Jane the Actuary General Interest, Retirement

Forbes post, “A ‘Living Wage’ Of $34,000? Bad Data, Or Bad Math, Will Stand In The Way Of Social Security Reform”

Originally published at Forbes.com on February 1, 2021

 

Yes, I have been calling for a comprehensive Social Security reform ever since I began writing at this platform. And, yes, that plan calls for a change from the current formula to a flat benefit for all, or, as I’ve also called it, a “basic retirement income.”

The catch, of course, is this: how do you decide what that right income level is?

The federal government gives us a number that seems reasonable enough by its name: the “poverty guideline.” This works out to $12,880 for a single person, or $17,420 for a household of two. True, you’d have to decide whether a household of two gets twice the single person’s benefit or only the two-person-household benefit, and you’d have to decide whether two people cohabitating count as a “single household” or not, but then the hard work of deciding what an “anti-poverty” benefit should be is finished.

Now, there’s a small wrinkle here: the federal government has two different calculations, the “guideline” and the “threshold”: the former is used for benefits eligibilities and the latter for counting how many people live in poverty — and, for what it’s worth, the threshold for an individual over 65 is $1,000 less than someone younger.

But the “poverty guideline” is ultimately just a metric used for other calculations — eligibility for Food Stamps is not “below the poverty line” but “below 130% of the poverty line.” And the calculation itself is based on the rather arbitrary assumption that people spend 1/3 of their income on food, so it’s not a particularly “scientific” measure of the amount of money needed to keep someone out of material deprivation.

But the promise President Biden has made with respect to expanding Social Security is to boost benefits to a minimum of 125% of the poverty level — and, it appears, to do so on an individual basis, so that households-of-two would get what works out to 180% of the poverty level. Is this enough?

Let’s do some more math: the current federal minimum wage is $7.25 per hour, which works out to $15,080 per year, based on a 40 hour week. Biden wants to boost this to $15.00 per hour, or $31,200, because, he says, that’s the level needed to prevent people from living in poverty (see his speech on his spending plan). Is it necessary to keep Social Security benefits in line with the minimum wage?

Lastly, there are (at least) two “Living Wage” calculators that purport to calculate the wage truly needed to cover the “basic needs” of families or a “subsistence living” income level.

The first of these is at MIT. To take some representative numbers:

In Peoria, Illinois, a single adult working 40 hours a week would need a wage of $10.70, or $22,256 per year. Two adults sharing expenses would need a total of $35,734.

In Chicago, those wages/incomes increase to $28,288 and $43,513, respectively.

(The “living wage” climbs even higher for parents; a single adult supporting 3 children would need to earn $39.31 per hour or $81,756 annually, according to their calculations, but that’s not really relevant when it comes to old-age/retirement benefits.)

The second of these was produced at the Economic Policy Institute. It does appear somewhat outdated, using 2017 data, but it produces considerably higher calculations.

Here, in Peoria, they calculate annual expenses of $33,994 for a single adult and $47,785 for a couple.

And in Chicago, they calculate a single adult needs to earn $36,917 and a couple, between the two of them, needs $50,006. Again, the numbers are even higher with children — $101,140 with three children.

But, it turns out, the basis for their calculations is questionable, at best.

According to the MIT documentation, the calculations assume that families prepare all their food at home (no eating out) according to the government’s “low cost food plan.” They calculate average health expenses based on typical premiums for employer health insurance and out-of-pocket costs from national government surveys. For families with children, they assume families elect the lower-cost option between family and center child care (but use average costs for each type).

But they base housing costs on the HUD Fair Market Rent estimates, that is, from HUD data for the 40th percentile rent for “standard quality units.” Why would a family living at a basic, subsistence level, rent an apartment at nearly the average rent for the area? They calculate transportation expenses based on average spending across all consumers, adjusting only to reflect purchasing used rather than new cars. They (appear to) calculate “other” expenses, again, by using average Americans’ spending on such items as clothing or personal care products.

The EPI documentation indicates other ways in which numbers they claim to be “basic expenses” are really just “average survey expenses.” For all metro areas, they assume parents choose daycare centers, despite their higher cost, and, again, spend the average amount on daycare. For transportation, they again use average American transportation spending, adjusting only to reduce vehicle miles travelled assuming less discretionary travelling. For “other” expenses, they again use survey data on actual spending rather than calculating necessary spending, with the primary adjustment being the assumption that families don’t spend any money on “entertainment” or the survey’s “other” category.

In addition, this calculation uses ACA/Obamacare exchanges to calculate health insurance costs but doesn’t take into account the Obamacare premium subsidies. And the tax calculations don’t appear to include Earned Income Tax Credits or Child Tax Credits (though this could be a result of calculating such high costs that the hypothetical family wouldn’t qualify).

Did MIT and EPI intentionally seek to inflate the living wage calculations? It stands to reason that groups advocating for boosts in the minimum wage would construct these calculators in a way to produce results that are invariably higher than minimum wage, but when they produce values that are so much in excess of what is reasonable, they weaken their case instead of strengthening it. After all, consider that the median individual income is $36,000; does it really make sense to say that the majority of Americans are living at a below-subsistence level?

Or is this a result of data limitations? A typical exercise in a high school Personal Finance course is to collect information on food costs, rent costs, and so on, from various sources, and construct a budget on this basis, but that’s not easy to replicate for families nationwide. One also imagines that there’s a certain fear that calculating such a spending budget might be misunderstood as casting moral judgement on the poor.

And, of course, these calculations are all based on spending for working families, not retirees, who are, as a practical matter, likely to spend less on clothing or other discretionary spending, who have the large majority of their medical spending covered by Medicare and the entirety covered by Medicaid for those below federal thresholds.

At the end of the day, this rabbit hole discussion shows that it is by no means easy to figure this question out — neither for those affected by the minimum wage nor for those affected by discussions of what the right level of Social Security benefit is.

December 2024 Author’s note: the terms of my affiliation with Forbes enable me to republish materials on other sites, so I am updating my personal website by duplicating a selected portion of my Forbes writing here.

Jane the Actuary General Interest

What if Trump fixed the healthcare system – and no one knew it?

So let’s start with an article in yesterday’s Chicago Tribune, a wire report from AP, that took me by surprise:

“Employers start sending workers shopping for health coverage.”

The article described a new form of employer healthcare provision, the Individual Coverage Health Reimbursement Arrangement or ICHRA.  This approach takes the well-established Healthcare Reimbursement Account, which combines a high-deductible healthcare plan and a reimbursement account, money provided by the employer which can be used to offset some healthcare costs while meeting the deductible, and adds a twist:  the employer can provide money which individuals can use to purchase health insurance — and they can do so with the same tax advantages as if they were providing the insurance coverage directly.

To be sure, there are limitations that mean that the government’s forecast is that only 11 million employees will benefit:  the employer must not offer group health insurance already (that is, employees can’t select this as an alternative to group health insurance), or can only offer the ICHRA to categories of employees to whom it doesn’t otherwise offer insurance (like part-time employees).  Also, an employee buying insurance through the Obamacare “exchange” can’t “stack” the employer benefit and the premium credits, and can’t pay for the additional costs in a pre-tax manner, but that is possible if an employee purchases insurance outside of the ACA exchange.  And, of course, a “regular” employer-sponsored healthcare plan is still preferable for employees when they benefit from group rates and don’t have to wade through a potentially overwhelming number of plan choices.

(For lots of detail, see “New Final Rule Lets Employees Use HRAs to Buy Health Insurance” at SHRM.)

Now, it turns out, this isn’t new.  This was a rule issued by the departments of HHS, Labor, and the Treasury issued the rule enabling this on June 13 of 2019.  And, yes, this is a “rule” — an administration interpretation/implementation of existing legislation, so in principle Biden could simply issue a new rule which overrules this (with the applicable comment period and other bureaucracy).  It seems likely that two other Trump “rules” — one allowing “association health plans” and the other allowing low-cost short-term insurance — will be sent to the circular file, but I have a hard time imagining that Biden will oppose this one (though perhaps my imagination is faulty).

But I do believe that this small regulation, over time, could have a very outsized impact on the healthcare system.

Bear with me for a minute here:

Remember the staff model HMO?

That was supposed to fix our healthcare system.  Rather than the existing expectation of “consumer-driven healthcare plans” that we healthcare customers will work with our healthcare providers to ensure that our medications are the lowest-cost options possible, that no unnecessary procedures and tests are performed, and that such tests and procedures as are necessary, are done by the most cost-effective provider (e.g., through look-up tools at insurer websites), the staff model HMO’s providers did all that as professionals.

And back in the day — well, not only is my own family’s current health plan a high-deductible one, but our choices are high deductible, or very high deductible.  You likely have the same (unless you’re a public sector employee).  When my first son was born, we paid a $10 copay.  That was it.  Oh, and a $300 upcharge for a private room.  Later, when he needed speech therapy, we paid copays, then were issued a refund check, because, it turned out, there was a no copay, it was first-dollar coverage.

But let me backtrack:  the original HMO concept was staff-model.  Its name, Health Maintenance Organization, was adopted because of the focus on preventive care, in a manner that wasn’t the norm in traditional insurance, which, at the time, did not necessarily cover ordinary annual check-ups and the like.  HMOs came about in the 1970s as doctor practices which were affiliated with particular hospitals; they were also called “prepaid healthcare” and the idea was that they were not an “insurance” product but you simply paid in advance for all your healthcare from that particular healthcare system.

What happened to them?  Some time ago, I tried to figure out the story and there is no good book on the matter. Perhaps that’s now changed.

In the 70s and 80s, they became popular — not mainstream, necessarily, but popular.  In some cases, they became too popular — doctors filed lawsuits in areas (e.g., small towns) where an HMO dominated medical practice, and pushed for “any willing provider” laws as their medical practice was limited to the portion of the population not a part of that HMO.  I vaguely recall that that it wasn’t just about losing clients to the competition but that they ended up with the less-desirable customer base.

At the same time, major insurance companies established their own version of “HMOs” which promised customers (and employers) that they could have their cake and eat it too — medical care with the low cost-share requirements of a staff-model HMO, but with thick booklets of participating providers rather than specific medical clinics to visit.  We were for a number of years in the late 90s and early 2000s enrolled (via our employer) with HMO Illinois, a Blue Cross Blue Shield of Illinois “product.”  We had to choose a primary care physician and women choose an OB/GYN, and an “Independent Practice Association,” a collection of doctors and one or more affiliated hospitals.  (In-between my first and second child, the doctor’s practice I was at, switched from an IPA associated with the hospital down the street to one a half-hour away, which was a nuisance; later, they left the HMO entirely as the networks shrank and, in our last year in the HMO, I had an annual exam with a doctor whom I had picked somewhat randomly from the provider listings.)  This worked on the basis of “capitation” — the IPA was paid a fixed fee per patient, but rather than resulting in a focus on preventive care and health maintenance, each visit consisted largely of handing out referrals to specialists to churn patients out.  This wasn’t sustainable.  (Why didn’t it work?  These weren’t groups of doctors who had come together to provide managed care, but were purely financial arrangements — and specialists and hospitals were not a part of this system in any case so shunting a patient to a specialist was a financial gain, not a loss.)

The end point of this pathway was the movement from HMO to what was called HMO-POS, where the POS was “point of service” and it referred to the creation of an out-of-network reimbursement level, and to the PPO, what we’re now generally used to today, with networks but with the requirement for referrals having been abandoned.  Was it planned, or foreseen, when BCBS and other providers set up their HMO competitors, that this would be the outcome?  Surely not.

And traditional HMOs have not entirely disappeared — Kaiser still remains, having built itself up during the 70s and 80s to such a point that laments about “the provider list is too narrow” are not relevant.  I, again, tried to dig into their story more as well at some point, to understand why there are not dozens of other competitors with their business model, but concluded that it’s just not possible for a plan to become a truly-integrated staff-model HMO in this environment.

But –

in the meantime, we are witnessing the ever-increasing consolidation of hospitals and doctors’ practices.  Locally, my nearby hospital has a growing list of urgent care centers, sites for lab work, and affiliated doctors’ practices.  They had been a wholly-independent hospital but are now themselves merging with a large hospital chain in the area.  There are many similar networks, and growing numbers of them.  As I had watched this trend, I had thought that this would make it possible for a new type of staff-model HMO, one in which alongside their usual roles in the community as medical care providers to anyone who showed up, with any sort of insurance or none at all, the entire network could offer a prepaid/self-insured “medical care product” in which care within that system would be coordinated, with doctors and hospitals alike sharing the objective of providing the best and most cost-effective care — with care while travelling or for rare circumstances requiring even greater levels of specialization being managed through a re-insurance product.  Over time, if coordinated care produced the best outcomes for patients, more patients would switch.

But there was a missing piece.  Employers want to offer their employees medical care that’s reasonably one-size-fits-all.  If you have employees scattered across the country, or even across a wide metropolitan area, it adds one more layer of complexity to your process of providing employee benefits.  In order for the way health insurance works to change, the relationship between employers and health insurance has to change.

And yes, finally, I get to why I think that the ICHRA has the power to reinvigorate health insurance — if increasing numbers of workers are “shopping” themselves, and without the constraints of Obamacare plans which are obliged to use a very small number of tools in their toolbox (high deductibles, narrow networks based on doctors willing to accept low reimbursements), then we might eventually get to the point where a hospital network might find it financially feasible to offer a coordinated care product.

Yes, that’s a big if.  I’m not an expert, and I suspect that, even if somewhere, someone is looking at taking that step, there are likely too many regulatory hurdles in the way.  But it’s a start.

 

Image: http://www.dodlive.mil/2017/10/03/usns-comfort-how-the-hospital-ship-helps-during-disasters/(U.S. Air Force photo by Staff Sgt. Courtney Richardson)

Jane the Actuary General Interest

Covid update: contact tracing, hospitalizations, international comparisons

Yesterday, the state of Illinois announced that suburban Cook County is now subject to covid mitigations, in which, as of tomorrow, indoor dining and bar service will be prohibited and groups at any one gathering will be capped at 25 people.  As the Chicago Tribune reported,

By Wednesday, more than half of Illinois residents will be living under stricter measures meant to slow the latest surge of the coronavirus as suburban Cook County and the Metro East region outside St. Louis join four other regions where the state has shut down indoor dining and bar service and lowered the cap on crowds to 25.

A week ago, only one of the 11 regions in Gov. J.B. Pritzker’s reopening plan was subject to those rules. . . .

Suburban Cook County has had eight consecutive days of test positivity rate increases and seven days of increased hospital admissions. It is the first region to surpass the state-set thresholds for those two metrics at the same time. The other region have triggered tougher rules by reaching an 8% positivity rate threshold for three consecutive days. As of Friday, the rolling seven-day positivity rate for the Cook County suburbs was 7.7%.

With that context, I wanted to write down some of my recent thoughts on developments.

First, why did contact tracing fail?

Contact tracing was, after all, the subject of my May 15 Tribune commentary, in which I observed that the state’s reopening metrics required that for Phase 3, contact tracing would be fully-rolled out, and for Phase 4, contact tracing would be fully scaled up, so that tracing would begin within 24 hours for 90% of new diagnoses in a region.  Turns out, Phase 3 began according to the timeline for all the other metrics, at the end of May, and Phase 4 began at the end of June.  But according to the organization TestAndTrace, as reported at Patch, Illinois has a failing grade in their assessment of Illinois’ contact tracing, due to their very low number of tracers and lack of transparency about their progress.

With respect to Cook County, the Cook County Department of Health announced on June 11 the receipt of a $41 million grant to scale up contact tracing.  But even just last week, Daily Line reporter Alex Nitkin had this to say:

Now, the question above is, I admit, partly rhetorical.  I have my own suppositions as to why, when it really would have made a difference in the late spring/early summer, when cases were down and when Illinoisans were relatively more hunkered down — that is, when a contact tracing effort would have uncovered fewer contacts for any given individual — the state, and Cook County and the city of Chicago as well, fumbled this:  the desire to create union jobs, for one, and the focus on “equity” even when a focus on “low-hanging fruit” might have been more effective.  Various reports in the meantime have described the suspicion with which immigrants and low-income Chicagoans treat contact tracer outreach; focusing resources on parts of the state which would have a greater success rate, as well as more rural areas where there would have been fewer contacts to trace in the first place, would surely have found more success.

In any event, at this point, it is far less effective to contact-trace when cases are becoming increasingly prevalent, as is the case now.

And, in addition, it would appear that the state is misinterpreting the data that it does garner from contact tracing, in any case.

Earlier in the month, Capitol Fax provided a graph produced by the state which was used as justification for its focus on bars and restaurants.  The graph is appallingly difficult to read (and is shown only as a picture, with no data accessible), but claims that, statewide, when contact tracees were asked where they had “visited or worked” within the past 14 days, the second-largest category of response was “restaurant/bar,” with 2300 responses.  The top response was “other,” which includes “vacations, family gatherings, weddings, college parties.”

But this graph is exceedingly unhelpful.  Respondents could give multiple answers, and the graph’s “n” is given as 17,939, but that’s the total number of boxes checked; a true “n” from such a survey would be the number of people surveyed.  We don’t know what percent of tracees visited bars or restaurants, and, more importantly, we don’t know whether people who went to bars/restaurants were disproportionately likely to have been diagnosed with covid.  In other words, to tell us something meaningful, this graph would need to be paired with another one, in which a random sampling of people who matched the demographic characteristics of covid-diagnosed tracing respondents.

And, in fact, here’s my transcript of Dr. Ngozi Ezike’s comments at the press briefing last Friday, upon being asked why bars and restaurants are being singled out for closure despite being linked to only 6% of outbreaks (about the 28 minute mark):

Ezike:  An outbreak would be something if somebody works like say at a manufacturing plant and a lot of people work in close proximity and 50 people develop covid in that setting we would have that as a documented outbreak where this person knows that I was working next to this person, this person contracted the virus, a week later so did I, a week later this person did, three days later, so that is like a clearly documented outbreak.  In most cases of covid, the person who has it cannot tell you exactly who they got it from, they cannot say, “oh, I was working in this setting and all these people got it and I got similar symptoms, so in the absence of a documented outbreak all those individuals that did contract the virus the way that you look at where they may have gotten it from is to look at the time at which, the time frame from when you catch the virus to when you show symptoms or to whey you’re diagnosed, in those preceding two weeks,  we ask the cases, where have you been, and all of those places that they list, that they have been in the preceding two weeks are exposure sites.  Any of those places could have been where they contracted the virus.  And time after time, bars and restaurants come up as the number two or the number three place of all of these places frequented, so that’s why we put it as a high because it consistently comes up as a place where people who are infected listed as one of their exposure sites.

What’s remarkable is that Pritzker appears to recognized that this is a poor rationale for closing bars and restaurants, and he jumps in:

Pritzker:  And I would just add that there are literally a dozen studies, many many articles about these bars and restaurants being exposure sites, and the effect of bars and restaurants on the spread of the virus and that is why there is a focus on bars and restaurants.

Ezike’s specialty is pediatrics and her expertise within public health comes from working on health care within juvenile detention centers.  Is it possible that she just doesn’t have the grounding in statistics that’s necessary to grasp these concepts?

Second, why are hospitalizations level in suburban Cook County?

Wirepoints has been tracking key covid data for Illinois as a whole since early on.  When cases rose starting in July, in a way that did not appear to be clearly linked to the ramping up of testing (because at that point the state had already increased testing substantially), I followed their tracking of hospitalizations and deaths and observed that these numbers were holding steady, in a manner that fit the theory that the rise in cases were due to increasing numbers of low-risk young adults becoming diagnosed, or that masks were having the effect of reducing the viral load and thus the severity of the infection.

But that’s no longer the case.  On September 19, hospitalizations stood at 1,417.  They rose gradually, to reach 1,575 on Oct. 3; since then they’ve risen steadily, to 2,605 on October 24.

What’s more, deaths have been increasing during the same time period.  Ranging from the upper teens to the low 20s all summer and early fall, the 7 day average stood at 42 on Oct. 26.  It’s also difficult to make a visual judgement, but there is no apparent lag, as you’d expect there should be, from the start of the increase in hospitalizations to the start of the increase in deaths; these are occurring simultaneously.

Frustratingly, it is not easy, from the information available at the Illinois Department of Health’s website, to look at hospitalizations by region or county.  With a little bit of patience, we can look at admissions for Covid-like illnesses region-by-region:

Region 1, northwest Illinois:  hospitalizations level over the summer, then steadily increase from 4 on September 20 to 14 on October 21.

Region 2, north-central-west:  steady increase in hospitalizations over July (4 on July 3) to early August (12 on August 4), then another small increase in recent weeks (14 on Oct 22).

Region 3, central-west: again, small incease in mid-July, level to mid-October, then increase from 8 on Oct. 12 to 12 on Oct. 18.

Region 4, south- west (St. Louis area): relative peaks in late July and again in late August; decline since then to match the level of June.

Region 5, south:  level/very gradual increase through September; then increase from 4 on Oct. 1 to 8 on Oct. 21.

Region 6, east: same pattern as south, very gradual increase through end of September, then jump: 8 on Oct. 2 to 19 on Oct. 22.

Region 7, far southern suburbs/exurbs: lots of bouncing around: peak in mid-August, decline, then increase from the beginning of October to now (6 to 16).

Region 8, western/far western suburbs: increase in mid-June, level through the end of September, then steep increase since then: 14 on Oct. 5 to 27 on Oct. 23.

Region 9, northeast Illinois (Lake and McHenry counties/far north suburban Chicago): increase in June, level through August, drop through mid-Sept. and level to the end of September, then increasing from 7 on Oct. 5, to 13 on Oct. 23.

Region 10, suburban Cook County: level-ish through the end of August, a small drop through the end of September, then a jump from Oct. 2, at 23 to Oct, 22, at 49.

and Region 11, Chicago: level through July and August, drop in September to a low of 21 on Oct. 3, then up to 41 on Oct. 23.

(Note that the Wirepoints numbers are total hospitalizations; these are admissions on any given day.)

But, again, here’s suburban Cook County according to the IDPH dashboard:

Covid-like admissions, October 27 data. https://www.dph.illinois.gov/regionmetrics?regionID=10.

But at the same time, the Cook County Department of Public Health‘s own website’s reported hospitalizations have been level, showing no change other than a drop-off for the past week due presumably to lags in data reporting.  (Note: as of today, they have removed the data on hospitalizations; I have requested an explanation.)

What’s going on?  You’ll have to trust me that the CCDPH data was level, because it’s been removed, but is the fact that the state includes “covid-like illnesses” regardless of whether a patient has covid, causing an increase in the numbers?  I can well understand using this broader definition back when testing was difficult, but covid tests are no routine for anyone who enters a hospital even for unrelated reasons.

What’s more, here’s the equivalent graph for region 11, Chicago:

But here are the hospitalizations as reported by the city of Chicago (as downloaded here on October 27):

— and this, despite rising case numbers:

Ugh.

Again, are hospitalizations due to covid really on the uptick?  Or is it due to “covid-like illnesses”?  Or — benefit of the doubt here — is there something faulty about the “covid hospitalizations” figure even after tests have become available without practical limits in terms of hospital access?

Third, what about Europe?

Biden, and Trump opponents generally speaking, are willing to say that a considerable number of America’s covid infections and deaths can be blamed on Trump’s poor management of the pandemic, and it’s easy to point to countries which have had extremely low infection rates — Japan, Taiwan, South Korea.  It’s also easy to point to stunningly foolish things Trump has done and said, and the whole mask debacle, well, it’s been a debacle — insisting in March that masks were useless only to later on conclude they weren’t, but stoking substantial suspicion due to that prior insistence.

But claims that the US has been singularly incompetent in managing the pandemic are falling apart.

According to the Financial Times‘ website, measured on a cases-per-million basis, averaged over 7 days, the European Union’s rate equaled that of the US on October 11 or thereabouts.  Now it’s rate is substantially higher, at 284.2 cases per million, compared to 200.7 in the US (as of Oct. 22 and 23, respectively).  In fact, very few countries within Europe are lower than the US, and many of those which are, are seeing steady increases.  Even Germany, lauded for its successful handling of the pandemic early on, is now seeing a surge in cases, with a 14 day change of 191% for new cases and 198% for deaths, compared to an increase of 40% and 14% for cases and deaths, respectively, for the US, according to the New York Times.  (Remember, to increase by 191% is not to double, but to triple, that is, for the new case rate to be 3 times that of the original rate.)  That means that seems quite likely indeed for Germany to reach our level of cases relative to the population by Election Day, which would be ironic when Joe Biden claims that he would have had German-levels of success in avoiding infections in the U.S.

Why are cases spiking in Europe?

Does that mean that there’s nothing, really, that can be done but hope that a vaccine and/or an antibody treatment is approved, manufactured, and distributed?  What does an observation of the case increases in Europe mean for our decision-making about whether to shut down restaurants or merely restrict their capacity, or even to re-institute lockdowns?

This is where I end, as I don’t have answers to these questions, and I’ve achieved my short-term goal of writing now new information I’ve learned and issues I wanted to share.

coronavirus

Jane the Actuary General Interest, Retirement

Forbes post, “When WEIRD People Have Weird Retirements: Some Comments On The ‘WEIRD’ Explanation Of Western Distinctiveness”

Originally published at Forbes.com on October 17, 2020.

 

Who are “WEIRD” people?

It’s a clever acronym, to denote people who are Western, Educated, Industrialized, Rich, and Democratic. But the acronym is meant to indicate something else as well, that psychologically, those of us whose ancestors hail from Western Europe, or who live in counties shaped by their culture, are weird, that is, different, in terms of our psychology, our norms, our sense of right and wrong, than the rest of the world. This is part of the thesis of a new book, The WEIRDest People in the World, by Joseph Henrich. The more remarkable part of that thesis, though, is something unexpected: that those differences have their origins in an unexpected source, the prohibition by the Catholic Church of marriages by people who were closely, or even distantly, related (as well as the requirement that the couple consent to the marriage and the prohibition of multiple spouses).

Now, readers may be wondering what this has to do with retirement — unless you’re a diligent enough follower of my writing to recall my April 2019 article about retirement in the Middle Ages. We may think that the notion of “retirement” is a modern one, and that as long ago as that, one worked until death or was simply cared for by one’s children, but that’s not true — even then, in Europe, newlyweds lived on their own, rather than staying in the family home to care for their parents as they aged. And that’s quite different than the “filial piety” of Confucian cultures or practices elsewhere (and, incidentally, the “Middle Ages” is a label that really only makes sense to use for Europe so that, as far as I’m concerned, “European Middle Ages” is redundant). Which means that Henrich’s theory provides insights that are helpful in thinking about retirement cross-culturally.

So let’s start with this: what are the psychological differences between WEIRD people and the rest of the world? Here are some of their traits: they (we) are “highly individualistic, self-obsessed, control-oriented, nonconformist, and analytical.” Henrich writes in his first chapter that

“We focus on ourselves — our attributes, accomplishments, and aspirations — over our relationships and social roles. We aim to be ‘ourselves’ across contexts and see inconsistencies in others as hypocrisy rather than flexibility. . . . [W]e are less willing to conform to others when this conflicts with our own beliefs, observations and preferences. We see ourselves as unique beings, not as nodes in a social network that stretches out through space and back in time. . . . When reasoning, WEIRD people tend to look for universal categories and rules with which to organize the world . . . . That is, we know a lot about individual trees but often miss the forest. WEIRD people are also particularly patient and often hardworking. Through potent self-regulation, we can defer gratification. . . . WEIRD people tend to stick to impartial rules or principles and can be quite trusting, honest, fair, and cooperative toward strangers or anonymous others. In fact, relative to most populations, we WEIRD people show relatively less favoritism toward our friends, families, co-ethnics, and local communities than other populations do. We think neoptism is wrong, and fetishize abstract principles over context, practicality, relationships, and expediency. Emotionally, WEIRD people are often racked with guilt, as they fail to live up to their culturally inspired, but largely self-imposed, standards and aspirations. In most non-WEIRD societies, shame — not guilt — dominates people’s lives.”

Henrich provides many examples of psychological studies (e.g., experiments conducted among university students globally, or by anthropologists in small villages) which show that WEIRD societies are the outliers in all these traits. One particularly striking one for me was the Passenger’s Dilemma: if you are in a car with a friend, and he gets into an accident, do you lie on his behalf to save him from legal consequences? Henrich shows the results in a graph rather than a table, but as it turns out, the footnote send me to a source with the numerical results, among which are that the the following percentages of people would refuse to lie, believing, that is, that universal norms of right and wrong are more important than the desire to protect our kith and kin:

  • Switzerland, 97%
  • USA, 93%
  • Canada, 93%
  • Ireland, 92%
  • Sweden, 92%
  • Australia, 91%
  • UK, 91%
  • Germany, 87%
  • Spain, 75%,
  • Japan, 68%,
  • Greece, 61%,
  • China, 47%,
  • Russia, 44%
  • South Korea, 37%.

What’s more, this particular book (Riding the Waves of Culture by Fons Trompenaars and Charles Hampden-Turner) focused on the importance of culture in global business and the questions were posed to individuals in business, which means that, one presumes people from non-WEIRD cultures would be more likely to be influenced by WEIRD norms (and, possibly, immigrants and minorities within WEIRD cultures themselves would be underrepresented in the survey group).

After establishing the distinctiveness of WEIRD culture, Henrich gives a lesson in the development of clans and states, and explains that, as people began to live in larger groups, clans developed, and, in most parts of the world, even when premodern states developed, intensive kin-based institutions remained important: extended households, arranged marriages with relatives (cousins), reliance on kin for protection and caregiving, and prevalence of polygynous marriages. This is still the norm in many parts of the world, and might have been the case in Europe, too, but for the “money wrench” of the Catholic Church’s regulations around marriage and family, what he calls the Marriage and Family Program, or the MFP. Beginning in late Antiquity, the Catholic Church promulgated prohibitions that increasingly expanded the restrictions placed on marriage, first to remarrying the sister of one’s deceased wife, then marriage between cousins or step-relatives, then second-cousins, second-cousins once-removed, third cousins, and eventually sixth cousins, before, in 1215, dialing back the prohibition to extend only to third cousins.

Why did the Church implement these prohibitions? The short answer is that the bishops and popes of the late Roman Empire and early Middle Ages considered them incestuous, but why? There’s no particular theological answer, and the prohibitions of the Eastern (Orthodox) Church(es) are much looser. Certainly, the overall discouragement of marriage benefitted the church directly, when people entered religious life and donated their land to the church (e.g., religious orders). Loosening the ties of kin and clan also strengthened people’s identity as “Christian.” What’s more, the shift from a third-cousin to a sixth-cousin prohibit was, to some extent, a fluke; Roman civil law counted each step up and back down a family tree as a “degree of consanguinity” but the medieval/Germanic method counted each step up alone (as we do today; our third-cousins have a shared great-great-grandfather), doubling the size of the family tree of prohibited relationships.*

This last bit fits in neatly with Henrich’s explanation that, from a cultural evolution perspective, in the same manner as in “regular” evolution, random mutations simply occur and enable to species to be more successful if they are useful, so, to, this was a mutation by chance which helped Christianity become more successful in spreading through formerly-pagan Europe, as the new norms of the MFP had its beneficial effects.

And, interestingly, these prohibitions, and their impacts, were not experienced Europe-wide. Southern Italy, in whole or part, was ruled by the Byzantine Empire during the early Middle Ages, and for a fair stretch Sicily was controlled by Arabs, as was, of course, Spain. And Sicily remains distinctive for its disproportionately high rate of cousin-marriage relative to the rest of Europe.

So how can you know that there is a connection between cousin-marriage, and high-intensity kinship institutions, in the first place? In the first place, Henrich compiles some truly remarkable graphs pairing Kinship Intensity Index (which looks at historical norms, from around the 1900s) and rates of cousin marriage even today with differences in psychological “norm” enforcement (more cousin-marriage, more community norms), individualism (more cousin-marriage, less individualism), trust of people outside one’s on group (more cousin marriage, less out-group trust), belief in universal ethical principles, such as the obligation to be honest at the expense of protecting kin or family (more cousin-marriage, less universalism), and so on.

He then traces the path that brought Western Europe from its early medieval “backwardness” (relative to the Byzantines and, later, the Islamic Golden Age) to the Industrial Revolution. Although the feudal system had lords, knights, dukes, kings, and the rest, the cities of the High Middle Ages were self-governing, with democratic institutions. Universities were likewise self-governing, as were the guilds for craftsmen (and women), and even monasteries voted on their Abbots, rather than this being a hereditary role. Merchant’s guilds enabled trade. Craftsmen took on apprentices from outside their family, and journeymen literally journeyed outside their hometowns, to further develop their skills — and all because, with clans and cousin- and arranged-marriage dismantled by the church’s prohibitions, new institutions arose to meet those needs instead, but in a way that enabled far more development, markets, even self-control and patience:

“Intensive kinship, through its strong normative obligations to a web of distant relatives, may create pressures that similarly disincentivize the cultivation of self-control or patience. I’ve seen this frequently in Fiji: an industrious person works hard to save money, but then some distant cousin-brother needs cash for a funeral, wedding, or medical procedure, so the nest egg evaporates. This makes sense because intensive kin-based institutions manage risk, retirement, and harmony collectively — through relationships — instead of via individual self-control and secure savings” (p. 377).

And, yes, Protestantism had the effect of intensifying the emerging WEIRD psychology, as well as emerging because in some respects it was a better fit for the new mindsets, with its emphasis on individuals relating to God directly rather than through institutions, and its promotion of individual literacy and Bible-reading. Finally, when it comes to the inventions that sparked the Industrial Revolution, they were the outcome of cities in which resources were available and knowledge was shared with a “collective brain.” Here, too, religious orders played a role: the Cistercians had monasteries which he labels “monastery-factories” all across Europe, and the abbots shared their knowledge with each other not just about theology but about “their best technical, industrial, and agricultural practices” in the medieval and early modern periods, and the monks then shared this knowledge with their local communities (p 446). But it was the teeming cities where innovation mushroomed — and, indeed, the number of people living in cities of over 10,000 increase 20 fold in the millennium from 800 to 1800, while at the same time, the number only doubled in the Islamic world and remained flat in China.

Finally, Henrich addresses the rapid development of Japan, South Korea, and China in modern times. How did this occur even though they weren’t WEIRD? In the first place, “these societies had all experienced long histories of agriculture and state-level governments that had fostered the evolution of cultural values, customs, and norms encouraging formal education, industriousness, and a willingness to defer gratification” (p. 476). Second, they each had top-down governments which, when they observed the development of Western countries, were able to copy many Western institutions in an “off the shelf” manner even if they hadn’t developed organically as the eventual result of the MFP.

So what ultimate conclusions do we draw from Henrich’s insights?

Looking at global retirement, one can easily enough connect Japan’s troubles, for examples, in transitioning from a norm where children take care of their elderly parents, to a social welfare state and/or expectations that one saves for one’s own retirement.

But is there a take-away for Americans? Could an understanding of WEIRD psychology provide insights into not just retirement in the past but what policy might be most successful in the future? That is, at the least, a question to ponder.

And one last note: do I recommend the book to readers? Depends on your patience — he takes 500 pages to make his case; the book is well-written and explains the issues well so you don’t need to be an Ivory Tower scholar to make sense of it, but, let’s face it, I’d still like to see a version for the more casual, less committed reader.

 

December 2024 Author’s note: the terms of my affiliation with Forbes enable me to republish materials on other sites, so I am updating my personal website by duplicating a selected portion of my Forbes writing here.

Jane the Actuary General Interest

What, really, is District 214’s plan for reopening? Or are they making it up as they go along?

school bus
school bus, public domain, https://www.maxpixel.net/Bus-Vehicle-Education-Transport-School-Bus-School-4406479

It’s time for another update on the hyper-local issue of the School District 214 reopening plan!  (See my prior update for my comments on the district’s officially-announced metrics.)

There was a school board meeting last night, during which no actions were taken.  The superintendent gave a brief update at the beginning of the meeting which — in all honesty — I only heard parts of, having arrived just at the start of the meeting and missing some items due to making my way to the overflow room.  According to others that were there, these comments consisted of some cheerleading statements about a band concert, internships, test kits and N95 mask access, and some comments about a teacher who passed away suddenly.

Then, this morning, the Daily Herald published an article on the meeting citing the superintendent making more substantial announcements.  Were these also a part of the initial updates?  I can’t confirm or deny.  In fact, the district livestreamed the meeting but did not make a recording available.  And, likewise, there has been no update from the district on its website, nor in e-mails sent to families of students or to residents.  But here are the key pieces of that article:

About 125 students are in school buildings, Superintendent David Schuler said, including those in special education, and those in programs such as automotive, aviation, and practical architecture in construction.

This is odd to me, given that the District 214 twitter account is still sharing pictures of automotive teachers working remotely, having the students check the fluids in their parents’ cars.  In any case, the article also says:

The superintendent reiterated Cook County Department of Public Health guidance that anyone who has been in contact with someone testing positive for COVID-19 for 15 cumulative minutes over a two-day period — essentially a few hallway passing periods — would need to quarantine.

“If you have smaller numbers, you can really stagger the times for passing time and we just can’t do that with a school of 2,000,” Schuler said. “It makes it much more challenging.”

But Schuler did announce plans to incrementally welcome back more students — as much as half of the 11,000 enrollment. Whether in this stage or next, he said first priority would be to bring back students who don’t have reliable internet, those who need academic support, those taking lab-based classes and, eventually, all freshmen.

With respect to the issue of numbers, public-comment speakers pointed out that local private schools have re-opened — and not just small schools, but Loyola Academy, with an enrollment larger than all but one district high school.  In addition, other public high schools have reopened on a rotational basis, which is not officially the plan until Cook County reaches less than 70 cases per 100,000.

(My son says:  “this is why nobody should get tested unless they have symptoms — it just drives up the number of cases and the number of restrictions.”  The trouble is that in other respects, the governor is super-focused on positivity rates, and a low positivity rate requires substantial asymptomatic testing, or, if not, a significant cold-and-flu season to increase the number of people getting tested for covid-like symptoms who don’t actually have covid.)

But this last statement of Schuler’s really set off alarm bells for me.

In the first place, the “official” plan has four clearly-delineated stages:  all-remote for a severe outbreak, “special populations” only (that is, special ed and homeless kids), rotational, and “fully flexible” (option for students to come in every day).

Brining in students with lab-based classes “in this stage or next” is not a part of the official plan as posted on the website.  Personally, I think it’s a good idea and the right thing to do, but they should not post a plan which makes the opposite statement.  So far as I can tell, they don’t even have any weasel-words in that reopening plan.  At best, one can label this unprofessional.  In reality, that communicates:  “we’ll do what we want without regard for what statements we might make.”

But more concerningly, a plan to prioritize some groups is not the rotational plan they announced for reaching 70 cases per 100,000.  Other schools have one-quarter or one-half the student body in class on a given day.  If his plan is instead to fill up the “quota” of half the enrollment by priority group, with those with various sorts of special concerns (but who aren’t the Stage 2 “special ed” kids in self-contained classrooms) coming first and freshmen “eventually” later, this suggests that non-freshmen without a concern that gives them priority simply will not come to school until Pritzker’s Phase 5, which, Trump’s hyping of a vaccine notwithstanding, is likely not until the spring, at the earliest.

Now, it’s possible that the Herald reporter didn’t transcribe Schuler’s statements correctly and, again, I can’t independently verify them because there has been nothing announced publicly by the district administration; this is all we have to go on.  It’s possible that the “eventually” refers to “before fully implementing the rotational model”, so that Shuler really envisions a process of, first, self-contained classrooms; second, other sorts of special needs kids; third, freshmen rotationally; and, finally, all students, rotationally.  But the fact that I have to parse his paraphrased comments to try to come up with a way to make it fit within their prior framework, even when it doesn’t, really, is, to put it nicely, frustrating.

I suspect that if they polled parents, at this point in time, with the question, yes or no, “do you believe that you child will attend in-person school this academic year?” most parents would say that, no, they don’t believe that.  The school district administration and school board have given parents no reason to believe they are working towards achieving this, and every reason to believe they are not.  And lacking confidence in a return-to-school will impact students, in ways such as academic progress, mental health, willingness to take “desirable” classes or participate in activities, and so on. Which means: this has got to stop, and the school board and administration must get serious about sharing information and plans, and about re-opening as soon as possible.