September 10, 2003

Early this year, economist Steven Levitt of the University of Chicago (educated at MIT) received the John Bates Clark award that is given every other year (but sometimes not) to the most promising economist under 40 years of age. 

Dr. Levitt did not develop new analytical techniques, new accounting methods, or new mathematical models.  Instead, he asked interesting questions and used tried and true economic methodology to develop interesting answers to those questions. 

The New York Times magazine did a much better job than I could about Dr. Levitt's work more than a month ago.  I will not repeat that here. 

I will mention, however, that the vast majority of John Bates Clark award recipients eventually receive a Nobel prize.  Aside from honoring an individual, the award also identifies an area of analysis that is especially promising.  But Dr. Levitt's contribution is not about methods but about solutions to easily identified problems. 

His most controversial conclusion came from the observation that the crime rate continued falling in the 1990s even after the crime prone population (14-23) began to grow following a period of absolute decline.  He had the observation problem related to additional police.  (Do more police deter crime or respond to the existence of more crime?) 

He had the incarceration solution (by putting a larger percentage of 14-23 year olds into prison until well beyond their recidivism age, crime will fall).  And he mentioned the reduction in unwanted children through voluntary abortion as a crime deterrent. 

As an 11 year resident of a privately endowed orphanage, I have developed some ideas about unwanted children, but they do not include requiring the mother who did not want them to care for them. 

He also observed that most cocaine distributors lived with their mothers.  They were not the ghetto warlords but product users who financed their habit through distribution.  The distribution is created through addiction, not money.  Indeed, neither the final distribution nor the production of illegal drugs creates criminal wealth.  It is the transportation that does. 

Ask these questions and alternative solutions begin to appear.  Can we use subsidies to get Afghan farmers to grow more wholesome crops than poppies (we certainly can get farmers not to grow grains in the U.S. through subsidies)?  Farmers should be indifferent if the subsidy is large enough.  But Afghan farmers are not.  Why?

The transportation chain where the wealth is created begins with the warlords.  Then what are the warlords providing?  The same thing that gangs were providing when they developed in governmentally overlooked neighborhoods in U.S. urban areas, protection.  If we establish a system of protection that does not evolve into warlords, can we eliminate the production of poppies in Afghanistan?

No one is saying that by asking such questions, the answers become easy or practical.  Tribal structures may eliminate some solutions.  But then we must ask what is provided by the tribe.  Are there alternatives?  (There almost always are when people migrate, so what are they and how costly are they?  Are the costs greater than stationing troops in the country?)

I will grant that not all of this thinking process is the sole domain of economists.  Sociologists, anthropologists, and psychologists certainly can weigh in with their expertise and methodologies to develop interesting solutions. 

Indeed, some of the more interesting economic work (once the theorists get their noses out of their eloquent but largely irrelevant equilibrium models) is being done through joint collaboration between economists and other social scientists.  Such thinking was not done, or at least is not in evidence, in what should replace the political structure of Saddam Hussein. 

Just as the warlords have returned after the destruction of the Taliban in Afghanistan (and the Taliban got a foothold because of the excesses of the warlords), the mullahs and family tribes are rising after the destruction of the Baath party in Iraq. 

Are we really so na´ve to believe that democracy will flourish before the infrastructure necessary to make it happen is developed?  Do we really believe a democratic  infrastructure will automatically develop in a culture where it never had before?

Dr. Levitt received the John Bates Clark award because his work is interesting.  Given current world conditions, that type of thinking also may be in short supply.


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