If You Want Social Mobility, Choose Your Parents Well!

A few years ago, I was researching the value of bachelor’s degrees and discovered a research study for the Department of Education called Baccalaureate and Beyond (Cataldi, Siegel, Shepherd and Cooney 2014).

It is a longitudinal survey – one that follows a group of individuals over a long period. In this case, researchers looked at subjects four years after earning a bachelor’s degree. The thing I found interesting was that about 30% of the subjects did not have a single full time job.

This caught my attention because the education industry insists that the more education one has the better job prospects become and the more money made. That promise implies that college graduates would have “good” jobs – traditional 40 hour per week positions with some degree of job security.

This study certainly did not support that claim.

Of the thirty percent who did not have a single full time job, about half, or 15%, were working one or more part time jobs and the other half were unemployed. The other half had dropped out of the labor force, either returning to school or becoming a housewife/husband.

I found this so stunning that I called up the lead investigator of the study and asked him, rather bluntly, “If a bachelor degree is not a good predictor of socioeconomic success, what is?”

He didn’t skip a beat.

“Zip Code”

The best indicator of future social status is the social status you happened to have been born into, even more than education. socio-economic status is inherited, it seems.

In his still very relevant and interesting 2003 book, Somebodies and Nobodies, physicist and college president, Robert Fuller argues that social hierarchies are natural and needed but takes special aim at the unfairness inherent in them.

In one passage he shares the divergent life courses taken by him and his childhood friend, Gerald, whose family owned a chicken farm. Both boys were interested in math and they enjoyed a friendly competition for twelve years that sharpened their math skills.

“At a high school reunion a few years ago, I asked Gerald whether he regretted not developing his talent for math…With an unmistakable wistfulness, he explained that it had always been assumed he’d work the farm. None of his teachers took his mathematical talent seriously. No one ever encouraged him to aim higher. He never even considered anything beyond high school. I’m sure he could have become a college math professor…” (Fuller 2003, p. 36).

Both men started at the same place with the same interests and talents, one becomes a physicist and college president, while the other spends his life driving an egg truck. The only difference between the two was the social status of their families.

If your parents were wealthy and went to elite universities you will likely follow that path. On the other hand, if your parents went to land grant colleges and end up in the working class that is probably your fate as well.

That just rubs me the wrong way. So I started researching academic studies in order to bring some sense and clarity to the issue of the value of education.

Here is Alison Wolf, (2009), a leading UK professor writing in Change: The Magazine of Higher Learning:

“In Britain, returns to degrees have already dipped badly for specific groups, especially those majoring in the liberal arts or attending low-status schools… You earn more…if you go to a highly selective institution, particularly if you go on to advanced academic or professional education and even more if is a world-renowned university (Harvard, Oxford).” (Wolf, 2009, p. 14).

There is no doubt that the choice of major has a lot to do with earnings, but notice that Wolf has added something new – the status of schools.

So, if the status of schools influences future earnings, what happens when aspiring students compete for entry into highly respected schools?

Just this month the Federal Reserve of Minneapolis released a study asking this very question. Hendricks, Herrington, and Schoellman, (July 2018), performed a meta-study of 42 previous research papers and data sets going all the way back the early 20th century.

A meta-study does not involve any original research. The investigators combine all the data from previous studies and subject it to statistical analyses. The goal is to aggregate data from a range of previous studies to look for long-term trends or consistent results.

Here is what these investigators say about how intense competition for high quality education affects US colleges and universities:

“The key intuition is that although the rising demand for college accepts all types of students equally, it sets off a chain reaction …”

“…The result is a transition from an equilibrium where all students had access to colleges of roughly the same quality to an equilibrium where high-ability students had access to better colleges but low-ability students had access to worse colleges…” (Hendricks, Herrington, and Schoellman, July 2018, p. 36)

In other words, the competition between colleges for good students has created a hierarchy of school quality. People aspiring to college try to get into the best schools, but the schools are “sorting” students by ability. Elite schools accept people with the best student skills, while people with lesser student skills go to less respected schools.

The path one takes to a bachelor’s degree signals social status to employers and graduate programs. A path starting with community college and transfer to a land grant college signals something much different from four years at an elite university or notable local institution.

This starts making sense.

If you know anything about social psychology or sociology you are aware of one very basic truth about human beings – we always arrange ourselves in a social hierarchy. It is such an automatic and inherent ability that we barely take notice. Our social circle usually consists of people very much like us – and that means people with similar socio-economic status.

So, what is it about our family of origin that anchors us so permanently into its socio-economic status?

Annette Lareau tells us all about it in her eye-opening book, Unequal Childhoods (2003). Lareau is a sociologist at the University of Pennsylvania who took on a monumental study of how parents transmit social values related to class their children. She and her graduate student assistants observed interactions of poor, working class and middle class families over a period of years and came to some sobering conclusions.

Lareau identified two general differences in the way parents socialized their children, “concert cultivation” and “natural growth”.

Middle class families and “concerted cultivation”.

According to the observations Lareau and her team made, middle class families tend to see their role as nurturing their children. They have the resources to dominate and control their children’s lives with all sorts of structured experiences intended to enrich their lives. These parents are highly involved in managing their children’s after school time, with organized sports, music and dance lessons and other highly structured activities.

They interact with their children much like adults, explaining why things are best done in certain ways, reminding the kids about chores and homework, and negotiating conflicts with reason, logic and compromise rather than using their authority to end them.

According to Lareau, these middle class children tend to develop a sense of entitlement, but also learn sophisticated methods of interacting with adults who are in positions of authority, such as teachers and doctors.

Middle class children, even in the fourth grade, frequently succeed in requesting special attention and privileges from teachers and other adults in positions of authority. They learn this from seeing their parents reminding teachers to respect their children’s learning style, or encouraging their children to ask doctors or dentists specific questions. Lareau contends this grows out the sense of entitlement middle class children develop.

They learn middle class “rules of the game”.

Poor and working class families and “natural growth”.

Lacking the resources of middle class families, poor and working class parents see themselves as authorities keeping their children on the proper path to adulthood. They are less concerned with feelings, opinions and thoughts, and more concerned with compliance and respect.

Their parents are working overtime, or on a second job or using time consuming public transportation and do not have the time or resources to closely shepherd their children. For these families the focus is on simply staying on top of things such as jobs and transportation instead of teaching the “rules of the game” like middle class.

Poor and working class children have far more unstructured time. They spend far more time playing with other children, interacting with extended family like aunts and cousins, and considerable time in cooperative activity with siblings and other children.

School structure is very rigid compared to structure found at home. Poor and working class children very quickly developed a sense of constraint in schools. They readily accept directives by adult authorities such as teachers, but resent the loss of autonomy and self-direction they enjoy at home.

The result is “neck down compliance” – going through the motions of compliance, but not integrating into the education system. For these kids there is no value in school and the point of learning is lost to them.

According to Lareau, poor and working class parents teach their children powerlessness in the face of schools because they don’t know how to assert themselves to authorities any more than their children do.

Putting it all together

So what does all this mean?

First, we find that bachelor’s degrees don’t return the level of value promised by the education industry, at least not for everyone. A researcher reveals a variable – zip code – that seems to influence the outcome of education.

Next, Robert Fuller, physicist and college president, shares a story illustrating how powerful the socio-economic status of the family of origin can be in determining the course of ones life.

After that, an observation from a UK academic about how much more valuable a degree from an elite university is than a degree from lesser-valued schools.

Next, the meta-study from scholars at Minneapolis Federal Reserve supporting the observation that universities have a hierarchy of value. Further, they conclude that schools and students “sort” themselves into hierarchies with poor students attending poor schools at the bottom and excellent students attending excellent schools at the top.

Finally, Annette Lareau identifies the mechanism parents use to transmit assumptions of how the world works into values that determine socio-economic status.

If any of this is an accurate explanation of how socio-economic status passes from one generation to the next, it brings in to question how much influence we have over the course of our lives. See what Robert Sapolosky thinks here, and share a comment.

Here are the sources cited in this article:

Cataldi, E. F., Siegel, P., Shepherd, B., & Cooney, J. (2014). Baccalaureate and Beyond: A First Look at the Employment Experiences and Lives of College Graduates, 4 Years On (B&B: 08/12).

Fuller, R. W. (2003). Somebodies and nobodies: Overcoming the abuse of rank. Gabriola Island, Canada: New Society Publishers.

Hendricks, L., Herrington, C., & Schoellman, T. (July 2018). College Access and Attendance Patterns. Minneapolis, MN: Federal Reserve Bank of Minneapolis.

Lareau, A. (2003). Unequal childhoods: Class, race, and family life. Berkeley: University of California Press.

Wolf, A. (2009). Misunderstanding Education: Why Increasing College Enrollments Can’t and Won’t Fix the Economy. Change: The Magazine of Higher Learning, 41(4), 10-17.

Thanks for reading! You can fine more like this at www.OnwardThroughTheFog.com


How Poor Sleep, Expanding Intestines and Foreign Microbes Keep Us Fat

Anyone keeping a healthy lifestyle knows that temptation is all around. Convenience stores and fast food outlets alternate on every corner. Marketers pay food psychologists to design sales tactics that overcome our will power and best intentions. Intentional combinations of fat, sugar and carbohydrates, engineered by food scientists, get us hooked on junk food in much the same way we are hooked on drugs.

We are aware of that environment. But there are other environments we cannot see that are attracting the scrutiny of researchers – the colony of bacteria in our intestines, activity within our brains and the weird ability of our intestines to expand and contract.

There is no doubt that night shift work is associated with weight gain and obesity. No one knows exactly what goes on inside our brains to make us fat when we work at night, but we know it happens.

A 2018 meta-study reveals interesting and puzzling details.

Combing the results of 28 studies of weight gain and shift work found that working at night increased the risk of being overweight by 23%, however the increased risk of dangerous abdominal or belly fat was even greater at 35%.

Robert Lusting, in his revolutionary book, Fat Chance, tells us all bout abdominal fat and why it is so dangerous.

Fat comes in a different varieties, and not all of them are bad.

Subcutaneous fat is “healthy fat” laying just under the skin. It is what gives women their curves, provides energy reserves when we are sick and seems to protect against disease. Elderly people without a modest amount of subcutaneous fat get sick more often, die younger and experience more injuries than those with a healthy amount.

Visceral fat – that kind that collects around our middle – it’s what kills us. Visceral fat causes insulin resistance, and insulin is the main player in how we digest our food. According to Lusting, insulin resistance promotes diabetes, cancer, cardiovascular disease, dementia and general ageing.

Our body easily turns visceral fat into energy to fuel our muscles and organs. But that leads to one of the very dangerous aspects of visceral fat – it resides near our organs. We can’t see the damage visceral fat does when it surrounds our liver or heart, but that is the essence of metabolic disease.

The only place we can easily detect visceral fat is when we see it around our belly. Lusting cites studies indicating that our waist circumference is the best predictor of risk of death from metabolic diseases. In other words, belly fat is a proxy or symbol for dangerous intra organ fat. But how do we measure it? How can we tell how much risk our visceral fat is subjecting us?

Lusting offers three suggestions.

First is belt size. Anything more than 40 inches for men or 35 inches for women is a likely indicator of excess visceral fat.

Another easy way to spot excess visceral fat is looking for darkening, thickening or ridging of the skin around the neck, armpits or knuckles. Lusting says this is excess insulin reacting with hormone receptors just under the skin.

For a more accurate measure, calculate the ratio between waist and hip. Research suggests that ratio less than .80 indicates a healthy amount of visceral fat. (Interestingly, David Buss, a well-known researcher and author of The Evolution of Desire finds that men consistently prefer women with a waist-hip ratio of .70.)

But why would shift work have anything to do with gaining visceral fat?

Barbara Natterson-Horowitz, MD, explains the biology behind circadian rhythms in her book Zoobiquity.

All the cells in our bodies contain “oscillators” built by clock genes. These oscillators influence the timing of everything in our bodies – how fast calories burn to when we feel like eating. Plants, animals, bacteria and even single celled organisms manage circadian rhythms.

Creatures with complex brains have a collection of neurons coordinating all these oscillators. Located at the point where the optic nerve connects to the hypothalamus is a tiny brain structure about the size of a sesame seed. Called the suprachiasmatic nucleus, (SCN), this tiny organ detects light levels detected by the optic nerve and directs our circadian rhythms – that is, helping us to sleep at night and remain awake during the day.

Think of its job as synchronizing external time signals with our internal oscillators.

When researchers expose mice to constant light, even dim light, they gain weight and carry higher blood-glucose ratios than mice exposed to natural rhythms of light and darkness. We also know that plants and animals living further from the equator have lower levels of sugars in their systems.

The annual switch from standard time to daylight savings time creates an opportunity for research on disruptions to circadian rhythms. Researchers find that depression increases during the switch to daylight savings time, as do car accidents, heart attacks and stoke. And that is just a modest change of one hour.

We know that lack of sleep can contribute to weight gain. In his book Go Wild, John Ratey, MD, points out that sleep deprivation studies consistently show that lack of sleep is associated with weight gain, even though there is no measurable change in caloric intake or energy expenditure.

It is interesting to point out that researchers have a hard time controlling for increased caloric intake when doing sleep deprivation studies. Simply not getting enough sleep causes disruption of hormones that signal satiety, resulting in cravings for sugar and carbohydrates, especially in the evening.

Putting all this together shows us that there is a complicated interplay between light, sleep and the secretion of hormones that affect our appetite, even to the point of causing a desire for certain foods.

But there are even more things that we have very little awareness of, yet can have far-reaching effect on how we gain, lose and carry our weight.

Natterson-Horowitz spends quite a bit of time telling us about our intestines and what scientists are finding in them.

The intestines of many animals can contract or expand. The remarkable ability to change the length of intestines is common among animals that migrate and hibernate. Fish, frogs, snakes squirrels voles and mice all have this ability. The exact mechanism is unknown, but it probably related to circadian rhythms. When stretched out intestines can absorb more nutrients from food passing though. They become more efficient.

It is unsettling to think that is one more thing we can’t control that affects our weight.

However, we are learning far more about our biome – the collection of microbes who call our intestines home. At birth, we have no intestinal microbes – our innards are sterile. This changes as we are exposed to microbes in our environment.

Parents can tell when their babies develop gut microbes – diaper changing suddenly becomes a very smelly affair. By the time we are only a few months old trillions of microbes reside in our mouths, skin, teeth, even our lungs. It is thought that only about ten percent of the cells in our body are human. The rest are little friends we pick up from the environment.

There are two dominant types of bacteria in our biome, firmicutes and bacteroidetes. Firmicutes are associated with obesity and bacteroidetes with leanness. Obese individuals tend to have more firmicutes bacteria in their gut biome than people with a normal weight do.

Each of us has a unique blend of these microbes, which accounts for the differences in how what we eat affects our weight. Some people can eat pasta and wine without giving their weight a thought, while others have to be careful about eating an apple or avocado.

It turns out that bacteroidetes are far more efficient at extracting calories from food than firmicutes are. When obese people lose weight, the ratio of firmicutes to bacteroidetes changes, and bacteroidetes eventually out number firmicutes.

Whether or not we can change the ratio of firmicutes and bacteroidetes and lose weight by taking probiotics is an open question. But not for the weight loss industry. They are taking advantage of the discovery and offer us a range of products designed to increase gut bacteroidetes. How much of an effect these products have on weight is hard to determine.

At this point, you might be wondering whether the controversial practice of giving farm animals high doses of antibiotics has an effect on the humans who eat them. Agribusiness is no longer allowed to administer massive doses of antibiotics for purely preventive measures.

However, the rules are very liberal, and routine use of antibiotics allows animals to get fatter on less food. Exactly why this happens is unknown, but it is possible that some gut microbes like firmicutes are more resistant to antibiotics than others are. The effect that antibiotics administered to farm animals has on the humans who eat them is unknown.

Scientists are making discoveries almost daily showing how intimately interconnected we are with our environment. The more we learn, the better we can make decisions pointing us to a long and healthy life.

Books mentioned in this article:

Buss, D. M. (2003). The evolution of desire: Strategies of human mating (Revised ed.). New York: Basic Books.

Lustig, R. H. (2012). Fat chance: Beating the odds against sugar, processed food, obesity, and disease. New York, New York: Hudson Street Press.

Natterson-Horowitz, B., & Bowers, K. Zoobiquity: What animals can teach us about health and the science of healing (1st ed.). New York: Alfred A. Knopf.

Ratey, J. J., Manning, R., & Perlmutter, D. (2014). Go wild: Free your body and mind from the afflictions of civilization (First edition. ed.). New York, NY: Little, Brown and Company.

If you enjoy what you read here, check similar articles at Onward Through the Fog





Central Bankers Don’t Know Any More Than the Rest of Us

“Your faith that central bankers know “where they are” is a little surprising (“Central banks correctly go their separate ways”, editorial, June 16). Since the crisis nadir, inflation and growth outcomes have consistently fallen short of what was expected by the central bankers of major market economies despite an unprecedented period of low policy rates alongside outsized balance sheets. Current policy may be moving in different directions for reasons that seem logical today but the reality is that no one knows how smooth or bumpy the path will be from this point forward.”

Quin Casey, Letter to the Editor, Financial Times, June 22, 2018


Jerome Powell, our new Federal Reserve Chairman replacing Janet Yellin, delivered a revealing speech to the European Central Bank Forum in Portugal recently.

The speech is illuminating and important because it shows how out of touch our central bankers are with the economy. It is stunning to see statements of purported fact followed by another that contradicts it. Equally baffling, the Chair does not seem to be aware of the information released in the most recent Employment Situation, the official government report on employment released monthly by the Bureau of labor Statistics, (BLS)

For example, first statement:

“Today, most Americans who want jobs can find them.”

Next statement:

“High demand for workers should support wage growth and labor force participation–the latter a measure on which the United States now lags most other advanced economies.”

Yes, high demand for workers should promote wage increases, but it wages have barely increased in the last decade. The BLS data contained in The Employment Situation tells us that wages have risen only 2.7% in the last year.  According to Trading Economics, wage growth has been declining since 1979 and now is about as low as it ever has been. There does not seem to be any pressure on wages at all.

So, no, there hasn’t been any wage growth, bringing into question whether there really is a high demand for workers.

What about labor force participation?

Trading Economics shows that labor force participation is now about what it was in the late 1970’s when women were just beginning to enter the labor force. Again high demand for workers would draw people back into the labor market, but that does not seem to be happening. Powell seems to have some understanding of this because he points out that our labor force participation rate is lower than other industrialized economies with which we compete.

A little later in the speech, another contradiction…

First sentence:

“As is often the case, in the current environment, significant uncertainty attends the process of making monetary policy.

Note the term “significant uncertainty”.

The economy is not recovering. Saying that it does implies that we are going back to something like what we had before, Things have changed so much that it is more accurate to say that we are building a brand new economy. That is why there is “significant uncertainty” – old concepts and metrics don’t work in the emerging economy as they did in the old industrial economy.

For example, there is the “Phillips Curve” that measures the relationship between employment and inflation. As people go back to work following a recession, they have more money, creating demand, which causes prices to increase. That is why a little inflation is a good thing.

However, unemployment is at 3.8% and there is little sign of inflation, implying that people don’t have enough money to create a demand strong enough to fuel inflation, even though they count as employed. That might be because of low wages in the gig economy.

Contingent workers make a lot less than people do in traditional jobs. We don’t know what the effect of contingent labor market has on other parts of the economy because we haven’t figured out a way to measure contingent employment.

Second sentence:

“Today, with the economy strong and risks to the outlook balanced, the case for continued gradual increases in the federal funds rate remains strong and broadly supported among FOMC participants.”

Powell sounds very confident in light of his previous comment about the significant uncertainty supporting monetary policymaking.

Finally, this:

“Unfortunately, with the passage of a half-century and important changes in the structure of our economy and in central bank practices, in my view the historical comparison does not shed as much light as we might have hoped.”

Here he mentions “structure”. Structural changes in the economy mean permanent change, not just normal cyclical changes.

Examples of this might be the end of mass employment in industry. It’s not that industry has left the United States; there is more than ever right now. It’s just that robots and software do most of the work.

The shift of traditional well-paying 40 hour a week jobs to low paying contingent employment is another example. Now we have to remember that just because someone has a job does not mean they can afford food and shelter.

So why is Powell running in circles? Reading between the lines, as we have been doing here, reveals a much different picture than taking the speech at face value.

I’ve been a little harsh on him, really. He’s in a tough position. The integrity of the banking system has as much to do with perception as reality. When people stop having faith in the financial health of a bank, they withdraw their money. When people see others withdrawing money the safety of their deposits come into question and they are inclined to withdraw as well. This is what a “run on the bank” is – panicked withdrawals that may or may not be necessary.

When this happens to one bank, people tend to lose faith in all banks. This is what social psychologists call “social proof”. This is one of many heuristics, or shortcuts to decision making. When we see many other people doing a particular thing we tend to trust their judgment and join in, usually without thinking.

James Surowiecki has written a wonderful book about heuristics in economics and finances, (and many other settings), in his book Wisdom of Crowds. I highly recommend it.

It may come as a surprise, but banks do not have enough cash on hand to cover all their debts to customers. Deposits go out the door in the form of loans, or during the collapse of the industrial economy in 2008, in the form of loans to other banks buying blocks of risky home mortgages. This is where the Federal Deposit Insurance Corporation (FDIC) and central banks, like the Federal Reserve come in.

The FDIC insures consumer deposits for up to $250,000 and central banks stand by to infuse troubled banks with huge amounts of cash to forestall a run and maintain faith in the banking system.

This is why Chairman Powell has to be so careful about what he says. On the one hand, he can’t just make outright falsehoods about the economy because the first time someone catches him in a lie will be the last time anyone believes him. He can’t be brutally honest about the economy, either, without undermining faith in the future.

So you have to listen carefully, take note of what he does not say, and examine exactly what he does say. Powell is saying that things are better than they were, we aren’t sure why, and we’ll move ahead cautiously.

But bank customers aren’t the only ones for whom Powell is designing his messages. He is the Chair of the Federal Reserve and one of 11 members of the Feds Board of Governors. The Federal Reserve consists of 12 of the largest banks in the United States.

The Board of Governors are the presidents of those banks and they creates monetary policy as a group. Most of their influence lies in inter-bank standards, like how much interest these banks charge one another, and agreements on length and volume of bond sales.

Remember Qualitative Easing? That was when the Fed was buying back bonds. Bonds are debt instruments – when you buy a bond you are loaning money to the bond issuer. Buying back Treasury bonds – like savings bonds except a lot bigger—is a way for banks to shed debt, but it also a way to pump money back into the economy.

For more than a year following the crash of 2008, the Fed was pumping $80 billion a month into the economy. It was the only thing keeping the economy solvent.

Yes, things were that bad.

You can read all about it in Mohamed El-Erian’s detailed and very readable account of the 2008 financial crisis, The Only Game in Town.

The challenge for Powell as Chair of the Fed is to get all 12 members of the Fed to agree on monetary policy. It sounds like dull and boring issues to most of us, but members of the Federal Reserve are passionate about economics – they all have PhDs from leading universities – and they are very ambitious and driven.

Powell has to get these all people to agree on specific and detailed monetary policy. Think about the last time you tried to get a few of your friends to decide on where to go for lunch or dinner. That’s hard enough.

Getting intelligent, personally ambitious and driven people to agree with one another is a herculean task. Getting them to agree on something the President supports and Congress might tolerate compounds the challenge, but this is at the core of Powell’s job description.

So no, the Fed chair can’t just make outright lies, but he can’t be brutally honest either. He has to construct a narrative that fits the facts and doesn’t get anyone upset while using data that is incomplete and uncertain.

That is why it is so important to listen carefully to what he says, and look for nuance and veiled meaning. It is also important to remember that the Federal Reserve doesn’t know everything. As Powell tells us repeatedly, we are in an entirely new emerging economy and there is “significant uncertainty”.

After all central banks don’t know any more than anyone else.


Sources used in this article:

El-Erian, M. A. (2017). The only game in town: Central banks, instability, and avoiding the next collapse. New York: Random House.

Surowiecki, J. (2004). The wisdom of crowds: Why the many are smarter than the few and how collective wisdom shapes business, economies, societies, and nations (1st ed.). New York: Doubleday.


Why Will Power is Powerless for Dieting

No matter how dedicated people might be about losing weight, they rarely have a detailed plan in place for changing their eating behaviors. For the most part, they rely on will power. Unfortunately, people who rely on will power alone to lose weight will almost certainly fail, either in the short run, or in the long-term objective of staying slim.

Roy Baumeister is a social psychologist at Florida State University who is famous for making significant discoveries about self-control and will power. In his very interesting book, Willpower he leads us through all the hidden challenges of weight loss.

One especially disheartening hidden challenge of losing weight is that weight is resistant to self-control. Both Oprah Winfrey and Newt Gingrich are unquestionably gifted with more self-control than most people are, yet in spite of that advantage, both have experienced a lifetime of shame and humiliation over their failed weight loss efforts.

The iron will and self-control that brought them success deserted these accomplished celebrities when applied to weight, and left both the center of public humiliation.

In her magazine, “O,” Oprah describes sitting at the Emmy Awards ceremony praying to lose to her talk show rival Phil Donahue:

“I wouldn’t have to embarrass myself by rolling my fat butt out of my seat and walking down the aisle to the stage.”

In her highly recommended book, The Secret Life of Fat, Sylvia Tara reveals that Gingrich has similar sentiments. When interviewed by Barbara Walters in 1995 shortly after his ascension to the top post of Speaker of the House she asked about his biggest embarrassment:

“I’m most embarrassed about my weight,” he said. Not the trumped up ethics investigation, nothing to do with any of the three marriages, not the stunning Republican losses under his tenure as Speaker.

None of that.

His weight.

“I know it’s entirely a function of my personality that I swim, I eat the right things and then either I have the chance to drink some Guinness or eat some ice cream and I cave.”

It hasn’t always been this way. Only recently, has our weight skyrocketed and our efforts to manage it failed so miserably.

In the past obesity a sign of wealth and success. Tara tells us about 19th century men’s organizations that celebrated being overweight and accepted only “stout” men into their membership. Ladies Home Journal featured stories on how to gain weight and maintain “plumpness’ and in 1878 a book titled How to be Plump became popular.

During the Civil War soldiers averaged about 5’8” and weighed around 143 pounds.

By the early 1980’s men were about the same height as the Civil War, but their weight averaged forty pounds more at 183 pounds according to the Centers for Disease Control.

What happened? It seems that as soon as we have food in front of us we can’t help but gorge ourselves. As Gingrich says, just offering the chance to overeat assures us that we cave.

Baumeister tells us that bookies in England, (where this kind of betting is legal), routinely give odds against anyone betting on weight loss. That is stunning when you consider that the people making the bets – the dieters and their friends – have control over just about everything. They define exactly what weight loss means, to the pound, they establish the period, and they identify the conditions under which they will attempt to lose.

Yet the house wins about 80% of the time. Keep in mind that this does not include regaining weight months or years later. No, the bet is only about losing weight in the immediate future. Almost about everyone fails.

Just like Oprah.

Baumeister got curious about this and set out to explore the challenges of weight loss and how even people with a proven high level of self-control find it elusive.

First, he did a meta-study. In a meta-study, the investigator does not do any experiments of their own. Instead, they look at experiments others have done, combine all the data collected in previous experiments, and subject it to new statistical analyses.

Across dozens of studies, Baumeister found that people with proven reserves of superior self-control did slightly better than the average in controlling weight.

Slightly better.

Baumeister tested this finding by creating a 12-week weight loss program for undergrads at Florida State. He identified students with high self-control and followed them throughout the course. They did slightly better than the low self-control individuals, but not by much, and not for long. As the program wore on their self-control seemed to flag. In the end, there was little difference in weight loss between the high self-control group and the low self-control group.

How can self-control mean so little when it comes to weight loss? It seems to work in other areas of people’s lives. Losing weight is only a little more complicated than eating less and exercising more, so it seems impossible that self-control would be so meaningless.

What’s going on?

There are many reasons, but one probably familiar to all of us was given the title The What the Hell Effect.

Dieters lured to a taste testing experiment did not eat for a few hours before the experiment. Some were trying to lose weight while others were not. When they arrived at the lab, Baumeisters’ experimenters gave them either a small milkshake to ward off the hunger pangs or two huge high calorie milkshakes. When they finished their milkshakes they were led to a small room with cookies, chips and other goodies and asked to rate the snacks.

The thing that stunned the investigators was that the dieters who received the huge milkshakes ate the most snacks. Experimenters repeated the procedure several times because they were sure they must have made a mistake.

But no, dieters who fell off their diets the most spectacularly were the most likely to subsequently overeat.

The failed dieters seemed to think, “What the hell. In for a penny in for a pound. Makes no difference now, so go for the goodies.”

That is what happens, once the dieting subjects broke their diet they continued to break it with joyous abandon. Still it makes no sense. Any reasonably logical person understands that one five hundred calorie mistake is only compounded by throwing caution to the wind and gorging on whatever happens to be handy.

But that is what we do.

Psychologists call it rationalization. We use arguments that seem rational but really aren’t. It might seem rational that eating more makes no difference after a huge dieting failure, but that simply isn’t true. The more you eat, the more weight you gain, and it doesn’t matter if a subsequent 500 calories comes after a five hundred calorie mistake. It’s still an additional 500 calories.

That’s rationalizing.

Alternatively, as I like to call it, Rational Lies. Sounds rational, but it isn’t.

If Rational Lies were all there were to losing weight we’d all be skinny. It would just be a matter of catching those rational lies when they try to fool us and getting back on our dieting track.

But there is a lot more to it than that.

One of the things Baumeister found was that self-control takes energy. Real energy. The kind you get from food.

I can hear the groans of defeat. If self-control takes energy that comes from food, and we are on a diet limiting our food intake….how the heck is it possible to lose weight? As soon as our body has an energy deficit, our self-control goes out the window and we start eating.

Very true. Congratulations. You just articulated one of the hidden challenges of weight loss.

Baumeister tells us about an experiment in which chronic female dieters were asked to volunteer for a taste test. However, before the taste test they were asked to watch Terms of Endearment. Half the participants were instructed to quell any emotions and the other half were told to freely express their emotions. Following the movie, they were shown to a small room, given several bowls containing varying amounts of ice cream, a rating from, and left alone.

Of course, the experimenters were actually measuring whether subduing ones emotions had any effect on how much was subsequently eaten. Each bowl of ice cream was carefully weighed before and after giving it to the subject.

The dieters in the “suppress emotion” condition ate almost twice as much ice cream as the dieters in the control condition. They had used up their ability to suppress their overeating behaviors by suppressing their emotional behaviors while watching the movie.

Still doubtful? Read on.

In another experiment, female dieters were asked to watch a documentary in one of two conditions: either sitting right next to a bowl of M&Ms or sitting across the room form a bowl of M&Ms. Following the documentary the women were asked to solve some (unsolvable) algebra problems.

Can you guess which group gave up on the algebra problems first?

The ones with the M&Ms tempting them within arm’s reach gave up on the algebra problems first. The group exposed to a lower level of temptation spent far more time on the problems before giving up.

Again, it seems that the ability to resist temptation lessens with over use.

In a twist on this experiment, experimenters added non-dieting volunteers to the mix. It turns out that non-dieters had no effect from snacks, no matter where they were located or what kind of movie they watched. No matter what condition the experimenters placed the non-dieters their performance on subsequent tasks, (like solving unsolvable puzzles), was the same.

Earlier I mentioned that self-control takes energy, specifically, energy one gets from food. How do we know this?

Because when presented with a choice of healthy foods like vegetables and high energy food like candy and fruits dieters subjected to experiments similar to the ones I’ve described invariably went for the quick energy, high glucose snacks. Glucose comes from high calorie foods contacting a high proportion of natural or artificial sugars. Candy, for example.

Resisting temptation takes self-control, and following periods in which self-control is needed glucose becomes diminished. Consequently, dieters expending a lot of self-control to resist breaking their diets set themselves up to crave high calorie glucose rich foods.

Interestingly, we tend to reach for candy to restore our glucose levels, when healthy foods have the same effect. What is that?

Baumeister tells us that when we are in an energy-deprived state we feel our emotions more intensely than at other times. This is what a craving is. When we are emotionally vulnerable, our attraction to the visceral joy of candy is far more intense than other times. This is why we can breeze right through the grocery checkout counter surrounded by racks of candy and not be tempted as long as we are already satiated. On the other hand, when we have depleted our self-control and glucose, we might walk to the store for a sugary fix.

This is why the long-standing advice to avoid grocery shopping when hungry is so effective. This is is a form of structure – making changes in the environment or our own internal states in order to control our behavior.

Creating structure is the key to long-term weight loss, and it is what the next article will cover.

Stay tuned.


Sources mentioned in this article:

Baumeister, R. F., & Tierney, J. (2011). Willpower: Rediscovering the greatest human strength. New York: Penguin Press.

Tara, S. (2017). The secret life of fat: The science behind the body’s least understood organ and what it means for you (First edition. ed.). New York: W.W. Norton & Company.





The Employment Situation June 2018

The Bureau of labor Statistics, (BLS), released labor market statistics for June 2018 today, Friday, July 6, 2018.

The bottom line:

Nothing much has changed.

Although the media is making a big deal about the unemployment rate and employers are shedding crocodile tears about a tight labor market, wages are stagnant, part time jobs are not converting to full time, and the average workweek is stalled at 34 hours.

There is not much encouragement, but neither are things getting any worse.

We’ve been hearing a lot about how tight the labor market is, and that employers are having a difficult time finding workers. The data does not support that contention.

When labor markets are tight, employment is very high and labor is hard to find. Demand for labor is so high that part time jobs turn into full time jobs, and part time jobs become hard to find. High quality employees are likely already working, so employers raise wages to attract them, lower barriers to employment like drug tests and credit checks, and the average workweek approaches 40 hours per week.

None of that is happening.

In June, there was no change in the number of involuntary part time workers. There just wasn’t enough work to offer these people full time employment.

The average workweek for all employees is only 34 hours. That is far from full capacity and implies there are far more idle potential workers than there are people drawing a steady full time paycheck.

Something else that happens in a tight labor market is wage increases. When employers compete for workers they offer higher wages to convince them to return to the labor market from whatever refuge has provided protection.

Wages are just about keeping pace with inflation at an annual rate of 2.7%. In other words, employers are not so in need of workers that they are offering higher wages.

There a number of things in The Employment Situation that you will not see the media crowing about because they don’t support the meme that everything is getting better.

One is the long-term unemployment rate. These people have been unemployed for six months or more. The six-month mark is significant because people have a much more difficult time finding a job after being unemployed for six months or more.

And guess what?

The long-term unemployment rate increased in June by 289,000 to 1.5 million, or 23% of the total unemployed. Remember, the BLS considers these people to still be attached to the labor force; they want a job, but may not have actively looked for one in the in the last 12 months. This group is getting bigger.

This brings up another statistical group, the Labor Force Participation Rate or the percentage of the population either working or desiring work.

The Labor Force Participation Rate has been at historically low levels since the Crash of 2008, but edged up by two tenths of a percent this month. Apparently, the good news about jobs convinced some people not in the labor force to try the job market again. Keep an eye on this number in future Situation reports. Continued increases might indicate an improving labor market.

People not in the labor force consist of those who have found ways other than a traditional job to survive. They might be doing things like making a career of going to school on student loans, blogging, grey market side work and outright illegal means of making a living. People in prison, the military the retired are also included in this group.

If you read many of my articles about statistics, you are familiar with my mantra “What are you measuring and how are you measuring it?” The BLS has a wonderful website explaining their methodology and definitions, How the Government Measures Unemployment

The definition of employed is straightforward – if you worked and were paid during the last week you are employed. There is no minimum wage or income requirement. This brings into question what a job really is.

Most people think that employment means being self-sufficient. With a job, you can rent an apartment and sign a note for a car. But this is not the way the BLS defines a job. If you make any amount of money in exchange for labor, you count as employed.

You raked your neighbor’s leaves for an hour last weekend and got $20 bucks? You’re employed.

In some cases, you don’t even have to make any money to count as employed. For instance, if you help your husband with the bookkeeping on his online business the BLS considers you employed even though you did not get a paycheck. Same with farms. Help Gramps out with the milking and the BLS considers you employed, even if you and your grandfather do not. (The rationale is that you benefit from your work, even though you don’t see a paycheck.)

More than ever, it is important to understand how the labor market is measured. At one time, it might have been enough to focus on the unemployment rate in order to understand the general health of the labor market, and larger economy.

Not anymore.

The economy, and especially the labor market, has changed so much that we need to understand the nuances of the Employment Situation and look at measures we have ignored in the past.

For example, the unemployment rate means something very different when average hours worked are very low and part time jobs are either increasing or staying the same. The BLS is not lying or intentionally misleading, but in order to understand labor trends it is imperative to understand what the statistics mean.

I hope this article helps people understand the numbers the media pulls out of the Employment Situation.



Why Physical Exercise Makes You Smarter and Protects Your Brain

Something I find very interesting is the relationship between brain function and exercise. I don’t mean just the idea that we feel better when we exercise or that our brain works better when our blood is oxygenated. I’m interested in how lifestyle choices can make the brain work better. Things like daily habits that make us more intelligent and creative.

That’s right; our lifestyle has an effect on how smart we are.

Before going, any further let’s pause and review what happens in the brain when we learn something new. I think we all know that our brain consists of neurons – brain cells – with a nucleus in the center and dendrites, stretching like fingers to the dendrites of other neurons. Learning, thinking, remembering — everything we experience — results from one neuron making an electrochemical contact with another.

The more often one neuron stimulates another, the stronger that connections becomes. That is what learning is. Think about learning a physically complex movement, like driving a stick shift automobile.

At first, it seems like an impossible task – 3 pedals, 1 gearshift and a steering wheel, but only two feet and two hands. Give a little gas, let out the clutch slowly and the engine dies. Alternatively, let out the clutch too fast and the car jerks.

With practice, though, you get better and better until you don’t have to give conscious thought to shifting gears.

The more frequently one neuron stimulates another, the stronger that connection becomes. In terms of brain physiology, the more one practices the stronger and more complex the network of neurons controlling that behavior becomes. This is what learning really is – building strong associations between neurons, creating ever-bigger networks of associated neurons.

I learned some very interesting things about my brain when I broke my left foot. After eight weeks in a cast, my calf atrophied, but so had the network of neurons connecting my foot to my brain.

Long after I built back the muscles in my calf, I would occasionally reach for something to my left, and keep right on going because I had no balance on my left foot. That network of neurons in my brain communicating with the nerves and muscles in my foot had atrophied too.

They no longer had strong connections with one another and the complex interaction between sensing balance in my brain and actuating muscles in my foot was lost. My left foot no longer had the ability to balance like my uninjured foot did.

My physical therapist suggested that I go without shoes whenever possible, and I did. Within just a couple of months, I could balance on my left foot for as long as I wanted. The contact with different surfaces – grass, asphalt, gravel – stimulated the sensory neurons on my foot and helped rehabilitate the neural network in my brain.

However, what was actually going on in my brain to allow this to happen? This is where things get interesting.

Most people over thirty probably remember a high school teacher instructing them not to drink alcohol because it destroys neurons, and neurons are not replaceable – you are born with all you will ever have.

It turns out that isn’t true at all. In the 1990’s scientists began identifying classes of proteins in the brain. One was Brain Derived Neurotrophic Factor (BDNF) first found in the hippocampus, the memory center of the brain. This discovery drew lot of scientific attention and it was quickly established that BDNF is essential to the development of neural networks – that is, brain structures supporting learning and memory.

The thing that is so astonishing about BDNF is that it actually works on the infrastructure of the brain – physical brain growth and expansion. Put some brain cells in a petri dish suspended in nutrients and not much happens. Add a few drops of BDNF and the neurons start growing dendrites and reaching for one another.

In his fascinating book Spark examining the relationship between exercise and the brain, John Ratey refers to BDNF as “Miracle-Gro for the brain”.

According to Ratey, BDNF sends ions to nerve endings, increasing the electrochemical bond, creating stronger and more robust neural networks. It activates brain receptors that make more BDNF, serotonin and other neuron-chemicals that aid the synapses and dendrites in communicating with one another. In short, BDNF is the driver of brain plasticity.

It gets even better.

Ratey tells us that throughout the 1990’s and early 2000’s animal studies proved beyond doubt that exercise and volume of BDNF in the brain correlate with one another. Now, consider this – physical movements are usually associated with learning. We learn by interacting with our world, finding puzzling new things we have not seen before and exploring their properties.

Think of how infants constantly focus their attention on one thing after another. Infants are constantly touching, tasting and feeling the world around them. Learning about the world and physical activity are closely related. Even if we are just moving our eyes, we are physically active. A relationship between physical movement and brain activity supporting learning makes sense.

Finally, in 2007 German researchers found that, people learn vocabulary words 20% faster after exercise than before exercise, and that there is a direct correlation between the rate of learning and levels of BDNF.

However, what is it about exercise that has an effect on the brain? What is the mechanism by which muscle movement assists in memory?

It turns out that when we exercise our muscles produce hormones that have effects on how the brain learns and makes memoires.

Ratey tells us that when we exercise muscles produce a hormone called IGF-1. We have known for some time that IFG-1 assists in delivering glucose to muscles in need of energy, but only recently discovered its role in learning. During exercise, BDNF stimulates uptake of IGF-1 in the brain, activing neurons to produce serotonin and glutamate, two neurotransmitters essential for communication between neurons. At the same time, it increases release of BDNF, enhancing neuro plasticity and the formation of long-term memories.

Another hormone produced in the muscles, VEGF, is essential in producing new blood capillaries and has found some success in naturally building detours around clotted arteries. In the brain, VEGF seems to have an effect on the blood-brain barrier, allowing muscle related hormones to more easily enter the brain.

Finally, FGF-2 helps tissue grow and its role in repairing muscles damaged by exercise is well known. Now we know that FGF-2 is also very active in the brain, assisting with the formation of new brain tissue.

Ratey includes many practical examples of how exercise benefits our brains. He quotes one study in which two groups of over 50 year olds took a memory test following either exercise or watching TV. It is no surprise that the exercise group demonstrated much better recall.

The practical takeaway is that no matter what our age cognitive activity should be interspaced with exercise. Not only is exercise good for our bodies, it is good for our minds as well. The earlier we get in the habit of taking care of our brains when we are young the better it will serve us in old age.

All of this is just touching on the fascinating information Ratey presents in Spark. In it, he explores how exercise can affect depression, anxiety, stress, learning and aging. Using different muscles releases different hormones that affect our brain differently. For instance, animal studies indicate that complex motor skills, the kind developed with dance or balance exercises produced more BDNF than aerobic exercise like running or walking.

Take a walk, jog a little, read a book or learn a language. Your brain needs to serve you for a lifetime and you have to care for it every day.

Why, Exactly, Should We Pay You?

ObamaCare was watershed legislation for the health industry. The infusion of taxpayer money enriched companies and their executives almost beyond comprehension. When the median income of Americans was less than $30,000 annually many CEOs made more than that daily — before lunch!

To cite just one example, John Martin, made $863 million during the ObamaCare years as CEO of the pharmaceutical company Gilead Sciences.

Read the details here.

(I never know what to think about people who, in one breath, excoriate “greedy” pharmaceutical companies and in the next advocate government funding of health care.)

The rationale for these exorbitant pay scales is that aligning compensation with stock value incentivizes the CEO to focus on corporate financial health. That sounds good – tying compensation to the value of the company will keep the CEO focused on growth and productivity, but it simply doesn’t work.

For one thing, it encourages what Rana Foroohar calls “financialism” in her book Makers and Takers. Foroohar does a great job of making complex financial shenanigans understandable and explains how laying off employees or taking on debt benefits stock valuation, at least in the short run.

Leadership focusing on stock valuation often results in losing sight of the distinctive competencies that made the corporation successful. Companies fail to “stick to the knitting” and drift into banking, real estate and insurance ventures instead of their areas of long-term expertise. Read my recent blog Financialism leads to agony for GE and Sears for examples.

In his landmark book, Good to Great, Harvard business professor Jim Collins examined the role of CEOs in eleven companies that overcame challenges threatening their existence, yet survived to outperform the stock market for at least five years. He identified five CEO traits pivotal to the survival and success of these companies, naming them Level Five Leadership Traits:

  1. Humility cloaking hard edged resolve
  2. Ability to articulate threats and vision to win the support of an entire corporation
  3. Superior organizational skills. “Get the right people sitting in the right seats on the bus to success.”
  4. They are willing to join subordinates toiling in dull non-glamorous tasks.
  5. Contributions spring from talent, knowledge, skills and traditional work habits.

None of these sound like traits shared buy CEOs of Sears, General Electric or General Motors, all venerated American companies facing uncertain futures. To the contrary, the CEOs of each of these companies succumbed to the temptation of financialism and now find themselves managing a slow motion train wreck.

Collins gives examples of Level Five leaders turning away from lucrative stock options and instead taking on the arduous task of turning large companies away from disaster. Why do some CEOs chose this path, while others focus on running up the value of their company by any means possible, then cashing in stock options and leaving a mess for bankruptcy attorneys?

Adam Smith was a Scottish economist who established fundamental rules of economics in Wealth of Nations in 1776. Smith came up with the idea of Supply and Demand, stating that rational people work only in their own interests, but by doing so create an economy that benefits everyone. This is the concept of the famous “invisible hand”.

That might be fine for economists, but modern psychologists are challenging the notion of rational actors acting in their own interests. After all, sometimes people work very hard, but have no expectation of reward.

Why do we put effort, and sometimes a great deal of money, into hobbies? Why do we work for free and call it volunteering? Or donate to social causes that benefit people we will never meet?

These are questions the emerging field of behavioral economics addresses.

Pioneered by Daniel Kahneman and Amos Tversky in the 1970’s behavioral economics is now a field attracting social psychologists and neuropsychologists. Kahnemans’ thick tome Thinking Fast and Slow is a summary of his life’s work.

Dan Ariely is a social psychologist with an unshakable interest in exploring why we do things that do not generate rewards that should motivate us. His interest began when a former student visited him with an intriguing question.

The student had graduated and accepted a job with a prestigious investment bank and recently worked on a presentation his boss was to give on a merger and acquisition deal the bank was engaging in. The student worked very hard on the project for a number of weeks. He produced a beautiful presentation with engaging pictures, informative graphs and convincing text.

The boss was elated with the quality of the project and promised the young man a bonus for his efforts, but gently broke the news that the M&A deal was off and the presentation no longer needed.

The question the former student poised for Ariely was that even though he was compensated for the work, received a bonus and praise from the boss, he felt empty. Suddenly he didn’t care about the project he had worked so hard on. He realized he didn’t care much about the other things he was doing for the bank, either.

From a functional perspective, nothing had changed; he was still being well paid, the job gave him enviable social status, and the company paid even his laundry bill. The only thing that changed was that his work would not see the light of day. Why would this cause so much disappointment?

Many years ago, I was a behavior analyst working with intellectually disabled clients. At one point, I was asked to create a behavior plan for a client who was exhibiting sudden violent behaviors at his vocational setting. He had been in the vocational program for some time without incident, but lately would suddenly destroy property and assault staff for no apparent reason.

It took only a few minutes to see what the problem was.

The staff placed a large flat box in front of the client with dozens of little square compartments, each with a picture of a nut, bolt or washer, on the bottom of the compartment. This was a training device for the client to practice sorting parts. The client began pulling nuts, bolts and washers from a large coffee can, examining them closely and then searching for the compartment with a matching picture.

So far so good.

The client was slow and methodical, clearly being very conscientious about his work. However, he was a little too slow and the staff urged him on, making sure that he did not forget about the kitchen timer ticking away on a nearby shelf.

Soon the timer’s loud bell went off, and the client reluctantly leaned back so the staff could examine his work, making a few notes on a clipboard. Then, right in front of the client, she upended the box into a funnel and back into the coffee can. All the nuts and bolts the client so intently sorted were in the same place they were when he started sorting. Then she put the empty box in front of the client and reset the timer for the next trial.

And what do you suppose the client did?

He looked at the empty compartments incredulously, then at the staff. He shot to his feet, grabbed the box, lifted it over his head and smashed it onto the table. Then he went after the staff.

The client had the same experience as Ariely’s former student. Both had worked hard only to see their efforts summarily erased. In both cases compensation was not an issue, and the actions of others was devastating.

Ariely and his colleagues investigated this question at length in dozens of ingenuous experiments documented in Arielys book, The Upside of Irrationality.

One of the first things Ariely found out was that when a task is simple and physical incentives worked well to increase performance. However, when a task was even minimally cognitive higher incentives led to lower performance.

Ariely concluded that higher incentives became a distraction when cognitive tasks are involved. Students often have much higher scores when taking practice SAT tests compared to actual SAT tests, for example. We call it “choking” – when the pressure to perform well undermines our ability to do so.

These results are not exactly earthshattering, but they led Ariely to think about the nature of work. Why do we volunteer or work hard at hobbies that don’t have incentives associated with them? Is there some sort of natural incentive that rewards us for working?

Back in the 60’s animal studies found that rats trained to press a lever for food would continue to press the lever occasionally even when food was freely available. Researchers found that 44% of rats would manually deliver more than half their daily food intake.

Subsequent experiments found this was common in all sorts of animals. Why would an animal prefer to exert effort to get food rather than just allow it to be delivered? Is there something inherently rewarding about work?

It seems there is.

In his book Satisfaction: Sensation Seeking, Novelty, and the Science of Finding True Fulfillment, Gregory Berns tells about an fMRI experiment by researcher Cary Zink.

Zink instructed volunteers press a button when particular shapes appeared on a computer screen. During the trial, a dollar bill would materialize on the screen. In one condition, the dollar was automatically deposited into a virtual bank, and in another, the volunteer had to push a button to make the deposit.

As the subjects were performing these tasks, their striatums were monitored. The striatum is a small structure at the base of the brain associated with the reward system. When the striatum is active, we are pleased.

The interesting thing about Zink’s experiment was that when the subjects were required to press a button to deposit their money their striatum indicated more pleasure. In the Spartan context of the experiment, this constitutes work. Zink concluded that doing something – working – in order to receive a reward was more satisfying than passively accepting a reward.

Much like the animal experiments, Zink’s research suggests that humans experience happiness when earning rewards rather than being given them.

Berns found out something else about the striatum in his experiments on motivation. It reacts to novel information. We feel a sense of pleasure when we run across new things we have not experienced before. No only does the striatum reward us for making an effort, it also reacts to the results of that effort – something new and different from before.

This implies that we are inherently motivated not only to explore novel experiences, but to create them as well. The reward of work is not just the money we receive, but the experience of work as well. That is why we forgo pay to volunteer and spend money on hobbies.

So what is going on with our highly compensated CEOs?

Two things.

First, when compensation is tied to corporate stock value CEOs are detracted from the  distinctive competencies that have driven past successes, and focus instead on stock price. This encourages financialism, which is often the death knell of a company.

The other thing that happens is that like most other animals and humans, the CEO has a drive to change the world in some way. Given the size of his or her compensation, big changes are expected.

By tying large compensation to stock price, Boards are not only distracting the CEO from “tending the knitting”, but also priming them to make these distracted changes in a big way.

It is doubtful we will see any reforms to corporate compensation in the near future, but talking about what needs to happen will make that day come just a little sooner.


Books used in this article:

Ariely, D. (2010). The upside of irrationality: The unexpected benefits of defying logic at work and at home. New York: Harper.

Berns, G. (2005). Satisfaction: Sensation Seeking, Novelty, and the Science of Finding True Fulfillment (1st ed.). New York: Henry Holt.

Collins, J. C. (2001). Good to great: Why some companies make the leap–and others don’t (1st ed.). New York, NY: HarperBusiness

Foroohar, R. (2016). Makers and takers: The rise of finance and the fall of American business (First edition. ed.). New York: Crown Business.

Kahneman, D. (2011). Thinking, fast and slow (1st ed.). New York: Farrar, Straus and Giroux.

Smith, A. (2015). The wealth of nations. New York: Fall River Press.




Why Your Kid’s School Doesn’t Teach And How It Got That Way

The Supreme Court has ruled that the nonsense phrase “BONG HiTS 4 JESUS” is so threatening to schools that it is illegal to speak or display the words anywhere students might see or hear them. Really.

But that’s not all.

The community college where I work spends around $15 million dollars annually on remedial classes for high school graduates who cannot read or write well enough to participate in introductory classes. Every term I return email messages to students because their writing skills are so poor, I have no idea what they are trying to tell me.

Are public schools addressing their failures?


Instead, they are preoccupied with bullying students about nonsense phrases and monitoring them for signs of sexuality.


Oregon School District 24j contacts police if they suspect a student are sexually active. Why? Because under Oregon law it is illegal for people under the age of 18 to have sex, so school administrators have added this to their list of responsibilities. They have taken upon themselves to police their student’s sex lives, while issues like illiteracy and math anxiety flourish.

To understand why public school are failing to teach basic skills like reading, writing and arithmetic in favor of concentrating on their students sexual activities we need to review just a little history and public policy.

First the public policy.

When government makes a law, it designates a bureaucracy to enforce it. Anything to do with vehicle registration or driver licensing goes to the Department of Motor Vehicles, and tax collection goes to the Revenue Department. Laws concerning public education go to public schools. These agencies then write the rules and procedures they will follow when they enforce the law. These are called Administrative Rules and are on the web sites of state attorneys general.

Elected political bodies pass statutes, or laws, and the agencies administering them write their own rules explaining how they will execute the laws.

It wasn’t always this way. Until the 1880’s or so, state and local governments administered laws in any way they wished. This led to widespread political corruption, especially in state and local government. It was said that an honest politician was one who stayed bribed, that is, he didn’t continue to accept graft after already selling his vote.

In 1904 muck raking reporter Lincoln Steffens was so outraged at the obvious buying and selling of political favors that he wrote a book called The Shame of the Cities. The book came out at the height of the reform movement and strengthened the argument for applying new management methods to fight corrupt government.

The blueprint for bureaucracy came from Fredrick Taylor, who wrote Principles of Scientific Management in 1911, the first book to describe how to run a mechanized factory.

There had been factories before, of course, but they were generally assembly lines of workers assembling products by hand. This was the method of manufacture for Civil War pistols, rifles and muskets, for example.

The turn of the century saw huge factories in which machines did much of the work, but required workers to keep the machines running. This was the era of steel production, stamped sheet metal and automated production lines. Raw materials went in at one end of a factory and a finished product came out the other. For the first time in history, thousands of workers came to work at the same time and the management challenge was overwhelming.

Principles of Scientific Management solved that problem with regimentation, and gave us the concept of a worker being just an extension of the machine. The role of workers was to obey instructions to the letter, while supervisors’ role was to think and issue orders.

In 1880, Woodrow Wilson, future President of the United States, was a political scientist at Princeton and wrote a paper arguing that public policy was the proper topic for political scientists. That might just be a minor side note in the history of academia, except for the fact that Wilson became President of the United States at the height of public outrage over political corruption.

Max Weber, a German sociologist, combined Wilson’s 1880 paper defining the new idea of public policy with Taylors work on managing factories and came up with the modern bureaucracy. He applied methods described by Taylor for running a factory to running an office. Weber’s ideas were included as a chapter simply titled Bureaucracy in a sociology book, but it became famous as the solution to political corruptions.

(If you are interested in reading Weber’s essay On Bureaucracy, it is included in Classics of Public Administration.)

The most prominent characteristic of a bureaucracy is process orientation. This means that the organization repeats a process or procedure repeatedly without deviation, like a machine. Results are not as important as process; in many cases results are irrelevant. The only concern is the procedure. Very quickly, the metaphor “machine bureaucracy” came into common use because office workers were acting like mindless machines.

Maintaining the status quo is one of the purposes of bureaucracy. There is little tolerance for anything new or different.

That might sound strange to our 21st century ears. We constantly hear about new ideas and innovation moving the economy ahead, but it is important that our institutions resist change. Imagine what life would be like if laws changed every day, or banks and lending institutions frequently experimented with different formulas for calculating interest.

Credit card companies are good examples of the need for clear rules governing a process. Rules for calculating interest and penalties are including in every credit card statement. It is important that credit card companies are consistent with the way it calculates interest.

We prefer it that way because it guarantees equal treatment of everyone.

Consistent procedure requires rigid rules. If the procedures are to remain consistent, we need to have rules that are also consistent. This means that inflexible rules drive bureaucracies. Clear, unambiguous rules are necessary to make sure that everyone performing the process does it the same very every time.

Employees within the organization are all subject to the same rules and procedures, as are customers, clients or service recipients.

So bureaucracies are rule driven, procedure oriented organizations with hierarchies of authorities acting as enforcers. Motivation is through coercion – workers do not receive rewards for doing what they are supposed to do, they face punishment for not following rules and procedures.

Obviously, bureaucracies are not the ideal organizational model for all things. They work best with simple tasks in a stable, predictable environment when exactly the same service is repeated indefinitely, and all inputs are identical.

Think for a minute about the work values people need to believe in bureaucracies.

First, unflinching respect for authority. That means never questioning anything the bureaucracy does. To do so is seen as disloyal and an attack on the bureaucracy.

People working in bureaucracies must also have a high belief in conformity and obedience. This leads to mindless unquestioning compliance. This is why one of the criticisms of bureaucracy is that it is undemocratic and lends itself to Fascism.

Social progressives believe that government is the proper vehicle for advancing social good, but since government uses inherently undemocratic bureaucracy to implement laws and policy, things can run amok.

This is why school administrators so easily slip into the role of adolescent sex police. If it’s a rule is has to be enforced. Never mind the results; the focus is on teaching obedience and conformity.

One of the things you might be asking yourself is how bureaucracy came to be the organizational style of choice for schools.

According to New York Teacher of the Year and outspoken education critic John Taylor Gatto in his book The Underground History of American Education there were three reasons:

Taylors Principles of Scientific Management were gaining popularity in industry, and Weber’s bureaucratic principles were spreading to public policy, so schools were not long to remain independent.

Second, one of the features of bureaucracy is specialization. A move was afoot to replace non-professional parents and local leaders with educational specialists. “Professionalizing” the management of schools with superintendents, school principals and teaching specialists would improve education.

However, one challenge to specialization and professionalization was the social status of teachers. At that time even teachers of one room schoolhouses, (of which there were still 149,000 in America), were seen as socially elite professionals. “School marms” had a reputation of assigning rigorous academics to their students.

The movement to bureaucratize schools first diminished the power of teachers by infusing school management with administrative professionals. Professional school superintendents, principles as supervisors, and curriculum development specialists quickly displaced teachers as professionals.

Finally, the introduction of standardized tests was the end of the iconic one room schools house educator.

In 1915 teachers made up 95% of school personnel, today teachers make up less than 50% of personnel at most school districts. The school district where I live – Tucson Unified School District, (TUSD) – lists 3505 certified teachers on the payroll for a teacher student ratio of 1:12, and non-certified employees at 6816 for a non-teacher to student ratio of 1:6.

(For an absorbing first person account of teaching in a one room schoolhouse at the turn of the century read Elsie – Adventures of an Arizona Schoolteacher 1913-1916.)

Between 1960 and 1990 the number of American public school students increase by 61% while school administrators had grown by 342%. Public schools have become a refuge for highly educated public education bureaucrats who had no place else to go besides school districts.

Teachers did not go quietly.

Dana Goldstein traces the rise of teacher labor organizing and the emergence of modern education and teacher organizations in Teacher Wars. Her book illustrates the lengths to which administrative control of the classroom under the guise of efficiency and standardization will go – the central ethos of Taylorism and bureaucracy.

She focuses on large cities on the east coast and traces the relationship between teachers and unions. She reveals how efforts to improve school instructions quickly become politicized, and explains the endless controversies of assessing teaching skills.

This should be no surprise given what we’ve learned about bureaucracies. The focus of bureaucracies is not on output, or the results of all the procedures, rules and polities. The focus is on the procedures, rules and polices themselves.

This is why graduating high school students often have such poor basic skills. High school focus on compliance and obedience and have little interest in education.


Sources mentioned in this article:

Goldstein, D. (2015). The teacher wars: A history of America’s most embattled profession (First Anchor Books edition. ed.). New York: Anchor Books.

Shafritz, J. M., & Hyde, A. C. (1997). Classics of public administration (4th ed.). Fort Worth: Harcourt Brace College Publishers.







If The Economy Is So Great, Why Are My Finances So Bad?


News headlines are touting all sorts of economic glad tidings.

The unemployment rate is lower than it has been in years, the stock market is expanding, businesses are reporting record growth and GDP is up and set to go even higher.

So why so do many people see little or no improvement in their own financial fortunes?

A big reason is that we are living in a different economy than the one that ended in 2008. The driving force behind that economy was industry, and the one we are building now isn’t. It is much harder to gauge the health of the economy today fundamental economic truths no longer are what they once were.

Take the stock market for instance. In the old industrial economy increasing stock prices meant investors were confident that the economy doing well. They bought shares in companies they thought had a bright future. When the stock market is in the rise it means companies are expanding – building new plants and offices, selling more of what they make and moving into new markets.

No longer.

Many large corporations active on the stock market have moved into “financialism” – rather than making things, these companies now act more like banks than manufacturers.

Rana Foroohar explains this at length in her very readable book on finance and economics, Makers and Takers. She points out that corporate borrowing is higher than it has ever been, but the borrowing is not for traditional business expansion.

Instead, corporations are buying back shares, making divided payments, outsourcing labor and using debt financing to minimize tax exposure. Instead of making things, large corporations are manipulating their balance sheets – in legal ways – to increase the value of the company.

This has devastating effects on workers. With the rise of software and robotics, one way to increase stock value is to replace workers with machines.

Workers are usually the most expensive part of any business overhead, so reducing workforce is a positive step to investors. Companies announcing layoffs are more efficient than those hiring workers are, and are therefore better investments.

This is unheard of.

For hundreds of years business expansion meant more job creation and hiring. The idea that business can improve their financial health by laying off workers is just the opposite of conventional investing wisdom.

If you have been following business news for the last couple of years, you know that Sears has been dangling on the edge of collapse. It is selling its real estate – its stores – to offset the cost of borrowing essential to survival.

The details make for interesting reading.

According to Foroohar, in 2015 Sears bundled 235 of its stores into a Real Estate Investment Trust (REIT), then leased the same stores back to itself. Its retail divisions, already losing money at an astonishing rate, now has the added burden of lease payments to Sears Holdings Corporation.

There is a perverse secret to making money in real estate – debt financing. Most of us think of debt as something to avoid because there is no real upside. That isn’t true for big players, though. There are huge tax advantages to debt financing. Money a company borrows can be deducted as businesses expenses and at the same time, an REIT can generate cash through the leases on property. It’s a win-win.

Sears borrows its money from ESL Investments, a hedge fund owned by Sears Holding CEO Eddie Lampert. (Yes, Lampert is CEO of both the lender and the borrower.) Every time Lampert injects money or lays off employees, Sears’s stock price increases a bit, and every time he closes another store, ESL gains another property.

This is just one small example of how the economy has changed at a very basic level. The idea that debt can be an advantage to a company is difficult for most of us to accept, and that illustrates a larger issue – nobody is quite sure how to measure and manage this new economy.

In The Only Game in Town, Mohamed El-Erians’ interesting and very readable book on modern economics, quotes William Dudley, New York Federal Reserve President on the state of knowledge of our financial leaders in this era of financialism:

“We still don’t have well developed macro-models that incorporate a realistic financial sector.”

In other words, the Federal Reserve doesn’t really know how to measure economic consequences of large companies moving away from traditional trade and towards debt financing.

Something else we have a hard time measuring is jobs. In the old economy when someone had a job, it meant they could rent a house or apartment, buy a car and have enough to eat. Now a job does not necessarily mean any of those things are possible.

Part of the problem is defining and counting jobs. In 2015, the Government Accounting Office (GAO) delivered a report to Congress putting the proportion of contingent work jobs at about 40% of all jobs. That is, almost half of people counted as employed were actually “involuntary part time workers” who did not make a living wage.

However, a 2017 report by Katz and Krueger from the Federal Reserve put the portion of contingent jobs at about 15%. It also estimates that only 6% of the jobs created between 2010 and 2015 are traditional full time jobs. The other 96% are contingent jobs.

Contingent jobs are just part time versions of regular full time jobs. The education industry has been moving to all contingent instructional staff for some time. At the community college where I work, about two thirds of the teachers are adjunct, and teach the great majority of classes. Adjuncts are paid about one third that of full time teachers.

That is typical for most industries.

This brings up another new normal issue that is affecting American workers.

Wages are not increasing, and they haven’t for some time. The slowdown in wage growth began in the early 21st century, prior to the Great Recession. Advances in robotics and software is almost certainly driving the shift away from human capital and towards automation. In other words, humans are losing value in the workplace.

In a 2013 research paper, Frey and Osborne estimated that technology would reduce the need for human workers partly or completely for about half of the occupations then in existence. This analysis found that most of the jobs at greatest risk were those paying low wages and requiring little training.

A paper published in 2017 by Lordan and Neumark found that the push for an increased minimum wage was actually causing employers to accelerate their move towards automation. An obvious example is the move by McDonalds introducing kiosk ordering and delivery by Uber. Autonomous cars are already entering our transportation system. By the time they are common McDonalds will likely have few or no humans in its stores.

This trend is not new. Between 1977 and 2012, more than 6.6 million manufacturing jobs were eliminated by either technology or offshoring. The interesting aspect is that while industrial jobs were disappearing, the manufacturing sector was doing quite well. Productivity actually increased at the same time that employment was decreasing.

One  of the great challenges us is how to interpret our new economy. It is so unlike the old one that we have trouble understanding even its most basic concepts.


Sources cited in this article:

El-Erian, M. A. (2017). The only game in town: Central banks, instability, and avoiding the next collapse. New York: Random House.

Foroohar, R. (2016). Makers and takers: The rise of finance and the fall of American business (First edition. ed.). New York: Crown Business.

Frey, C., & Osborne, M. (2013). The future of employment: How susceptible are jobs to computerisation? (Publication., from University of Oxford: http://www.oxfordmartin.ox.ac.uk/publications/view/1314

GAO. (2015). Contingent Workforce: Size, Characteristics, Earnings, and Benefits. (GAO-15-168R). Washington DC: GAO Retrieved from https://www.gao.gov/assets/670/669766.pdf.

Katz, L. F., & Krueger, A. B. (2017). The rise and nature of alternative work arrangements in the United States, 1995–2015 (2016). The Global Talent Competitiveness Index, 2016.

Lordan, G., & Neumark, D. (2017). People Versus Machines: The Impact of Minimum Wages on Automatable Jobs. Cambridge, MA: National Bureau of Economic Research.

Degree Inflation, Credentialing and Signaling: Employers Now Demand Over Qualification

A new report out today from the Philadelphia Federal Reserve examines the recent trend of employers inflating requirements for jobs. “Addressing Bias and Equity in Hiring” is a literature review by Ashley Putnam, director of Economic Growth and Mobility Project at the Philadelphia Federal Reserve. Literature reviews are a way for scientists to condense current knowledge on particular topic. Putnam didn’t do any original research; instead, she summarizes previous work on the topic.

“Upcredentialing” usually means demanding a college degree for jobs that do not require one. It’s expensive for both job seekers and employers, but the sort term gain is a powerful seduction for employers.

Economists measure upcredentialing by comparing education levels of people currently in a particular job with education levels required in job postings. For example, Putnam cites a 2014 study in which 64% of job posts for executive assistants required a college degree, but only 19% of executive assistants on the job at the time had one.

President Obama gave his first inauguration speech in the mist of the collapse of the industrial economy in 2008. In it, he urged Americans to go to school in order to be ready for the eventual recovery.

That recovery never came, of course. Instead, we find ourselves in a decade’s long project of building a new economy with little resemblance to the previous one. While the 3.8% unemployment rate is wall papered all over the media, the Bureau of Labor Statistics, (BLS), reports that record numbers of people are not in the workforce, the average workweek is only 33 hours and wages continue to stagnate.

The Great Recession was a boom time for the education industry. Admissions shot up by about 30% and there was a bumper crop of college graduates during President Obamas first term.

Unfortunately, the jobs of the 20th century no longer exist for these new graduates.

Katz and Krueger (2017) estimated that 94% of the jobs created between 2005 and 2015 were contingent jobs – “gigs” that generally do not pay a living wage. The National Employment Law Project finds that 60% of newly created jobs are low wage, low skill service positions. These are not the jobs that people responding to President Obamas call for education had in mind.

Old-fashioned jobs that legitimately required skills that a bachelor’s degree conferred have been in short supply, while at the same time the United States has a higher proportion of bachelor degree holders than ever before. About one third of Americans have a bachelor’s degree, and more than half have a two-year degree or certificate.

In spite of record numbers of Americans holding bachelor and technical degrees, employers complain of a “skills gap”. Potential employees do not have the technical skills needed in the workplace.

Peter Cappelli has studied this issue at length in his book, Why Good People Can’t Get Jobs, and finds a number of reasons the “skills gap” is largely a myth. Cappelli points out that many of the skills employers have trouble finding are not the kind learned in a bachelors program. As surprising as it might be, most colleges and universities do not have basic computer skills as a general education requirement.

Often employers look for specialized skills; say the ability to code in Python, or WordPress experience. These skills are mostly self-taught, and consequently have no certificate associated with them.

Another trend among employers is to condense several technical jobs into one position. Cappelli gives the example of an engineer with thirty years’ experience, a master’s degree and a Professional Engineer certificate who could not get a position with an engineering firm because he could not type 65 words per minute.

“David Altig, research director at the Federal Reserve Bank of Atlanta, notes that this broadening of skill requirements is now commonplace. Where in the past a company may have had three positions and only one required computer skills, now ‘one person is doing all three of those jobs—and every job you fill has to have computer skills,’”  (Cappelli, 2013, Kindle Locations 553-555).

Another under the radar development has been the success with which American companies have shifted the expense of education to employees. Like retirement and health care, employees are now largely responsible for financing their education. Education costs are one of the fringe benefits that disappeared with the industrial economy.

On the job training, apprenticeships and learning how to do a new job are outdated. We are now in an era of “onboarding” new employees with the expectation that they must be productive from day one on the job.

Both Putnam and Cappelli point to the bachelor’s degree as a “signaling” device. It may not confer specific technical skills needed to perform a job, but implies the holder has certain characteristics. Employers can infer race, social class and cultural values by a bachelor’s degree and not be concerned with charges of racism or elitism.

Academic studies on the relationship between bachelor degree holders and productivity have been inconclusive. However, recent studies show that “upcredentialing” and using education as a signaling device cost employers a good deal of money.

Adding unnecessary requirements makes it more difficult and time consuming to find candidates whose knowledge, skills and abilities, (KSAs), meet the inflated requirements of employers. Putnam cites sties a study indicating that IT help desk positons requiring a college degree take 40% more time to fill than the same position without the college requirement. Front line construction mangers require 119% more time to fill a vacancy with a bachelor’s degree is required

This translates into huge amounts of money. The Centre for Economic Research estimates that unfilled openings cost the economy $160 billion a year. Degree inflation also increases employee turnover. While one might argue that college graduates deserve a pay differential compared to non-grads, Harvard Business School contends that non-degree holders perform just as well on specific technical needs for particular jobs. Adding a requirement for a degree adds costs but does not seem to have a matching effect on productivity or quality of work.

Entry-level employees bear a disproportionate cost of upcredentialing. According to Putnam, costs at four-year institutions increased by 129% between 1987 and 2017 – far more than wages for degree holders, which have stagnated.

But not everyone who enters college completes it — only a few more than half of students who enter college actually graduate. The remainder has no degree, but carries student debt. The most common reason for dropping out of college is to keep a job; the second most common reasons are lack of affordability of higher education.

None of this will change any time soon. The glut of degree holders will remain as long as the economy does not expand enough to provide jobs for people who have left the labor force.


References used in this article:

Cappelli, P. (2013). Why good people can’t get jobs: The skills gap and what companies can do about it. (Kindle ed.). Philadelphia: Wharton Digital Press.

Fuller, J. B., & Raman, M. (2017). Dismissed by Degrees: How Degree Inflation is Undermining US Competitiveness and Hurting America’s Middle Class. Accenture, Grads of Life, Harvard Business School.

Katz, L. F. & Krueger, A. B. (2017). The rise and nature of alternative work arrangements in the United States, 1995–2015 (2016). The Global Talent Competitiveness Index, 2016.

National Employment Law Project, “The Low-Wage Recovery and Growing Inequality”, August 2012, available at http://www.nelp.org/content/uploads/2015/03/LowWageRecovery2012.pdf.

Putnam, A. (Spring 2018). Addressing Bias and Equity in Hiring. Federal Reserve Bank of Philadelphia, Economic Insights, Cascade, 1(98), 9