IQ and homicide

The inverse correlation between mean white IQ (as estimated by NAEP scores) and the white homicide offender rate at the state level in the US is a statistically significant .67 (p = 0).

A few technical notes: Florida is excluded for lack of adequate FBI uniform crime reporting data. "White" includes Hispanics who racially identify as white. To compute the total white NAEP scores for each state, I took NAEP results for 8th graders from 2005 and then weighted the non-Hispanic white and Hispanic scores according to how much of the total white test-taking population each comprised. For the states in which the Hispanic population is too small to be reliably reported, I used the average Hispanic score from the states where the Hispanic populations are large enough for mean scores to be reported.

Intelligence doesn't just improve quality of life measures in a cerebral way, it also does the physical body good.

On the wealth gap

Pew recently published a report accompanied by a press release that highlights the recent growth in the ratio of the median wealth of white households relative to that of black and Hispanic households. As of 2009, the median white household's net worth was 20 times that of blacks. Just four years prior, the multiple had 'only' been 11.

The median net worth of white households fell over $22k from $135k in '05 to $113k '09, while black net worth decreased $6, from $12k to $6k. White wealth decreased more than NAM wealth in absolute terms.

As nearly one-quarter of NAM households have no assets beyond a vehicle (about 1 in 17 white households are in the same situation), it's a bit misleading to focus on relative multiples, since the floor is not zero, but some undefined negative number far below that. If a double dip recession propels us into "peak everything", imagine the consequences are another $20k off of median white household net worth and another $5k off black net worth. Now we're looking at a multiple of nearly 100 between white and black wealth. Is it plausible that the relative increased suffering of blacks will be an order of magnitude worse than the pain this causes whites? If black net worth falls to $100 and white net worth to $50k, is the black situation 500 times worse? Doubtful (though it is admittedly difficult to quantify economic suffering). And what if median black wealth falls $7k, into negative territory, where a large number of blacks already are? The multiplier becomes a negative number, which just gets really confusing in the popular press.

Anyway, the underlying data that comparative reports like these are built upon is often useful for calibrating one's hazy conception of the American scene (in this case, by affluence and race) into something sharper. Unfortunately, even though the report understandably focuses on median rather than mean wealth, breaking out actual average dollar figures by asset class for all households is more tenable for mean wealth than it is for median wealth based on the figures provided. Consequently, that's what the following table displays, derived primarily from the data on page 6 of the full report (all figures are in US dollars, rounded to the nearest $100):

Asset class	Whites	Hispanics	Blacks	Asians
Total assets	271,000	73,000	73,800	313,000
Own home	103,000	40,200	41,300	109,600
Rental property	16,300	6,600	4,400	15,700
Other real estate	10,800	1,500	2,200	3,100
Stocks and mutual funds	43,400	2,200	3,700	100,200
IRA and Keogh accounts	27,100	4,400	4,400	18,800
401(k) and thrift accounts	32,500	8,000	10,300	31,300
Financial institution accounts	16,300	4,400	4,400	18,800
Other interest-earning assets	5,400	700	700	3,100
Business equity	19,000	10,200	6,600	15,700
Vehicles	8,100	3,700	3,000	6,300
Other assets	8,100	1,500	700	3,100
Unsecured liabilities	(13,500)	(9,500)	(8,900)	(12,500)

The gap between whites and NAMs is by far the widest in categories involving financial assets. While the average white family's sedan is only twice as nice as the average Hispanic's family van, the white family's Scottrade account is 20 times as valuable. Seeing people on the street gives the general impression that whites tend to be a little better off than NAMs, but it's certainly nothing like a British tourist traveling to a village in the Congo. Seeing each of these people's personal ledgers reveals that behind relatively equal public appearances, whites have a lot more tucked away than NAMs do (and Asians--whose cars are less flashy than those of whites--have even more than that tucked away). If whites and Asians tried to be as opulent relative to their real wealth as blacks (and to a lesser extent, Hispanics) do, racial tensions and the clamor for robin hood economics would be even worse than they already are.

A couple of other interesting asides: 1) The report mentions that the Asian figure for stocks and bonds is noticeably higher than it was four years ago, even though the DJIA lost around 40% of its value over that period of time, and suggests caution in putting too much stake in an Asian sample that may have had an unexpectedly high number of very affluent participants. The total mean wealth of Asian households holds over the four year period. As the recession hit states with large immigrant populations the hardest, it would be expected for mean Asian wealth to drop quite a bit, like Hispanic mean wealth did. So the caution is valid.

2) While the median Hispanic household's net worth is higher than the median black net worth, mean black net worth is higher than mean Hispanic net worth. Among the lower classes, blacks struggle a little more than Hispanics do. But there are a lot more blacks than there are Hispanics who make it big in things like sports and the world of entertainment.

Charter cities: Institute Occidental rules, realize Occidental results?

In a recent EconTalk podcast, host Russ Roberts had Stanford's Paul Romer on to talk about the latter's ideas about what he calls "charter cities". Romer explains that Haitians are miserable because they live under terrible rules. He suggests letting them seek out 'charter cities'--something akin to Singapore with a suzerainty and guarantor of laws that doesn't interfere with internal affairs--and in the process allowing the rest of the world to learn from experimentation in the field. It's the "laboratory of the states idea" on steroids.

The glaring problem in the eyes of HBD realists, of course, is that it is more than just 'rules' that make Haiti Haiti--Haitians themselves play a big role. Relative performance of immigrant groups in the US is similar to the performance of the home countries those immigrants come from. Moving pockets of the underclass into middle class suburbia does not turn the hood rats into burghers--turns out you can take the underclass out of the hood, but you can't take the hood out of the underclass. Likewise, it's easy to get Mexicans out of Mexico, but taking Mexico out of Mexicans is not so simple.

Because it operates under the presumption that human populations are completely interchangeable, the hour long discussion is almost worthless intellectually. But the content isn't all forgettable flotsam. Worse that that, much of it is civilizationally masochistic (28:33):

I think it would be great if we let poor people come to the United States. As [Romer] say[s], their incomes usually jump manyfold. They're very productive. They make our lives better.

Yes, clearly importing poverty on a massive scale is the best way to increase the quality of life in the US! The only reason places like Zimbabwe and Somalia are such hellholes is because they have governments that are too heavy-handed and too feeble, respectively, for a Western standard of living to be realized. Since we have a poor track record when it comes to changing the governmental structures of other countries, a better way of fighting poverty is to take the world's impoverished and put them within the borders of the developed world. What could possibly go wrong?

Roberts goes on to agree with Romer that just allowing a few hundred thousand poor migrants into the US each year is merely a drop in the bucket, that there are one billion people who would benefit from coming here. Those we are unable to take in should be transported to these charter cities (presumably on the developed world's dime, although that's not fleshed out in the podcast). Because they become much wealthier upon taking up residency in the US, largescale immigration of impoverished third-worlders not only carries with it a putative economic benefit (because everyone knows that it is countries where labor costs are lowest are the same countries where standard of livings are the highest!), it also brings a humanitarian one.

The same logic can be applied to wealth redistribution at the individual level. If a bunch of indigents are free to take up residence on Bill Gates' Lake Washington property and use the facilities for their own well-being, it will markedly increase their quality of life. It won't even break Bill's bank. But it will bring down the value of his property, cause him to devote more of his energy to addressing the issues that arise as a result of having indigents living under his roof, decrease the trust existing within the household (Bill's not doing the same thing with his spare time as the indigents are), and disincentivize the behaviors that allowed him to acquire the property in the first place.

I suspect that in response Romer would point out that such indigents being allowed to take up residency on Bill's property is a violation of his personal property rights. But are property rights at the individual level principally different from the rights of a national sovereign to the territory that comprises it? If the majority of the Gates' household was in favor of allowing the indigents to move in, the political argument would be different. When it comes to illegal immigration in the US, however, it is clear that the majority of the Gates' are opposed to hosting the indigents. Forced against their will to accept their new housemates, the Gates' will be prone to move to sections of the house where the indigents don't frequent, such as the northeast quadrant of the property.

The American Southwest is approaching the Deep South in terms of poor scholastic performance, public indebtedness, unemployment, and criminal activity. White flight has been an element of California's existence for over a decade now, due in part to unskilled immigration from Mexico and Central America, most of it unregulated or based on family reunification rather than any measure of merit. The negative externalities listed previously (in addition to accentuated economic and social inequality) associated with largescale unskilled immigration is why laws like the one recently signed in Arizona are created--residents of the states on the front lines realize the transformation from first-world United States into third-world Mexico is not a desirable one.

That Northeastern professors existing in the most unrealistic setting imaginable--the university setting--see no meaningful difference between Ellis Island Jewish immigrants from Russia in the late 19th and early 20th centuries--before the modern welfare state came into being, when a couple percent of aspiring immigrants were actually turned away in fear they'd become public charges, and when the need for physical labor was rapidly rising--and the immigration patterns today is unsurprising.

While I generally enjoy EconTalk podcasts, Roberts regularly makes empirical assertions that are simply incorrect (although to be fair, he usually prefaces them with something along the lines of "I think, although I'm not familiar with the latest data..."). The one theoretical problem he sees with unfettered immigration--although his comments show he really only thinks it's a political, not a legitimate, problem--into the US is the potential for abuse of the welfare system. After asserting that immigrants in the US improve the lives of natives, he insinuates that welfare use among immigrants is not an actual problem (28:42):

As long as they didn't live off our welfare system, which is a big handicap--I don't think they want to live off our welfare system, but the fact that they could, means people aren't going to let them in. We don't have that luxury [the realization that current immigration patterns are beneficial for natives] right now, politically, I don't think.

A graph comparing usage rates of various welfare programs in the US from the Center for Immigration's impressive 2007 report profiling the US' foreign-born population demonstrates, however, that while it may not be the case in Fairfax, on the whole immigrants make considerably better use of welfare programs in the US than natives do:

Employment and satisfaction with standard-of-living

In February 19th's Radio Derb podcast, John Derbyshire commented on a recent Gallup poll concerning the percentage of adults in a state expressing satisfaction at their individual standard-of-livings (explicitly, "all the things you can do and buy"):

Here's a new Gallup poll on how satisfied people are with their standard of living. Guess which state came out top? Yep, it's the Flickertail state. ... North Dakota also had the nation's lowest unemployment rate last December, 4.4 percent.

I'm always interested in state-by-state comparisons, as there is an enormous amount of data available at that level for which relationships are waiting to be discovered and causations to be suggested. So I was eager to find the actual poll and get to work. However, the regulars correlate tepidly with the Gallup measure; with IQ at .40, the percentage of the population having attained a bachelor's degree or higher at .11, average credit score at .45, average monetary standard-of-living (imperfectly) measured by both income and average cost-of-living at .12.

Turns out there's a simpler explanation for the results, and the Derb was intuitively all over it. The share of the SoL-satisfied population inversely correlates with a state's December '09 unemployment rate at a vigorous .78 (p = 0). The poll was based on interviews conducted throughout 2009, after the long-term consequences of the recession had become clear (ie, Phoenix and Las Vegas are not going to be booming again anytime soon). The higher the percentage of people out of work, the lower the statewide level of satisfaction with personal standard-of-livings. The range for the unemployment rate by state is 10.2 percentage points (Michigan on the high-end at 14.6%, North Dakota on the low-end at 4.4%); the range for SoL satisfaction is 13.3 percentage points (North Dakota on the high-end at 82.3%, Nevada on the low-end at 69.0%). It's almost as though we're looking at the same thing measured in a different way.


This is entirely sensible--those who have no steady source of income (government transfers excepted) are virtually guaranteed to be unsatisfied with their abilities to buy and do the things they want to buy and do. I just finished a book by Henry Hazlitt and am now reading Murray Rothbard's America's Great Depression. While I've long since become more inclined toward the Austrian school than any of the other major economic schools of thought, the Austrians' position on the presumed irrelevance of employment levels strikes me as lacking a needed subjectivity (the presence of which otherwise separates the Austrians from others)--unemployed people are unhappy people.

Economic self-sufficiency is an important ingredient in the recipe for enjoying a satisfactory existence. There is much to the argument that giving primacy to the goal of protecting employment leads to retarding effects on technological innovation, and I do not mean to suggest that full employment be perceived as society's ultimate objective.

But this does have obvious implications on immigration policy--expanding the supply of unskilled laborers simultaneously increases the native unemployment rate (bad) and decreases the incentives for innovation (also bad) by reducing the long-term cost savings of mechanized alternatives to menial labor.