt, since I myself consider any serious indebtedness with horror. I would guess that debt by itself is probably a much lesser source of worry to most people.
Now, when it comes to the issue of renting vs. buying, this is one of those things where people, including otherwise smart and successful people, tend to have opinions that seem seriously crazy to me. As far as I can tell, among the North American middle classes, it seems to be near-universal belief that a basic prerequisite for serious family life is owning a house, so the idea of renting is a non-starter. There is also the near-universal belief that renting is somehow a raw deal compared to buying, so that renting sends a strong signal that you’re either stupid or, more likely, can’t be approved for credit because of some shameful history you’re hiding (and all the bad qualities it likely implies).
All this despite the fact that basic economics strongly suggests that renting should be a better deal for nearly everyone. (Unless perhaps the relevant markets are distorted to an enormous degree by subsidies, regulations, and perhaps also status signaling games, but in reality I see only the latter in sufficiently strong form.)
However, this gets us to the more general issue of various other expensive status games that one is supposed to play in order to be accepted among one’s social group nowadays. This is a difficult and complicated topic, but on the whole, it seems to me that for a variety of reasons, these signaling requirements tend to expand as one’s career and income advance, so in the end, it’s difficult to avoid the situation where one is constantly walking on the edge financially. Needless to say, all this certainly isn’t conductive to having kids.
So it seems we all agree that your crocodile-pit description does not necessarily reflect reality.
Except for certain child-bearing zoo employees.
It depends on the concrete place and people we’re talking about. There are ways to escape falling into the underclass even with very little money, but that requires luck and talent that many (and I’d even say most) people don’t have.
Well, in 15 years I’ll let you know whether my decision to live and reproduce in a city that has poor people has turned my kids into underclass wrecks.
It would be mere anecdotal evidence. I kind of feel you are trying to tell or signal something other than offering to eventually share with us the results of a long term experiment.
...you’re right, I’m not making housing and childrearing decisions with the main goal of providing a useful data point to LW 15 years in the future. And I am trying to signal that I think poor people are not a crocodile pit. Enough so that I am choosing to share a neighborhood with them.
I don’t think he was painting it as a crocodile pit, I read him as pointing out that negative effects on life outcomes are to be expected on average. It seems a highly probable hypothesis.
How do you interpret “it means being thrown, together with your kids, right into the dreaded underclass in which all sorts of frightful social pathologies are rampant. It’s like precariously holding onto a rope above a pond full of crocodiles” ?
I think you are being unfair when you imply that I identify poor people (i.e. those who are merely not affluent) with the underclass (i.e. those social groups that display high levels of dysfunction). In a place where poor people are generally non-dysfunctional, so that a drastic fall in economic status means only that one will have to live frugally among others doing the same, clearly none of what I wrote applies. However, in a place with a large dysfunctional underclass, a similar fall in economic status is a much more dreadful prospect for someone who is used to the norms and customs of the middle class.
Now, I probably should have omitted the “above a pond full of crocodiles” part in the above quote. It came out when I was looking for a vivid metaphor for the situation of people who struggle to keep themselves above a certain level of economic status below which bad things will happen, with the crocodiles symbolizing a general feeling of fear and danger, rather than being a straightforward metaphor for underclass people. Now I realize that the way I wrote it, the latter reading is natural, but it wasn’t my intention. (It also suggests incorrectly that the main problem with falling into the underclass is the physical danger of crime.)
Point taken.
To be fair, maybe this was part sarcasm towards the middle classes’ secretly hypocritical and overly fearful social attitude, as Vladimir sees it.
As Julia said, people are offended by the suggestion to treat their own class position with extreme cynicism, and to believe that there’s, like, a separate species of people in their country—their compatriots, mostly, not just illegal immigrants—who are dangerous animals to be avoided at all costs. While certainly such a position could increase personal safety, I’m adamantly against it.
For fuck’s sake, I grew up in Russia in the 90s—a time of danger, opportunity and rampant inequality/unfairness—and no-one back then had a “bubble” (well, except for the top 0,1% maybe), so I mixed with kids from rough neighbourhoods and not-so-good families, was even friends with one (after we fought for years and then grew up a bit). Our school was an ordinary one, but well-run, with good and savvy teachers, so there was no violence outside of the usual scuffles and playing at gangs; I think that every one of us would be offended were our parents to try and “bubble” us away from the “underclass”.
Juliawise said she does not believe that she is throwing her kids into a pit of crocodiles. You seem to be saying that she has an obligation to throw her kids into a pit of crocodiles.
I’m saying that she has an obligation, whatever she does, not to think about her society as a pit of crocodiles (except hypothetically, for abstract arguments, etc—never in semi-conscious daily thinking, as a matter of “attitude”), because that’ll only increase the class divide and its problems. Society is affected by its members’ perception of it, and if everyone just wanted to maximize safety for themselves and their families… why, that society would be utterly helpless! What’s the difference between civic responsibility in the face of war or natural disasters and civic responsibility in the face of social division and alienation?
If the middle class just evacuates from everywhere where they have any contact with the “underclasses”, so that the latter are left in utter and visible isolation, like the “Untouchable” castes in India… do you think that spells any hope of survival for the American nation, its culture, its spirit?
If my society is a pit of crocodiles, I want to believe my society is a pit of crocodiles! I’m sure German Jews in the 1930s, or Cambodians intellectuals (or short-sighted people) in the 1970s would agree with me.
Nowadays the standard way of solving coordination/tragedy-of-the-commons problems is through the government; for example Singapore has quality public housings that house 85% of the population and have ethnic quotas to prevent self-segregation.
Singaporeans and Americans probably both want to maximize safety for themselves and their families, but the incentives in Singapore mean that sticking to “people like you” is not as attractive a strategy as it is in the US.
This sounds much like a tragedy of the commons. Remind me again what the rational response is if one has little hope of organizing measures to overcome it.
Where is the evidence that living with the underclass benefits the underclass more than it hurts the middle class? In case you haven’t notice the underclass has due to social changes nearly fully assimilated the wrecked working class that existed in the United States at one point and its cultural norms and dysfunction are spreading and becoming worse. I believe the non-blue collar middle class is next and nearly all social indicators seem to be moving in that direction.
For a brief overview of just how far the cultural class divides have grown I suggest reading Charles Murray’s “Coming Apart”. Why group such different cultures under the marker “American culture” in a sense beyond geographical designation?
= “Remind me again what the rational response is in non-iterated PD when you’re sure your partner is a stupid Defect-Bot.” And my answer to that is, if you value something beyond one-turn success, you’ll at least consider that the PD might be iterated after all, in the historic long run. But if no-one on the “reasonable” side acts like it’s iterated, it wouldn’t be, and the Defect-Bots will eventually tear apart everything you love.
How much can society last in such a way before the abandoned and despised “underclass” finally boils over? I don’t think that it’s more than a few generations. Would you want a somewhat nicer and safer life for your children without a future for their children?
Indeed that was my intended message.
I think it is unavoidable. As to saving “everything you love” or rather salvaging the things I value about our civilization. I have spent a lot of time on this problem. Let us say that my current best hope is FAI. Any effort towards which I consider nearly certain to fail horribly, yet still think should be attempted.
What does this tell you? But let me try and put it another way, especially since you bring up the stupid always-defect-bot. Imagine you have a unfriendly self-improving AI. Now imagine it is built out of people’s brains, brains that you care about. Those brains have dreams and values of their own, but they are not the dreams and values of the uFAI that is running on them. It will continue running and self-improving making their dreams and values matter less and less for how the universe is ordered and indeed it will edit and change those values arbitrarily and unpredictably. Imagine the only alternative to this is that it pretty much blows itself up together with all the brains it contains.
This is the world I think I am living in.
But in that world, defecting to ensure your own short-term gain is best replaced with wireheading; nothing fragile survives anyway, so why rob and oppress other brains for a fleeting illusion of contentment? Therefore, we should find happiness in simple things, avoid increasing strife and competition for resources and, ideally, just stop being troubled by the whole mess.
Oops, looks like I accidentally Buddhism.
I don’t need gains to be “eternal” or “non-fragile” to count. Remember our debate about the “Hansonian hell word”, where I pointed out that a few centuries of human minds living in plenty followed by aeons of alien minds isn’t really a “hell world” to me?
My conclusions about the world simply mean that I have centuries or decades instead of billions of years of minds I care about arranging matter. I don’t find such a shortening a convincing reason to embrace counterfeit utility with wire-heading.
So you’ve no reinforcing reasons to give up your own fleeting well-being for anyone else’s sake, especially that of far people? Well, at least that’s honest. But I still want to aim for more than temporary gratification when deciding what to do—partly because I still feel very irresponsible and worried when trying not to care about what I see in society.
The set of minds I care about obviously includes my own but isn’t limited to it!
Sure, of course you care. I meant, well, I’ll think of how to explain it. But basically I’m talking about quasi-religious values again. I have this nagging feeling that we’re hugely missing out on both satisfaction and morality for not understanding their true use.
Ok I hope you can write it out because it sounds interesting. But let me pose a query of my own.
You seem to think that over a period a few billion years means that real utility optimization should occur rather than going for wire-heading. And think that if limited to a few centuries counterfeit utility is better. How would you feel about 10 000 years of the values you cherish followed by a alien or empty universe? What about 10 million years?
If it makes you feel better if everything I cared was destined to disappear tomorrow I think I would go for some wire-heading, so I guess we are just on different spots on the same curve. Is this so?
I’m thinking. But keep in mind that I’m basically a would-be deontologist; I’m just not sure what my deontic ethics should be. If only I could get a consistent (?) and satisfying system, I’d be fine with missing out on direct utility. I know, for humans that’s as impossible as becoming an utility maximizer, because we’re the antithesis of “consistency”.
Depends on my estimate of how little that hope is, and of how many other people like me there are.
How about an obligation to get good evidence about local groups, rather than listening to people who make a habit of scaring each other?
A lot of your posts leave me with the impression that you think the right wing has all the facts on its side, but it only means you need to oppose them that much more heroically. This is a terribly perverse point of view, all the moreso because there are some facts that support left wing opinions too.
For instance, you’ll note that Vladimir_M is perfectly open about the scarcity of scientific literature supporting his gut feeling about peer effects. A parent came along to say she wasn’t worried about peer effects for her own children, not that it was her moral duty to throw their safety to the wind.
I’m not actually a parent yet, but I do plan to have kids and to raise them in a mixed-income neighborhood (somewhere in Cambridge MA).
I do think peer effects exist. Having worked in a local school full of both “underclass” kids and professors’ children, which is the mix you get in Cambridge, I do think the poorer kids have a somewhat negative effect on the richer kids. I expect there will be some negative effects to my kids from not living in a bubble. However, I love the area and I think that living there will be good for the family, better than going into the kind of debt Vladimir_M mentioned to afford all-rich neighborhoods or private schools. We like living in a city, we like not owning a car, we having no debt. Those things mean living near some poor people.
I accept the correction, but now I don’t see a difference between your points of view. Certainly what you write above is more delicately phrased than “poor people are crocodiles”, but VMs comment was also more delicately phrased than that.
Huh? Um, perhaps you have a point here, but why did you reply with that to my comment above specifically? I thought that, of all things, cross-class solidarity and opposition to the splintered modern society can be construed as just as much of a right-wing value as a left-wing one. Hell, fascists used rhetoric similar to mine.
“What is to be done?” I often scan answers to this question as left-wing, but perhaps that heuristic is a hundred years out of date.
Whether or not “pro-crocodile” and “anti-crocodile” map to “left” and “right”, there is something perverse about saying: the evil anti-crocodiles have it exactly right, so we pro-crocodiles have our work cut out for us!
Let’s call it what it is, OK? IMO there are two related matters here:
1) What is the size of the groups you’re willing to empathize with? and how much relative concern you feel obliged to show for each—your family? neighbours? ethnicity? social class? compatriots? culture? religion? species?
2) What’s your attitude towards social alienation and various unsavoury processes that accompany it? Is it just an inevitable side of humanity, to be ignored if possible? Only to be ignored if you’re sure it’s not about to explode? A moderately tragic natural disaster? A concrete ethical evil, akin to not helping victims in an accident? A disease of the nation-organism, which ultimately concerns all its other parts? A profane/sinful Awful Thing that’s an affront to your preferred Grand Design?
I don’t have a clear answer for myself, neither logically nor emotionally.
(Great. You try to break shit down into more manageable bits—aligned with LW’s mission, it is! - and there’s an instant downvote.)
The parent does not seem to be a response to the grandparent.
I think this question is a bit misleading, as if size is the only important (or most important) information about any group.
Let’s ask instead: “What groups you are willing to cooperate with?” (Because the empathy should lead to cooperation, right?) Now the question is: Is the given group able and willing to cooperate with me? The answer does not depend directly on the size—I can imagine an enlightened galactical society where everyone cares about the well-being of others; and I can also imagine a small group of people harming their neighbors to achieve short-term gains. It is not about the size of the group; it is about what those people do, what they think like.
I’d rather not have it, but merely pretending that it does not exist is not enough. In a long term, if I am able to help people in bad situations, I will try. In a short term, I care about my survival, and survival of my children.
I don’t know. World changes; what was impossible yesterday, may be possible today; but sometimes what was possible yesterday is no longer possible today. Instead of asking whether it is inevitable or not, we should discuss specific strategies, their costs and probabilities of success. There is a difference between asking whether “there is a solution” or whether “a specific strategy X is a solution”. (In this specific case, X being: “living and raising your children among people of lower classes”.)
Perhaps this deserves a specific top-level thread in “Open Thread”. But we should start by trying to define what “social alienation” approximately is (maybe it is an unnatural category consisting of several different cases); then discuss relevant factors; and only then start suggesting solutions.
Here’s a nice post to begin with, written by a local libertarian, Larks, in response to Eliezer’s “Traditional Capitalist Values”.
Giving one example—a hugely mindkilling one—is not the same as providing a definition. It can help me understand your feelings about “social alienation”, but I still don’t know what exactly it means—where are the boundaries of this concept.
Is “social alienation” any kind of situation when one group of people has problems imagining themselves as members of another group? Or is it necessary to have some asymetry, where almost everyone agrees that it is better to belong to group A than to group B? Is there a difference whether belonging to group A or B is caused by family one was born in, or by one’s abilities, or by one’s decisions?
A too wide definition could lead to: “Any difference in anything (including opinions, hobbies, values) is morally wrong.”
For more specific definitions we could perhaps discuss the possible paradox of morally acceptable differences causing morally wrong differences later, and how could that paradox be solved.
And then, later, we could discuss speficic strategies that could be used to solve specific problems.
Are you asking me?
I’m willing, even eager, to empathize with every human being. But that includes Singaporeans, and Republican squares raising their kids in the suburbs. You seem to have a blind spot or worse when it comes to those folks.
I can’t think of a definition of “social alienation” where I would like to see more of it. But I don’t know what you’re asking me to sign on for when you ask me to help you thwart it. I don’t like the sound of it.
Such values are pretty right wing for example.
I’m not even convinced this is a right-wing sentiment when it’s held by an American.
Watching from the sidelines, and not being an American, it seems to me you (plural) are close to arguing about definitions (what is to be called right wing?) but that is probably not your intent. If you taboo “left and right” what is left of your discussion?
Your comment has some similar features to what I commented earlier in this discussion (http://lesswrong.com/lw/col/review_selfish_reasons_to_have_more_kids/6onl?context=1#6onl). We both grew up in late communist era. Non-elitarianism was both an official moral value, and it also was enforced by mixing up people geographically. The good neighbourhoods and bad neighborhoods were not so strongly different from each other as they are now. I started wondering for a while, if my attitude is caused by the regime I grew in… Maybe in some countries or areas there is almost nothing in the middle between good and bad neighborhoods. But people describing schools in Cambridge, where profesors’ kids mix up with the low class kids seem to have the similar experience as I have.
To summarize my opinion: Creating the bubble is usually unnecessary and deforms the mental image of the world for the child. The child chooses his peers as long as there is some variety available. If the child instinctively wants to go out with little criminals and do wrong things together, it is time to sit together at the table and discuss it in the family. One day the child will grow up and will have to choose his peers on his own, as well as make his own moral decisions. Of course, if reasoning would not work, I would probably proceed to creating a bubble eventually, as a last and desperate measure. But in most cases this stage will never happen, and I would not ruin myself financially to do the bubble thing as the first step.
Nice thoughts, thanks.
The important thing is the neighborhood not the city. I think it also depends on the type of poor people.
Cambridge, MA. Lots of lefty professorial and computer types, also lots of Haitian and Cape Verdean immigrants in housing projects.
In different neighborhoods. Specifically, would your children be playing with the children in the projects?
Probably. They’ll certainly be going to school with them. We haven’t bought a house yet, but all the areas we’re considering have projects nearby.
I’m willing to assign significant probability that when you actually have kids and see them experience first hand the actual quality of the school, you’ll arrange for them to go to a charter and/or private school (or possibly even home-school).
Would you please share your own experience with American public schools, if you have any?
I went to an inner city public school for several years. The last year I attended (I was pulled out and homeschooled afterwards), one of my teachers made a cell out of bookshelves to put students who had misbehaved. They were all black. When called on it, she said she was ‘getting them used to it.’ There was also a lot of petty vandalism, bullying, and the educational quality was pretty miserable. If it makes you feel any better, I’m almost certain this experience was an outlying data point.
I wasn’t in an “inner city” school.
I was. The experience was good. I learned to double-dutch jump rope, and play the dozens. I didn’t learn to dance the Cabbage Patch, no matter how many times my classmates tried to demonstrate it for me, but that was my failing and not theirs.
Then I took the SAT, got a good score, and on the strength of my high school and my zip code was offered a good scholarship to a private liberal arts college.
What I’m trying to say is: the piece Eugine_Nier is missing is how drastically parental wealth, income, and educational attainment affect the kids’ educational outcomes. If you look at the research, these factors drastically outweigh the quality of the school or the teacher. That’s not to say that teachers have no effect; but, so far as these things have been quantified, the family background is more important by an order of magnitude.
In other words—if you are doing relatively well, and if you read a lot of books, it almost doesn’t matter where you send your kids to school. In fact, sending them to a diverse “inner city” school could be very helpful from a social point of view.
It was for me.
In other words your school was ok provided you are willing to do all your learning outside of it.
Wait—that’s not how everybody does their learning?
I learned a lot in school, especially once my parents got me out of the public school system. I would argue that sending child to a school where they’re not going to learn anything is an example of a lost purpose.
At least in the US, there is a big subsidy for homeowning in that you can deduct the interest on you mortgage (I think this only applies to your first home ).
I wasn’t aware that the tax breaks on mortgage interest were so straightforward in the U.S. Here in Canada nothing similar exists.
There seems to be an interesting natural experiment here—in Canada, even though there is no such deduction, people’s attitudes and behavior with regards to renting vs. buying are still more or less the same as in the U.S. (In fact, the recent crash has probably left Americans less eager to buy on average.) So while the tax break changes the math in favor of buying significantly for people in high tax brackets, it looks like this isn’t the crucial factor motivating people to buy in practice.
This may be true in suburbs, but not everywhere. My mother grew up in a small college town in Kentucky. Her parents, and the parents of her friends, were mostly college educated but below national median income. They lived in small, inexpensive houses. Local kids had access neither to ballet and karate lessons nor drugs and gangs. Her social life focused around church and folk dancing. From what I understand, it was a high-quality, low-cost childhood.
I believe you, but places of the sort you describe are increasingly rare. For most people, I don’t see any plausible way how they could move to some place like that and organize their lives there.
Well, you can live in an apartment, for one thing.
(I don’t know how the math works out nowadays, so I’m not really advocating it, just pointing it out.)
Perhaps another reason peer effects don’t show up is that situations consisting of one kid of upper class background completely surrounded by lower class kids and having no other options but them as a peer group are relatively rare. In most cases there are a number of other middle classish kids in the same boat to form a peer group with.
I base this conclusion on two pieces of evidence, the first is anecdotal, my own school background. My school had a variety of kids that included a large amount of lower class kids from a nearby trailer park and a large amount of respectable kids. For the most part nothing the trailer park kids did rubbed off on me or any of the other respectable kids because we rarely socialized with them, we naturally tended to interact with the kids we had something in common with (although most of the trailer park kids were friendly enough in class, I can’t really say that most of them were unpleasant to be around). The only long-term impact they had on me was to help me realize that the underclass are usually trying to be nice people, even if they fail at it a lot.
The second piece consist of articles (mostly by Thomas Sowell) I’ve read about various immigrant communities in poor neighborhoods and how kids from groups with middle-class values (i.e. Chinese, Jewish immigrants) tended to cluster together and interact with each other and not the poorer kids around them. So it seems plausible to me that the ability to form small clusters of like-minded peers might mitigate peer effects.
Also, I second jsalvatier’s points about some of your comments having a “political” feel. In particular it seems like you have a tendency to work in angry-seeming statements about how awful and unpleasant poor people are that can be rather off-putting, to say the least.
I didn’t say anything about poor people as such. In fact, I would bet that I have more experience with actually being poor myself than most people here (and almost anyone here who is posting from a first-world country).
Now, it certainly isn’t a source of any pleasure to me when I observe that in North America, and especially in many parts of the U.S., the class system has been evolving for several decades in a direction where there is an increasingly wide and severe chasm between the growing underclass and the middle classes, with rampant social dysfunction among the underclass, and increasing correlation between being poor and belonging to the underclass. (Note that I distinguish merely being poor, i.e. non-affluent, and belonging to the underclass, which is dysfunctional by definition.) But that’s what the actual situation seems to be.
You characterize my statements as “off-putting,” but you don’t indicate what exactly you find inaccurate about them. Do you believe that I’m exaggerating the above described phenomenon? Or do you think only that I should be expressing myself more diplomatically about it?
Sorry to take so long getting back to you, I’ve had internet problems all week.
I’m somewhat familiar with Charles Murray’s research on this subject, I assume you are too. But he has argued that the middle-class’ efforts to separate themselves from the underclass make the situation worse, not better, because they make it harder to middle class culture to spread to the underclass, and he has advocated attempting to close the chasm in various ways. By contrast in your original comment you seemed distressed that it was so financially difficult for the middle class to separate themselves from the underclass and I got the impression you wished it was easier. Do you disagree with Murray, or was I drawing an incorrect inference from your comment? Feel free not to answer if you think doing so would break the “no discussing politics” rule.
What I find off-putting is primarily that they sound rather political and we aren’t supposed to discuss politics at Less Wrong. If you were making the point at some politics forum I wouldn’t necessarily find it off-putting. Admittedly this sort of discussion is something of a gray area since it’s hard to discuss this type human social behavior without mentioning ideas that are parts of major political ideologies. I am reticent about voicing my personal opinion on the accuracy of your description is because I’m afraid I’m skirting the edge of political discussion already.
Well, even if we assume for the sake of the argument that it exacerbates the problem, this still doesn’t mean that it’s irrational for individual middle-class people to separate themselves from the underclass. All that this assumption would imply is that there is a tragedy-of-the-commons effect. But this doesn’t change the perspective and the incentives faced by individuals at all.
Don’t worry. As long as your comments are polite, well-argued, and made in good faith, you won’t break any social norms here. Especially if the discussion is about general and long-standing social issues, and not about the ongoing political controversies from the headlines.
Upvoted. Why was it downvoted before ? Perhaps the last paragraph irritated someone ? Apart from that, all the other statements I consider a sheer wisdom :-)
I agree with you about peer effects but I think you assume without cause that they are lasting. Twin studies, despite their flaws, would seem to be the best way to establish that, whatever their influence now, differing peer groups and adolescent environments will not lead to different adult characteristics. Any efforts that parents take NOW to improve children’s peer groups, in order to improve current well-being, are valuable. But if the effect fades over time, then the harm is less than most parents think it is, and therefore on the margin children are less costly and Caplan’s conclusion is warranted.