The war against taxes (and the unmarried)
The American Enterprise Institute, conservative think-tank, is releasing a report today. It’s called For richer, for poorer: How family structures economic success in America, and there is also an event in DC today from 9:30am til 12:15pm that will be livestreamed. The report takes a look at statistics for various races and income levels at how marriage is associated with increased hours works and income, for men especially.
It uses a technique called the “fixed-effects model,” and since I’d never studied that I took a look at it on the wikipedia page, and in this worked-out example on Josh Blumenstock’s webpage of massage prices in various cities, and in this example, on Richard William’s webpage, where it’s also a logit model, for girls in and out of poverty.
The critical thing to know about fixed effects models is that we need more than one snapshot of an object of interest – in this case a person who is or isn’t married – in order to use that person as a control against themselves. So in 1990 Person A is 18 and unmarried, but in 2000 he is 28 and married, and makes way more money. Similarly, in 1990 Person B is 18 and unmarried, but in 2000 he is 28 and still unmarried, and makes more money but not quite as much more money as Person A.
The AEI report cannot claim causality – and even notes as much on page 8 of their report – so instead they talk about a bunch of “suggested causal relationships” between marriage and income. But really what they are seeing is that, as men get more hours at work, they also tend to get married. Not sure why the married thing would cause the hours, though. As women get married, they tend to work fewer hours. I’m guessing this is because pregnancy causes both.
The AEI report concludes, rightly, that people who get married, and come from homes where there were married parents, make more money. But that doesn’t mean we can “prescribe” marriage to a population and expect to see that effect. Causality is a bitch.
On the other hand, that’s not what the AEI says we should do. Instead, the AEI is recommending (what else?) tax breaks to encourage people to get married. Most bizarre of their suggestions, at least to me, is to expand tax benefits for single, childless adults to “increase their marriageability.” What? Isn’t that also an incentive to stay single and childless?
What I’m worried about is that this report will be cleverly marketed, using the phrase “fixed effects,” to make it seem like they have indeed proven “mathematically” that individuals, yet again, are to be blamed for the structural failure of our nation’s work problems, and if they would only get married already we’d all be ok and have great jobs. All problems will be solved by tax breaks.