Letter from the Director | Spring 2005
Valentine's Day
Valentine's Day: We organize the newsletter around holidays. ISERP was a net receiver of roses this year, in contrast to last year, where outflow exceeded inflow. We think this may be a sign of even better times to come, but perhaps we are more optimistic than others. Is optimism important? Tom DiPrete (ISERP Faculty Fellow, Sociology) suggests that optimism is an American characteristic. He notes in his paper "Is This a Great Country, or What?" that public opinion data suggests that a strikingly large proportion of Americans believe they have a good chance of becoming rich in their lifetime. Responding to these opinion surveys, Conservative columnist David Brooks argued on the New York Times Op-Ed page that Americans admire the rich and see themselves as "pre-rich." Therefore, Brooks argued, Democrats should not be surprised when so many voters are inhospitable to what he terms the "combative rather than unifying," "inauthentic," and "not optimistic" message of "class-based" politics. But is this a correct interpretation of these surveys? DiPrete's analysis reveals considerable variance in what being "rich" means to Americans. Those below the median household income (about $50K) defined rich as having a household income of $100K, while those making less than $30K thought it took only $74K. Perhaps Americans define "rich" in relative terms. More likely, those with low incomes can't realistically judge how much money it takes to live a life of luxury in contemporary America. The Wall Street Journal editorial writers, reacting to the high proportion of Americans who thought they would someday be rich, dismissed the possibility that Americans were allowing hope to triumph over experience. But DiPrete's analysis of PSID data belies their interpretation. Americans substantially overestimate their chances of spending even a few years above their "rich" threshold, and the estimates are wildly optimistic for those who do not rise above the median income early in their working lives. Maybe optimism is more important than we think.
Or maybe we need to better integrate into our models the idea that people use different heuristics to make decisions and projections. This is the conclusion that Elke Weber (ISERP Faculty Fellow, Psychology and Management) reaches in her project on agricultural decision making in the Argentine Pampas. Funded by NSF's Biocomplexity Initiative and NOAA's Office of Global Programs, Weber and colleagues from the University of Miami and from Argentina study how farmers respond to climate variability and other risk factors. Weber examines the ways in which farmers' decision objectives deviate from the assumptions of expected utility maximization. Computer simulations comparing expected utility or profit maximization with alternative (and psychologically more plausible) objective functions show that the value of climate forecasts is affected little by the choice of objective function. Best practices (in terms of optimal production and pricing decisions), however, differ strongly. This suggests that there is value in categorizing farm decision makers into classes that differ in objective function.
I promised to consider responses to the bivariate relationship we showed between emptiness and Bush support. Some correspondents wanted to see a full multivariate model. So do I, but for quick thinking, bivariate looks are fine. Paul Fricke (Visiting Fellow in Columbia Sociology, from University of Chicago) writes that thinking about emptiness is the wrong way to go; instead, we should consider social structure, specifically social networks:
"More people living in the same space does not necessarily lead to an increase in the number of social ties in that space. In fact, it may inhibit them. Population density measures will never capture social density. Network theory can help explain Bush's success. Kerry raised the lion-share of his money through the Internet; Bush raised his through the work of 'mavericks,' 'pioneers,' and 'rangers,' that is, donors who also raised money from their friends. Bush's strategy simultaneously builds social networks while revealing the central nodes of those networks. Kerry's strategy does neither. Thus Democrats did not build coalitions of supporters and did not have an adequate procedure for identifying the salient nodes in networks of supporters. A sack of potatoes makes neither a social class nor a political movement."
ISERP is doing fine. Research goes on. We hope to organize a major conference next year on breakthrough social science. Your ideas are solicited. The next newsletter comes out around Memorial Day.
Peter Bearman, Director
Institute of Social and Economic
Research and Policy
