Tuesday, July 3, 2018

Joseph Hotz


For this post, I interviewed Professor Joseph Hotz. He is the Arts and Sciences Professor of Economics at Duke University. He is a labor economist who specializes in the economics of the family. His research spans the entire life cycle of the family, including the relationships between parents and children at various stages of their development.  

I interviewed Professor Hotz about his paper, “The Impact of Regulations on the Supply and Quality of Care in Child Care Markets.” In this paper, Professor Hotz and his coauthor, Professor Mo Xiao, seek to investigate the effects of policies that are designed to improve the quality of child care in the U.S.   

Child care centers are regulated at the state level. The regulations are mostly focused on insuring the welfare of children in the centers. They include: (1) maximum child to staff ratios, which vary by age of child; (2) maximum group size; and (3) educational requirements of staff. They also might include other rules like background checks for the staff, and some requirements for safety like equipment checks. But these authors focus on the three that I’ve enumerated, which are widely adopted by states. The specificity of the regulations, and their severity, vary by state.

There are also two types of centers: center-based, and home-based or family-based. The home-based centers tend to be smaller, and less stringently regulated. Developmental psychologists generally agree that center-based care is of higher quality, in terms of educational enrichment, than home-based care. 

The authors have detailed data about both types of child care centers in all 50 states, over the period from 1987 to 1997. And, it turns out that there are some interesting unintended consequences of the regulations. For one, the authors find that states that have more stringently regulated center-based care have fewer of these centers; and in particular it is low income neighborhoods that lose these centers, as compared to high income neighborhoods. Families tend to find care close to home, so it seems that these regulations, designed to ensure that centers are developmentally enriching, instead limit access to them; and more so for the families that might need them the most. In fact, as an example, if the average child to staff ratio (7.5) is imposed in low income child care markets, the number of centers would fall by 10%, whereas this requirement would lead to an increase of 8.7% in the number of centers in high income neighborhoods. Further, with fewer center-based care options, these low income children end up in family-based centers, in what is generally considered lower quality care.

There is some good news. The regulations seem to be working: the centers that do remain as a result of these stringent regulations tend to be of higher quality. However, again, these centers tend to be located in high income neighborhoods. So, overall, high income families are the ones benefiting from this care. All in all, it seems that high income families benefit from these regulations, while low income families might struggle to gain access to the best quality centers.  

I asked Professor Hotz if there would be a better way to design child care regulations, to avoid these negative unintended consequences. He told me that he believes that subsidies to low income households should be the focus. Such subsidies do exist, but the emphasis has often been on the parents, with the goal of helping a parent, usually a mother, get off of welfare and into work. The subsidy will get a child into daycare, but with less attention paid to the quality of the care. He argues that the focus should be on the child. For example, it should not be a requirement that the mother must work in order to receive the subsidy. Developmental psychologists have made some headway on this issue, and it’s made some progress in Congress. But it has not gotten off the ground yet.  

I asked Professor Hotz about some of his other recent work. In this paper, he and his coauthors are studying families with stepkin. They are interested in learning about how much time stepparents spend with their adult stepchildren, and how much time adult children spend with their elderly stepparents. 

Let’s talk! I would love to know what you think about this example of unintended consequences. Please submit comments and questions.

Friday, September 22, 2017

Jenna Stearns

For this post, I interviewed Professor Jenna Stearns, Assistant Professor of Economics at the University of California, Davis. She is a labor economist; and her research is centered on understanding what she calls “family-friendly” policies in the workplace.  She is particularly interested in how they change the decisions women make about their employment, their family structure, and their health.

In “Equal but Inequitable: Who Benefits from Gender-Neutral Tenure Clock Stopping Policies?,”  Professor Stearns and two co-authors, Heather Antecol and Kelly Bedard, look at an example of a family-friendly policy that I myself, as an academic, have taken advantage of: stopping the tenure clock after childbirth or adoption. So, I was naturally drawn to this research. Most of you probably don’t know how this detail of the tenure system works in the academic world. This is a policy that allows assistant professors to extend the time until they come up for tenure, typically by a year. Initially, colleges and universities created these policies only for women, to “level the playing field.” That is, to try to help make up for the time women spend away from work after childbirth. But now it is most common for these policies to be gender-neutral, so that both new mothers and new fathers can take advantage of them, usually a maximum of twice before tenure time.

In this paper, the authors study the effects of these policies only at the top 50 Economics departments in the United States. They have data on over 1300 assistant professors hired in these departments between 1980 and 2005. They can’t tell exactly who took advantage of this program, but this is where the power of statistical analysis comes in. By separating out the various characteristics of the professors and the universities, they can estimate the effects the policy has had, and on whom.

The news is disheartening for women, but could be worse. They find that males at an institution with a gender-neutral clock stopping policy have about a 17% higher probability of getting tenure than they would have had before their institution adopted a clock stopping policy. On the other hand, women are about 19% LESS likely to get tenure after their institution adopts the policy. However, while tenure rates do fall for women at these top 50 institutions, the evidence shows that these women do go on to get tenure at other, sometimes, lower ranked institutions. What seems to be happening is that at the most prestigious institutions, the clock stopping policy allows men time to produce additional publications in the top 5 journals in Economics. On the other hand, women are not able to increase their publications in these journals. At these institutions, publishing in these journals is key to earning tenure. 

I think this research is important because it adds something new to the evidence on why women are not able to make it to the top of their professions. However, Professor Stearns is careful to point out that these results may be somewhat specific to Economics as a discipline. In Economics, especially at the most prestigious institutions, publishing in the top 5 journals is important for earning tenure, and it can take a long time to get these papers published. Hence, the one-year extension of the tenure clock early on in their career is very valuable for assistant professors in these departments, if it helps them get their research into these outlets. The gender-neutral clock stopping policy may not prove to be detrimental to women in other fields. 

I asked Professor Stearns how she thinks these policies should be designed differently, now that we know they are not working the way they were intended. The thing is, one of the reasons tenure clock stopping policies have changed from female-only to gender-neutral is because of the stigma associated with taking time off at childbirth: women feared that they were being perceived as less committed to their careers under the female-only version. But Professor Stearns believes that this work shows that the policies need to take into account that it is women who generally bear most of the burden of childcare; and that any policy should be designed to help encourage men to prioritize childcare -- during the tenure clock stopping, and in general. She suggests that the benefit can perhaps be available for both males and females, but be more generous for females. 

I wondered whether this work has implications outside the world of academia. Professor Stearns mentioned law firms, where young lawyers come up for partner, in a similar way that assistant professors come up for tenure. They have one shot at it, early on, so policies like this could be similarly effective (or not?!) in the law profession. I am very curious about the potential implications for enacting family-friendly policies likes this more widely in the business world, and maybe even in other professions. 

I asked Professor Stearns about some of her other research. She is currently working on a project that looks at the effects of different types of maternity leaves. So this work is specifically about policies designed only for women who take time off after childbirth. While some of these provide mothers with an income stream, others instead ensure that their jobs will be waiting for them. Her preliminary findings are that the latter types of policies work better to keep women in their jobs in the long run. 

Let’s talk! I would love to know what you think about this example of unintended consequences. Please submit comments and questions.

Monday, June 19, 2017

Michael Luca

                                                                 Photo of Michael Luca 

For this post, I interviewed Professor Michael Luca, Assistant Professor at Harvard Business School.  Professor Luca’s research and teaching focus on the economics of digitization and on using data to improve policy and managerial decisions. In his work he has collaborated with organizations ranging from Yelp to the City of Boston.

Professor Luca wrote “Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment” with Benjamin Edelman and Dan Svirsky, both colleagues at Harvard Business School. I first heard about this study when it was a working paper, and Professor Luca was interviewed on the podcast Hidden Brain. In this study, Professor Luca and his coauthors examined the online marketplace, or what academics call the sharing economy. In particular, they wanted to see how the differing policies of websites play out for the consumers who use them.

Think about the transactions you carry out on eBay or Amazon. They are pretty much anonymous: you usually know nothing about the people you are doing business with. But, what about Airbnb? If you’ve used it, you know that this site requires users to share personal information in order to participate. The requirements have changed over time, and they are different for hosts vs. guests. You must share at least your name, and hosts must post their pictures. Looking at a random sample of guests, Professor Luca and his coauthors found that 44% had posted profile pictures. The stated reason is that sharing this personal information builds trust between host and guest. But, as heard on the Hidden Brain podcast, this sharing of personal information has led to the unintended consequence of racial discrimination, against African American guests. In addition to the anecdotes you hear on the podcast and elsewhere (search #airbnbwhileblack on Twitter to see more), this paper provides evidence that discrimination on the platform is widespread.

How did the authors find evidence of racial discrimination on Airbnb? They exploited the fact that Airbnb users must share personal information, in particular their names. They created 20 Airbnb accounts, 10 whose names sounded distinctively African American and 10 whose names sounded distinctively white. Half of each were female, and half were male. Examples of female African American sounding names included Tanisha Jackson and Latoya Williams and examples of male white sounding names included Brent Baker and Brad Walsh. In total, they sent about 6,400 messages to hosts in 5 cities requesting bookings. It turned out that guests with white sounding names were accepted about 50 percent of the time while those with African American sounding names were accepted only 42 percent of the time. 

But, you might wonder, who is carrying out this discrimination? The authors found that even hosts who they thought might not discriminate were: hosts with multiple listings (many of whom are subject to and violating existing discrimination laws), hosts in diverse neighborhoods, hosts with more experience, and hosts with lower priced listings all discriminated. The only hosts who didn’t discriminate were the ones who had hosted an African American guest in the past. (The authors were able to gather this last bit of information from pictures of previous guests of the hosts.)   

Airbnb is aware of these findings, and has begun to take action. A 32 page report responding to the mounting evidence is posted on their website. A team of data scientists now has the responsibility of  evaluating this issue internally. Professor Luca has met with members of the staff, and shared possible solutions. One would be to eliminate completely the sharing of personal information. This, however, is not something that Airbnb is willing to do – Airbnb clearly wants to maintain a culture of sharing personal details, in contrast with Priceline and other short-term rental platforms. They do have an option called “Instant Book”, which to be clear, existed before, but now the goal is to get 1/3 of properties booked through it. From the Airbnb website: “Instant Book listings don't require approval from the host before they can be booked. Instead, guests can just choose their travel dates, book, and discuss check-in plans with the host.” So, it makes Airbnb more like your standard hotel site. Professor Luca argues that the effectiveness of instant booking in curbing discrimination depends largely on which hosts are using it: if those who were discriminating start to adopt it, it will make more of a difference, but if it is mainly adopted by people who were already less likely to discriminate, then the impact will be more limited. Airbnb also has added to its terms of service, which now includes an anti-discrimination policy, which every host must read and sign.

But, what if the hosts don’t even realize that they are discriminating? Professor Luca explained to me that this could be part of what is happening here:  it is what psychologists call unconscious bias. Hosts make decisions about who to accept, and don’t notice that they are systematically turning down African American guests.  Maybe these new policies will make them more aware. Hopefully they will now at least stop and think about the possibility that they are discriminating, and that they have the ability to take action to prevent it. (As a teacher, this reminded me of the existing evidence that all teachers, even female teachers, call on boys in the classroom more than they do on girls. I think this must be unconscious bias as well.)

Beyond his research on discrimination, Professor Luca has other work about information in online platforms. For example, in his working paper, “Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit,” with Dara Lee Luca, he uses data from Yelp to study how increases in the minimum wage affect restaurants. The authors find that the least expensive restaurants are forced to close when the minimum wage increases.  

Let’s talk! I would love to know what you think about this example of unintended consequences. Please submit comments and questions.