The marshmallow test

There are two kinds of people, those who eat one marshmallow, and those who eat two.  More specifically, The Economist reported:

FORTY years ago Walter Mischel, an American psychologist, conducted a famous experiment. He left a series of four-year-olds alone in a room with a marshmallow on the table. He told them that they could eat the marshmallow at once, or wait until he came back and get two marshmallows. Recreations of the experiment on YouTube show what happens next. Some eat the marshmallow immediately. Others try all kinds of strategies to leave the tempting treat alone.

Nothing surprising there. The astonishing part was the way that the four-year-olds’ ability to defer gratification was reflected over time in their lives. Those who waited longest scored higher in academic tests at school, were much less likely to drop out of university and earned substantially higher incomes than those who gobbled up the sweet straight away. Those who could not wait at all were far more likely, in later life, to have problems with drugs or alcohol.

I am a libertarian, but I am also a utilitarian, so I don’t really object to reasonable “nudge” policies like making the 401k plan the default option for new hires, or having banks warn people who rely too much on expensive overdrafts. 

What bothers me is when I see attempts to redistribute wealth from the two marshmallow eaters to the one marshmallow eaters.  For instance, by the time I retire in 6 years I will have probably averaged about $80,000/year over my working life, which makes me comfortably upper middle class.  Because I am a two marshmallow personality, I’ve probably saved about half of that income.  So I’m doing fine.  Most Americans with similar incomes are one marshmallow types, and save something closer to 10% of their incomes.

What do we do if Social Security needs to be trimmed in order to balance the budget?  I hear lots of talk about cutting back on benefits for those who “don’t need it.”  That would be people like me.  Here’s why I don’t trust the Dems—I see them as the party of one marshmallow eaters.  They represent people who have less self-control.  I fear they will cut my benefits, but not cut the benefits of people who didn’t save for retirement.  I fear they will use “wealth” as the criterion to determine who is needy and who isn’t; not lifetime wage earnings.

In my view there is nothing egalitarian about redistributing income from two marshmallow eaters to one marshmallow eaters.  They’ve already had their fun when young, loading up their three car garages with all sorts of fun toys.  I’ve never even had a garage. 

I’m not saying that the rich shouldn’t be the ones who accept cutbacks in Social Security to save the system, that is a defensible argument (although interestingly many progressives oppose the idea, hoping that Social Security doesn’t become seen as “welfare.”)  But if you are going to do means-testing, it should be on lifetime wage income, not wealth.  If they do that then I need not fear for my SS benefits, as most Americans who have averaged about $80,000 a year over their lifetime have not saved much, and would march on Washington if their SS benefits were cut back.

Update:  Commenter Edwin A pointed out that I shouldn’t have picked on the Dems.  I do think they are usually the one marshmallow party, but in this case many Dems oppose means-testing Social Security, and some conservatives support the idea.


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77 Responses to “The marshmallow test”

  1. Gravatar of John Thacker John Thacker
    22. March 2011 at 07:35

    “But if you are going to do means-testing, it should be on lifetime wage income, not wealth.”

    I agree.

    The proposals of the bipartisan commission are to reduce the benefit formulas at the high end, which would be based on lifetime wage income, rather than means test benefits at the back-end, which would penalize savers. (Since retirees get “income” by withdrawing their saved assets.)

  2. Gravatar of Doc Merlin Doc Merlin
    22. March 2011 at 07:44

    @John Thacker:

    You should also include “if you are still making more than 70k on any taxable income (including investment income) you are not retired for purposes of social security.” This alone would save a fair chunk of money.

  3. Gravatar of Philo Philo
    22. March 2011 at 07:45

    (1) Lots of wage income is a return on prior investment in human capital (and should be categorized as investment income), and lots more is a reward for the self-denial of working long hours (and should not be a basis for denying governmental benefits). (2) Formally, entrepreneurs don’t have wage income; it would have to be imputed. (But then “wage income” would be not such a simple notion.)

  4. Gravatar of Bababooey Bababooey
    22. March 2011 at 07:56

    They’ve already had their fun when young, loading up their three car garages with all sorts of fun toys.

    Hey now, I resemble that remark.

    Besides this notion, you prefer consumption taxes? I wouldn’t call you a utilitarian, I’d call you a Sumnerian, concerned about policy incentives for your lifestyle.

  5. Gravatar of Bret Bret
    22. March 2011 at 08:15

    The whole purpose of politics is for people like me who haven’t saved much to take money away from people like you who have saved. Why else would we bother having politicians?

    On a slightly more serious note, using total wage income is stunningly bad idea in my opinion. Perhaps total income (earned and investment) with allowances for losses due to theft and fraud would be okay. Or some combination of income and current wealth.

    Otherwise people who saved and made perfectly reasonable investments or started businesses that ended up doing poorly would end up being in a dire position. I don’t think we want to discourage people from making some investments.

  6. Gravatar of John John
    22. March 2011 at 08:17

    Here’s why I don’t trust the Dems—I see them as the party of one marshmallow eaters.

    So this is why you think you’re a Republican!

    Following this blog has all the twists and turns of a great classic novel. I’m loving it.

  7. Gravatar of John Hall John Hall
    22. March 2011 at 08:34

    Saving 40,000/yr on 80,000/yr income is quite a high savings rate, even compared to two marshmellow people.

    You sure you didn’t mean something else?

    For instance, if you worked 40years, that would mean 3.2mn in income. Having 1.6mn saved would be 50% of 3.2mn. However, if you invested 40,000 a year at 5% for 40 years give you something like 50% greater than your life-time income.

  8. Gravatar of Anthony Anthony
    22. March 2011 at 08:37

    At a 50% savings rate, I dare say you aren’t a two-marshmallower: instead, you probably asked the researcher to leave the room again, so you could have three.

    Also, I’d strike “Democrats” and replace with “politicians”, as its entirely unclear that Republicans are any different. 2001–2007 weren’t exactly banner years for fiscal sanity.

  9. Gravatar of Morgan Warstler Morgan Warstler
    22. March 2011 at 08:43

    “Don’t eat the marshmallow” is one of my favorite sayings.

    What’s crazy is that marshmallow eaters are largely determined in the first year of brain development.

    Before they are considered sentient, when the brain is determining how to process new information (in a positive/hopeful or negative/fearful light) – marshmallow eaters lack Freud’s delay of gratification – they have a deep seated reason not to trust that there is a second marshmallow coming.

  10. Gravatar of Benjamin Cole Benjamin Cole
    22. March 2011 at 08:49

    Well, this is an interesting topic. Yes, we should reward productive or responsible behavior.

    On the other hand, the one marshmellow people are also the ones who serve in war, drive street-cleaning machines in the dead of night and keep bowling leagues going.

    I doubt the one marshmellow crowd (in general) live in houses with three-car garages, as they lack the personality type to become materially successful. That is probably an unfair generalization by Scott Sumner.

    I agree with the assessment of the D-Party. On the other hand, the R-Party must represent not the two-marshmellow crowd, but the officious snot who organized such a test of fellow human beings. And his militaristic, martinet cousin.

    BTW, the is a great story on runaway Social Security disability claims in today’s WSJ. One of the worst offender states? North Dakota. The same state that gets back $6k net per capita in federal spending over federal taxes, or about $24k in net federal spending per family of four.

    The North Dakota success story is an interesting one.

  11. Gravatar of dirk dirk
    22. March 2011 at 09:05

    I don’t think many of the 1 marshmallow eaters manage to make an average of 80k a year in the first place. I think the 3 car garage types are a subcategory of 1 marshmallow eaters, who are not overwhelmingly Democrats.

    I think you are a 3 marshmallow eater (were that an extra-credit option), whereas most successful people are 2 marshmallow eaters. Democrats are a coalition of 1 marshmallow eaters and 3 marshmallow eaters who perceive the 3 car garage 2 marshmallow eaters as everything they find threatening and/or offensive. How does that explain you? It doesn’t. You are an outlier.

  12. Gravatar of Edwin A. Edwin A.
    22. March 2011 at 09:37

    You’re actually picking on the wrong party for this issue. Means testing for SS and Medicare is something Republicans have largely been toting, while the Dems have been generally against it. Prominent liberals like Dean Baker, Mark Thoma, and Paul Krugman have said it’s unnecessary and won’t save much money. Guys for like Tyler Cowen and Bryan Kaplan on the other hand support it.

    Means testing Social Security would cause the program’s broader support to drop, which is what the Dems don’t want and what Republicans do want. If the narrative becomes that it’s a welfare program instead of a retirement program for all, the Dems lose.

  13. Gravatar of Mark A. Sadowski Mark A. Sadowski
    22. March 2011 at 10:13

    Scott wrote:
    “They’ve already had their fun when young, loading up their three car garages with all sorts of fun toys. I’ve never even had a garage.”

    I’ve got a slightly different problem. I have a large (24′ long) 2 car garage. But there’s no “fun toys” in it (my three old cars are all on the driveway). Mostly it’s full of old useless junk I’m terrified to part with because who knows if I’ll ever have enough money to replace it with new useful stuff.

    Yes, it’s a sickness. It’s the fear of never being able to replace my old moldy marshmallows with new edible ones.

    P.S. Owning three old cars is itself symptomatic of my disease. I have three cars in case two of them ever break down (extremely unlikely). Call it risk aversion taken to a delusional level.

  14. Gravatar of Jim W. Jim W.
    22. March 2011 at 10:55

    It is possible that the experiment doesn’t just measure instant vs. deferred gratification. Another interpretation is that the test is measuring trust levels or even manipulation levels. For example, the experience of some of the four year olds might be that adults frequently make promises that they don’t keep so there is no reason to believe them when they tell you that waiting will get you the extra marshmellow. Or maybe some four year olds have learned that adults are not consistent when they say there are negative consequences for their actions – they still have a chance of getting the second marshmellow regardless of what has been said.

  15. Gravatar of dirk dirk
    22. March 2011 at 11:54

    I mistyped. I meant that 3 car garage types were a subcategory of 2 marshmallow eaters.

  16. Gravatar of James Oswald James Oswald
    22. March 2011 at 12:00

    It’s always possible to lower your wealth by buying more durable goods. It’s something that many people forget. The rich can always choose to become poor.

  17. Gravatar of Jason Jason
    22. March 2011 at 12:30

    I thought the point was that if we redistributed some of the marshmallows from the two marshmallow people to the one marshmallow people, everyone would get an extra marshmallow.

    The marginal utility of the second marshmallow is not as high as the first marshmallow. At some point in reducing the fraction of the second marshmallow given out to the waiters, the incentive to wait gets close enough to zero that we’d all become one marshmallow people. But at every fraction of second marshmallow before that point we’d have increased total marginal utility if we redistributed the complement of the marshmallow to the one marshmallow people.

    The solution to the basic model assuming equal numbers of each type of person shows all fractions of marshmallows greater than 50% should be sufficient to avoid the disincentive. However, from studies where one person splits $10, and a second accepts or rejects, you could probably get away with taking up to 70% and putting the extra into a sovereign marshmallow fund.

  18. Gravatar of James Oswald James Oswald
    22. March 2011 at 13:19

    @Jason: The study Sumner is refering to is the Stanford marshmallow experiment where children who could avoid eating marshmallows immediately got a second one after a few minutes. There is no welfare increasing redistribution, since if someone knew their marshmallow would be given to someone else, the optimal strategy is to eat the marshmallow immediately. It’s a tragedy of the commons situation.

  19. Gravatar of ssumner ssumner
    22. March 2011 at 14:21

    John, I agree.

    Doc Merlin, It is absolutely a horrible idea to include investment income in any means testing, that was the whole point of my post. That means people who saved a lot will never get the Social Security that they paid into. That would discourage saving.

    Philo, Yes, but those things are hard to measure. One idea is to allow people to write off educational expenses. But that has practical problems associated with implementation.

    Bababooey, I’ve thought about the fact that it’s better for my lifestyle than current policy. But I figure any policy that’s neutral in terms of saving can be justified from a dispassionate perspective. Still, it’s always useful to be aware of one’s biases.

    Bret, That a good argument for doing no means testing at all, which would be my preference.

    John, Here’s another twist, I don’t trust the GOP either.

    John Hall, The problem is that my income has a steep upward gradiant. Most of my income was earned quite recently, or will be earned in the future. I earned less than $5000 per year from age 18 to 26. Then it suddenly rose to about $20,000/year.

    Anthony, Good point.

    Morgan, Maybe it’s genetic.

    Benjamin, You said;

    “I doubt the one marshmellow crowd (in general) live in houses with three-car garages, as they lack the personality type to become materially successful. That is probably an unfair generalization by Scott Sumner.”

    Agreed, but in this post I was specifically talking about people who have the same wage income that I do. If they save 10% of that income then they must be buying a lot of toys. I can’t even imagine what I would spend all my income on, if I stopped saving like a miser.

    dirk, You said;

    “I don’t think many of the 1 marshmallow eaters manage to make an average of 80k a year in the first place.”

    I read that most upper middle class Americans save relatively little. Is that wrong?

    Edwin, I agree, I added an update.

    Mark, But I’m guessing they aren’t expensive cars.

    Jim W, Maybe, but why do they later do more poorly in life? Surely kids are not hurt by the fact that parents don’t keep promises. Research shows parenting has little impact on life outcomes.

    James Oswald, Yes, and that’s one problem with redistribution, it creates that sort of distortion.

    Jason, You have explained why it might make sense to redistribute from high consumption people to low consumption people. I also support a progressive consumption tax. But means testing SS is not a progressive consumption tax (which is good) it’s a tax on saving and investment (which is bad.)

  20. Gravatar of Full Employment Hawk Full Employment Hawk
    22. March 2011 at 17:15

    Since the late 1970s the degree if inequality in the United States has increased sharply. According to this line of reasoning the ratio of two marshmallow eaters to one marshmallow eaters during this time must have increased sharply.

  21. Gravatar of Morgan Warstler Morgan Warstler
    22. March 2011 at 18:16

    Scott, my pet working theory (as opposed to my more perfected theories…) is that some parents in the first year yell “NO!” quite a bit at what they assume is a person.

    Since there is not actually a person there, more a bio-mass forming a neural network, everything in the first year is “new information” – the brain interprets this continuous negative feedback as generally associated with exploration, and adopts a strategy of being satisfied with any positive immediate status quo, and assumes Door #2 is going to contain a No!

    I imagine this decision-process sits one layer above the lizard brain, and then generally informs all future brain development over the next ten years when most of the network gets laid down.

  22. Gravatar of MikeDC MikeDC
    22. March 2011 at 18:16

    While you specify that you’re talking about folks with the same wage income over time, isn’t the lesson of the experiment that the average one marshmallow kid is going to have both substantially lower lifetime earning and lower wealth at time of retirement?

    It’s six of one, half-dozen of the other.

  23. Gravatar of Humble microeconomist Humble microeconomist
    23. March 2011 at 03:42

    As a dedicated one-marshmallow man, let me assure you some of us agree with you and will happily live with our own choices. But you understate your case when you speak of lifetime earnings as the appropriate measure. I estimate I could have doubled my earnings had I not spent so much time fishing, camping, traveling by thumb, etc.; and I suspect many of us one-mallow types are similarly driven to non-market pleasures. I just hope you enjoy your savings half as much as I’ve enjoyed my fishing.

  24. Gravatar of Scott Sumner Scott Sumner
    23. March 2011 at 04:43

    Full Employment Hawk, You said;

    “Since the late 1970s the degree if inequality in the United States has increased sharply. According to this line of reasoning the ratio of two marshmallow eaters to one marshmallow eaters during this time must have increased sharply.”

    There are lots of problems with this statement:

    1. The marshmallow issue has more to do with saving than income inequality. So it doesn’t mean there are more of one than the other. Indeed most affluent people are one marshmallow types by the criterion I used in this post (saving about 10% of income.)

    2. Income inequality has increased sharply since the 1970s, but it’s a meaningless statistic, as I have pointed out in many posts. Economic inequality is best measured by consumption inequality, which hasn’t changed much since the 1970s.

    3. By the way, this post is not arguing against policies to reduce economic inequality.

    Morgan, The data suggests that parenting doesn’t have much impact on life outcomes, except in extreme cases.

    Mike DC, You said;

    “While you specify that you’re talking about folks with the same wage income over time, isn’t the lesson of the experiment that the average one marshmallow kid is going to have both substantially lower lifetime earning and lower wealth at time of retirement?
    It’s six of one, half-dozen of the other.”

    That may be true on average, but the distinction is still crucial. Indeed one reason the Nordic countries do relatively well is that they understand this distinction, and tax capital fairly lightly. Even if what you say is true, it has no bearing on the policy arguments I make in the post.

    More broadly I think people overrate the relationship between saving rates and income. The Chinese (poor by American standards) have very high savings rates, even excluding forced saving.) The American upper middle class, some of the wealthiest people ever to walk this Earth, HAVE VERY LOW SAVINGS RATES. I don’t think most people have truly absorbed the implication of these facts.

    Humble microeconomist;

    “I just hope you enjoy your savings half as much as I’ve enjoyed my fishing.”

    I think you are confusing the saving choice with the labor leisure choice. Until I started this blog two years ago I had much more free time than the average middle class American. Four months off in the summer, a month off after Christmas. I’m not a fisherman, but I’ve had plenty of time for leisure. The labor leisure trade-off is very different from the saving consumption trade-off.

    I’m sure you’ll enjoy your fishing more than I’ll enjoy my absurdly high level of saving. But the point of the saving (in my case) is to have more leisure, not more goods, so we aren’t as different as you think.

  25. Gravatar of OGT OGT
    23. March 2011 at 04:59

    Scott- In response to Morgan you said: “Maybe it’s genetic.”

    Maybe, but research suggests it is also teachable. Probably the best investment we could make would be quality early childhood education.

    See this paper from U of Chicago Prof James Heckman:

    In contemporary America, racial gaps in achievement are primarily due to gaps in skills. Skill gaps emerge early before children enter school. Families are major producers of those skills. Inequality in performance in school is strongly linked to inequality in family environments. Schools do little to reduce or enlarge the gaps in skills that are present when children enter school. Parenting matters, and the true measure of child advantage and disadvantage is the quality of parenting received. A growing fraction of American children across all race and ethnic groups is being raised in dysfunctional families. Investment in the early lives of children in disadvantaged families will help close achievement gaps. America currently relies too much on schools and adolescent remediation strategies to solve problems that start in the preschool years. Policy should prevent rather than remediate. Voluntary, culturally
    sensitive support for parenting is a politically and economically palatable strategy that addresses problems common to all racial and ethnic groups.

    http://ftp.iza.org/dp5495.pdf

    I am also not sure your statement on the effect of parenting is accurate. There is some research that suggests that’s the case, but hardly a closed case. And nearly all studies of early childhood development suggest that parenting and teaching matter for later life results.

  26. Gravatar of Floccina Floccina
    23. March 2011 at 05:56

    The reasoning in the post is why I advocate that we eliminate the FICA and medicare taxes and change SS so that everyone gets the same amount in retirement. This would welfareize the program making people more accepting of further changes to the program as needed. People can then think of it as insurance against being a poor earner or saver or out living your savings, NOT a retirement plan that you own and deserve because you were forced to pay into it!

  27. Gravatar of Morgan Warstler Morgan Warstler
    23. March 2011 at 06:38

    Scott, I’m aware of the twins research. But I’m also aware of that first year in brain development. For one marshmallow types, the promise is less compelling, the bird in the hand is all that there is.

    The most positive answer I’ve heard is that people who don’t like marshmallows as much are more successful. But I doubt it.

  28. Gravatar of Jim W. Jim W.
    23. March 2011 at 06:56

    Scott, you said,
    “Jim W, Maybe, but why do they later do more poorly in life? Surely kids are not hurt by the fact that parents don’t keep promises. Research shows parenting has little impact on life outcomes.”

    3 comments – I really wasn’t arguing against your interpretation of the study or the conclusions you draw from it. I was just pointing out that there are alternative explanations to explain the behavioral differences. Human beings are complex (even at 4!) and difficult to “study”.

    Have you had discussions with psychologists/counselors? From my experience (limited I grant you) I have never heard any of them who would agree with your statement about unkept promises, albeit it was mainly concerned with more serious issues than marshmallows.

    Finally I imagine that in your last statement you really meant to say that differences in parenting style/emphasis have little imapct on life outcomes. No child grows up to be a productive member of society (whatever that is) without parents or some kind of adult protection/supervision. Like OGT I would disagree with your statement though for slightly different reasons.

  29. Gravatar of Full Employment Hawk Full Employment Hawk
    23. March 2011 at 07:05

    “The marshmallow issue has more to do with saving than income inequality. So it doesn’t mean there are more of one than the other. Indeed most affluent people are one marshmallow types by the criterion I used in this post (saving about 10% of income.)”

    This kind of argument is used by people who argue that the large income inequality obseved in the United States is due to the rich being rich due to delaying gratification in order to acquire wealth and means of getting wealth, such as education, while the poor are poor due to an unwillingness to do so. Actually I think that a significant part of the inequality is due to just that factor. For example, people dropping out of high schools versus people getting a graduate degree from a university. But I don’t think that this factor is important enough to explain the very large inequality that has been developing in the United States since the late 1970s.

  30. Gravatar of Full Employment Hawk Full Employment Hawk
    23. March 2011 at 07:08

    “Since there is not actually a person there, more a bio-mass forming a neural network”

    If an infant is not a person, it must follow that a fetus is not a person. It must follow from this that libetarians must oppose any restrictions on abortions as an intolerable interference by the government with the inalianable right of women to control their own bodies.

  31. Gravatar of ssumner ssumner
    23. March 2011 at 07:53

    OGT, The arguments made about marshmallow preference being partly genetic in no way conflict with the view that teaching in important. I don’t doubt that peasants in Bangladesh who do not receive edication are at a severe disadvantage later in life. Yet it still might be true that how those peasants do on the marshmallow test is strongly influenced by genetics.

    I am pretty sure that there is a lot of evidence that parenting doesn’t have all that much effect, except in the extreme cases. I admit that I haven’t studied that evidence closely, but Bryan Caplan has, and makes the same argument, so I certainly don’t agree that most evidence points to parenting being important.

    There is no doubt that life outcomes are strongly correlated with home environment, but it’s hard to know whether that reflects genetics or environment, since both are strongly correlated. I suppose the separated at birth studies for identical twins help, but I don’t think those adoptions typical go into the very bad environments, so I’m not sure how much they prove.

    I’ve read that programs like Head Start have a strong short term impact, but not much long term impact. I don’t have strong views on the genetics/environment debate, but assume that both are probably important. If I’m not mistaken, parenting has been found to be less important than the choice of one’s peers.

    Floccina, You can make that argument, but it’s not going to sell politically. Even if we did that, I’d favor keeping FICA and Medicare taxes, and eliminating income taxes instead. Fund miltary and other programs out of payroll taxes (which are not at all regressive, contrary to widespread view.)

    Morgan, I’m pretty sure you are right about the first year being important, but I recall that the evidence suggests it’s especially true in the extremes. The difference between a good and very good home environment is hard to see in the data, but the difference between a good and bad environment is important. I think Caplan is right that pretty good parents shouldn’t obsess over the details of child rearing, but should just “chill.”

    Jim, See my response to OGT. I’m no expert, just reporting what I read.

    Full employment hawk, You said;

    “But I don’t think that this factor is important enough to explain the very large inequality that has been developing in the United States since the late 1970s.”

    I agree, and this post certainly wasn’t about inequality, it was about saving. And as I said, measured income inequality is pretty meaningless, as it’s consumption inequality that matters. “Income” adds wage and capital income, which makes no sense. It’s double counting.

  32. Gravatar of Doc Merlin Doc Merlin
    23. March 2011 at 09:36

    ‘Doc Merlin, It is absolutely a horrible idea to include investment income in any means testing, that was the whole point of my post. That means people who saved a lot will never get the Social Security that they paid into. That would discourage saving.’

    I don’t think you realize the severity of the problem, and how soon it will hit.

    Ten years ago I would have agreed with you… now its too late in the game to be worried about such things, particularly as those in their 30′s don’t expect to get social security.

  33. Gravatar of OGT OGT
    23. March 2011 at 09:43

    Sumner- I believe the most current thinking on Head Start and other early childhood interventions is that the cognitive development and testing effects fade, but longer term studies indicate significantly better life results.

    The interesting thing is that increasingly the evidence is pointing to non-cognitive skills being as important to life results as traditional IQ. And that those non-cognitive skills can be significantly improved with ealry investment.

    My preferred model isn’t necessarily Head Start per se, more likely a voucher model with the centers accepting for vouchers needing some sort of developmental education certification.

    I agree with that the adoption studies have an issue with the range of parenting investment under study. It’s as though I looked at houses in a four block radius and determined location doesn’t matter. They may, possibly, indicate a sharply diminishing rate of return, but that’s not a problem for the amount of investment many poor kids or kids from less stable homes.

    Here’s another good paper on early investment from Heckman and Cunha.

    This paper summarizes findings from the recent literature on child development and presents a model that explains them. A model that is faithful to the evidence must recognize that
    (a) parental influences are key factors governing child development; (b) early childhood investments must be distinguished from late childhood investments; (c) an equity-efficiency trade-off exists for late investments, but not for early investments; (d) abilities are created, not solely
    inherited, and are multiple in variety; (e) the traditional ability-skills dichotomy is misleading. Both skills and abilities are created; and (f) the “nature versus nurture” distinction is obsolete. These insights change the way we interpret evidence and design policy about investing in
    children. Point (a) is emphasized in many papers. Point (b) is ignored in models that consider only one period of childhood investment. Points (c), (d) and (e) have received scant attention in the formal literature on child investment. Point (f) is ignored in the literature that partitions
    the variance of child outcomes into components due to nature and components due to nurture.

    http://jenni.uchicago.edu/papers/Dugger/tech-skill_all_2007-01-10b_mms.pdf

    http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2885826/

  34. Gravatar of Sentence of the Day Sentence of the Day
    23. March 2011 at 11:14

    [...] Scott Sumner, a two-marshmallow eater. Be The First to Comment Cancel reply [...]

  35. Gravatar of Dan Dan
    23. March 2011 at 11:38

    Scott–What if right next door to your comfortable two-marshmallow world, there’s a classroom in which the experimenter offered all of the participants 1/2 a marshmallow or 1, and you’re lecturing those who chose 1 about how imprudent they are.

    If you really believe there should be a world of equality of marshmallow-choice, then you believe in a far more radical levelling of society than anybody in the political spectrum is currently advocating for.

  36. Gravatar of Mike Mike
    23. March 2011 at 12:18

    Your mistake is assigning the $80k-earning-nonsaver label to all nonsavers. If I were in the mood for an ad-hominem attack, I would say something like, “You’re a lucky guy to be in a position where you can mentally marginalize people in poverty.”

    Nobody, Democrat, Republican or otherwise, has sympathy for $80k earners who don’t save. Just ask Todd Henderson, who, if you recall, is the law professor who blogged about how he barely gets by on a $250k+ income.

  37. Gravatar of Chuck Chuck
    23. March 2011 at 12:22

    So it’s the republicans with their long history of deficit financed tax cuts and Medicare drug benefits who we think of as gratification-delaying two marshmallow eaters while the pay-go Dems and “lock-box” Al Gore are the ones we perceive as instant gratification one marshmallow eaters?

    World turned upside down.

    You point on means testing SS, along with your commentor’s input, I can buy into.

  38. Gravatar of Rahul Rahul
    23. March 2011 at 12:23

    Terry Pratchett (Terry Pratchett’s Men at Arms):
    “The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.

    Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

    But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

    This was the Captain Samuel Vimes ‘Boots’ theory of socioeconomic unfairness.”

  39. Gravatar of ssumner ssumner
    23. March 2011 at 12:29

    OGT, You obviously know more about this than I do. I’ll try to do more reading on the subject, so that I can be better prepared next time I discuss the topic. I was mostly relying on news summaries, not original research.

    Doc Merlin, Why would people in their 30s not get Social security? It’s not like the governemtn is going to stop collecting payroll taxes?

    I’m not opposed to cutbacks, I am opposed to cutbacks that target high savers over low savers. I’m OK with cutbacks that target high earners over low earners.

    Dan and Mike, You obviously didn’t read my post carefully, which had nothing critical to say about nonsavers, nothing critical to say about poor people. I happen to favor redistributing income to poor people, but not to low savers. There is a difference.

    The post was simply comparing people that average $80,000 a year over their lifetime. The post has zero relevance for people making $79,000, or $81,000, or any other income.

  40. Gravatar of Joe K Joe K
    23. March 2011 at 13:07

    Social Security is already a wealth redistribution system.

    Since it takes in money from all available young workers and gives it to the people who live long enough to retire, it disproportionally takes money from low-income minority workers and gives it to upper-middle-class whites, the group that has the best access to health care.

    You may rest assured that the attempts to ‘fix’ Social Security will preserve this basic function.

  41. Gravatar of SM SM
    23. March 2011 at 13:13

    Suppose we all agree that no one should suffer and that mane one-eaters will suffer (be very poor, or what not) while few two-eater will suffer.

    Why is someone a one-eater. It could be from parenting/environment, it could be from genetics. Or epigenetics, perhaps.

    If research suggests that parenting and home environment is a small portion of the reason, then I’d bet that the research suffers from measurement issues. Do we really think that people can’t be taught how to save?

    The brain get wired before birth, and parents have some control over epigenetic factors even if they don’t have control over genetic ones.

    In any case, many one-eaters may be one-eaters for reasons that are largely beyond their control. But not entirely, and the right environment would probably convert many one-eaters.

    Suppose two-eaters have higher marginal products of labor and that there are positive externalities to high labor productivity. Then maybe we’d want to turn one-eaters into two-eaters. Support for programs that turn some one-eaters into two-eaters seems a good use of public funds. That still leaves us with the question of how much suffering to allow. I don’t like thinking about that. But let’s remember that how governments allocate their scarce resources is only partly a question of efficient allocation. It’s also a ethical question.

  42. Gravatar of ssumner ssumner
    23. March 2011 at 13:57

    Chuck, Good point.

    Rahul, Check out my comment at MR.

    Joe, Good point, which is why I prefer a fully-funded system, with private accounts. It would be better for those with shorter life expectancies.

    SM, Good points, but mostly unrelated to this post. I’d look to Singapore if you want to figure out how to turn the public into 2 marshmallow eaters; they basically force them to save.

  43. Gravatar of Matt Matt
    23. March 2011 at 14:13

    You say Chuck has a good point about Republicans being the two marshmallow eaters – what exactly is it that causes you to think that “Dems are usually the two marshmallow eaters”. Since at least Reagan Dems have been far more fiscally responsible than Republicans, far more willing to make difficult choices, far more willing to delay gratification. It’s astounding to me how seemingly sane people like yourself, who when pressed support policies far closer to Dems than Republicans, still pick on the Dems.

  44. Gravatar of ssumner ssumner
    23. March 2011 at 14:16

    Matt, You misread Chuck, he was being sarcastic. At least I think so, maybe he can comment. I agreed with his sarcasm about the GOP.

  45. Gravatar of Matt Matt
    23. March 2011 at 14:42

    You do seem to agree with Chuck’s sarcasm about the GOP on that point. What I was trying to get at was why you think the dems are the ones who are less likely to be interested in delaying gratification. Seems to me the facts who it’s completely the opposite.

  46. Gravatar of Morgan Warstler Morgan Warstler
    23. March 2011 at 14:54

    Unemployment Hawk,

    You’ll get no quibble from me. I’d let people sell fetuses.

    The argument on sentience is Peter Singer.

  47. Gravatar of Negative Kurtosis Negative Kurtosis
    23. March 2011 at 15:37

    “…measured income inequality is pretty meaningless, as it’s consumption inequality that matters. “Income” adds wage and capital income, which makes no sense. It’s double counting.”

    I’m not sure I understand the logic for using consumption to measure inequality in our society as the savings rates for individual groups (e.g., one marshmallow eaters vs. two marshmallow eaters) would have a huge impact on that analysis.

    Especially given the rampant consumer leveraging (i.e., negative savings rates) over the last three decades, people with meager wage income would be able to maintain a relatively extravagant consumption level.

  48. Gravatar of Tom O Tom O
    23. March 2011 at 15:39

    I think the real issue here is how often somewhat clever people use their somewhat above average intelligence to better justify their prejudices. Among the fallacies of the author’s oh so cute fairy tale retelling of Republican orthodoxy is a complete lack of acknowledgment of the regressive nature of Social Security taxes and a blithe and airy disregard of political realities.

    How anyone possessed of a sound mind can continue to argue that the Republican Party stand for fiscal probity simply astounds me. Look no further than the recent roughly 300 billion dollar giveaway to the wealthiest 2% of Americans, followed the next day by cries of despair over the deficit they just voted to expand as an example of the fundamentally dishonest and self-serving reality of out post Citizen’s United world.

  49. Gravatar of bill bill
    23. March 2011 at 16:30

    Scott,
    I believe that the way Soc Sec calculates its benefits (90% of a small amount of average earnings, 36% of a middle tier and 15% of the rest) already fits your definition of means testing. And I agree that this is a good thing.

    Bill (a one marshmallow eater)

  50. Gravatar of Scott Sumner Scott Sumner
    23. March 2011 at 16:31

    Matt, You’re right that I shouldn’t have singled out the Dems. But who’s more in favor of taxes on capital? Isn’t it the Democrats?

    Yes, progressive bloggers like Yglesias favor progressive consumption taxes, but I don’t see many Democratic politicians arguing the income tax should be abolished.

    Negative Kurtosis. Counting income from capital as “income” is basically counting the same income twice, it leads to meaningless comparisons in terms of economic inequality and tax progressivity, etc. Here’s a simple thought experiment:

    Two people both earn $80,000 for life in wage income. One spends it all and the other saves half. Economists almost universally agree there is no meaningful economic “inequality” in that society, it’s just that the two people have chosen to allocate their consumption at different times in their life. But measured income inequality will be huge. Yes, there is lots of economic inequality in our society, but it’s because some people have much higher wage incomes than others. Mixing saving into the equation just confuses the issue.

    Tom, The real issue is that commenters didn’t read my post carefully. Why do you think I like the GOP? Why do you think I oppose progressive payroll taxes? I don’t like the GOP, and I like progressive payroll taxes.

  51. Gravatar of Scott Sumner Scott Sumner
    23. March 2011 at 16:33

    Bill, Good point.

  52. Gravatar of Matt Matt
    23. March 2011 at 19:07

    The democrats are more in favor of taxes on anything vs. the republicans. Given that virtually no republican today can consider any meaningful change in the tax code since they ceded responsibility for governance by pledging not to raise any taxes on anyone ever, you are in fact far more likely to get any improvements in our tax code coming from democrats than from republicans. As far as a consumption tax goes, again, you are far more likely to get democratic support, since a consumption tax would (and should) raise the price of gas. Republicans rely heavily on oil interests and rural states for their support, and rural states entire economies are predicated on low gas prices. Not to mention that republicans preferences regarding taxing capital is likely to have far more to do with the prominence of folks like the Koch family in republican circles than any logical analysis.

    But more generally, there seems to be so many more indicators of preference for instant gratification than being pro or con taxing capital or income, and I have a hard time seeing how democrats rate worse than republicans on the vast majority of these indicators.

  53. Gravatar of Sumner needs to be sent to Somalia – Michael Alan Miller Sumner needs to be sent to Somalia – Michael Alan Miller
    23. March 2011 at 23:11

    [...] Rafe had the same reaction I did to this execrable Scott Sumner piece. [...]

  54. Gravatar of Austin Austin
    24. March 2011 at 05:54

    So are financial institutions that have switched to obsession with bonuses and the next quarterly profit “one marshmallow eaters”?

    If you make 80K, you are solidly middle class, not upper middle class – if you have a family.

    This entire article and its responses are horribly condescending. So poor people are stupid one marshmallow eaters and the rich are smarter, saving their marshmallows for later? Poor immigrants tend to save and budget every penny, but still use welfare programs. Are they one or two marshmallow eaters? This is pretty much nonsense.

  55. Gravatar of tom tom
    24. March 2011 at 06:16

    Marshmallows are ok, but I like the fable about ants and grasshoppers. I’d say the tea party is ants more than the GOP is.

  56. Gravatar of Doc Merlin Doc Merlin
    24. March 2011 at 07:03

    @Scott:
    “Doc Merlin, Why would people in their 30s not get Social security? It’s not like the governemtn is going to stop collecting payroll taxes?”

    Most people in their thirties I have spoken to believe the government will either go insolvent between now when they retire and/or their social security will become unworkable and (partially) end. They simply don’t expect to get social security checks when they retire. Most financial planners I have talked to have also said, not to count on social security to be around for retirement.

  57. Gravatar of Doc Merlin Doc Merlin
    24. March 2011 at 07:05

    @Austin:
    ‘So are financial institutions that have switched to obsession with bonuses and the next quarterly profit “one marshmallow eaters”?’

    The reason for the “obsession” with bonuses is that bonuses in the finance industry (and only in finance) are taxed at capital gains tax rate not at the income tax rate.

  58. Gravatar of Class Wars Swept Under the Rug? « Contrarian Moderate Class Wars Swept Under the Rug? « Contrarian Moderate
    24. March 2011 at 09:20

    [...] Sumner makes an interesting argument about means testing.  Union-workers make a compelling case to defend their negotiating power.  No [...]

  59. Gravatar of ssumner ssumner
    24. March 2011 at 10:21

    Matt, I partly agree. When change does come, it will come with support from the Democrats.

    But I’m not sure the Dems are as innocent as you suggest. How do they feel about student aid? Suppose one middle class family has saved for their kid to go to college and the other middle class family hasn’t?

    Suppose one rich guy blows all his money on wine, women, and song, and the other rich guy leaves it to his children. Don’t the Dems want to let the hedonist off scott-free and tax the estate of the other guy?

    Austin, You said;

    “If you make 80K, you are solidly middle class, not upper middle class – if you have a family.”

    I didn’t say I made $80,000 read my post. I make well over $100,000

    “This entire article and its responses are horribly condescending. So poor people are stupid one marshmallow eaters and the rich are smarter, saving their marshmallows for later? Poor immigrants tend to save and budget every penny, but still use welfare programs. Are they one or two marshmallow eaters? This is pretty much nonsense.”

    My post never discussed poor people, only those averaging $80,000/year. So your comment is “pretty much nonsense.”

    Tom, I’m not impressed with the Tea Party or the GOP.

    Doc Merlin, Most people don’t have a clue as to what Social Security is, so it’s no surprise they are woried about it going bankrupt. It would be like worrying our military will go bankrupt–it’s a meaningless assertion.

  60. Gravatar of Joe Joe
    24. March 2011 at 10:34

    Scott,

    If I recall my seminar on education policy correctly, you’re half right. Yes, individual parental effects (and Head Start) become fairly weak after the first few years. But the factors that wash them out are community parental effects.

    When your kid is five, you can control the environment she’s exposed to very well. As she gets older, she interacts with other children. She gets her cues on what’s appropriate from those children. If those children blow off school, she’s much more likely to. If they think science is cool instead of nerdy, she’s more likely to. If they do drugs, she’s more likely to.

    And so “number of books your parents have” stops being a very good predictor of child development, but “average number of books your classmates’ parents have” becomes a strong one.

  61. Gravatar of Matt Matt
    24. March 2011 at 11:15

    It would be nice if we lived in a country where our politicians could have rational conversations about tax policies. Unfortunately, the actual world we live in is one where Republicans are solely interested in advancing the welfare of our richest citizens by lowering their taxes as much as possible, at the expense of the responsible and irresponsible poor, the sick, the elderly, the environment, virtuous policy, and fiscal sanity. In that context, democrats are forced into a situation trying of trying to preserve and extend whatever politically possible taxes are available. If the choice for progressives is the political practicality of maintaining the estate tax vs. redesigning the tax system to some kind of ideal Nordic system where you have an effectively regressive consumption tax balanced out by social programs that balance out the regressiveness — if that’s the choice, then I think given political reality it is not really a knock on the democrats that they favor the former.

    Democrats are not innocent of ever promoting bad policy, but Republicans are not even serious about trying. Republicans basic policy litmus test is how does this policy benefit or hurt the very rich. It’s purely a coincidence when their preferred policy also happens to be reward the virtuous.

    Your comment re: dems would have been slightly more understandable if you had framed it as liberals vs. conservatives or libertarians. But Democrats in this country are more conservative (and far more virtuous in a marshmallow sense) than Republicans in any meaningful respect, so it is sad to see you sticking to these tired stereotypes.

  62. Gravatar of blighter blighter
    25. March 2011 at 03:28

    This post is an exemplar of subtle racist bias.

    Did you really say that the Democrats are the party for people who can’t control themselves? And then double down on that by saying “maybe it’s genetic”? Are you actually unaware that the Democrats are the party which defends our beleaguered minority populations from the unceasing depredations the teeming masses of vile bigots infesting this country forever threaten them with?

    So in a nutshell your post is saying that minorities are poor & irresponsible b/c they are genetically incapable of controlling their impulses and displaying the proper future time orientation that someone like yourself does. Wow.

    I think a just society wouldn’t worry about whether their policies “steal from those who have lived responsibly” or “reward indolence & irresponsibility”. A truly just society would force an equitable distribution of wealth, income and all other desirable things like height, beauty, athletic ability or what have you.

    Rather than cast subtle aspersions on those who are different from us, as this post does, why don’t we all work towards creating a society in which the fundamental equality of all is finally realized in reality? Isn’t that a better, more worthwhile goal?

  63. Gravatar of RN RN
    25. March 2011 at 05:05

    More outrageous selfishness and disingenuity from the great Scott Sumner.

    You point at irresponsible “three car” people and “boat owners”. Talk about a straw man.

    The reason people have so much debt is BECAUSE you libertarians “opposed to any and all regulation” types have gleefully stolen trillions from savers in the form of high credit card rates, no housing finance regulation so that people find themselves in outrageous, impossible mortgages, pension funds that have blown up, and on and on.

    You steal all the money, and then complain that it’s they’re all a bunch of whining “boat owners”.

    You truly are despicable.

  64. Gravatar of Scott Sumner Scott Sumner
    25. March 2011 at 08:05

    Joe, That sounds right.

    Matt, As I recall after the 2008 elections the Dems had vastly more political control than the GOP had at any time in my entire life. Complete control of both branches of government. And no attempt was made at tax reform. I didn’t even see liberal pundits talking about the idea. So I can’t agree with the view that the Dems would like to improve the tax system along Nordic lines, but the big bad GOP won’t allow it. If you read bloggers like DeLong it’s clear that they don’t even know the facts. DeLong recently agreed with Yglesias that our tax system is not more progressive than the Nordic system. If you don’t even know the facts, what hope is there for policy reform?

    And I just have one question: How did we end up with a tax system that is more progressive than the Nordic system, if the GOP tax cuts all went to the rich?

    blighter, You said;

    “This post is an exemplar of subtle racist bias.”

    Hmmm, I don’t recall mentioning race at all. You have a very odd mind if the mention of “genetics” immediately makes you think of race. Why are the two topics connected in your mind?

    I also notice that you read my comments. That means you know for a fact that the post was not at all about the poor, but about upper middle class savers and non-savers. That means you have intentionally mischaracterized my views. You know that I favor redistributing money to the poor, but choose to imply I don’t.

    I notice that you have also completely fabricated quotations that I never said. Implying that I am a mean-spirited racist.

    All in all my vote for the most despicable comment of the year.

    And now for my vote for the (unintentionally) funniest comment of the year:

    RN, you said;

    “You point at irresponsible “three car” people and “boat owners”. Talk about a straw man.
    The reason people have so much debt is BECAUSE you libertarians “opposed to any and all regulation” types have gleefully stolen trillions from savers in the form of high credit card rates”

    Yes, I’m very sorry that I forced upper middle class people to buy houses with three car garages, and boats using credit cards with high interest. It’s all the fault of deregulation. Let’s bring back usury laws.

    BTW, I thought credit cards stole from borrowers, not savers. I never paid any interest on credit card debt. Not once.

    Everyone, There seems to have been an enormous amount of confusion about this post. I am not biased against low savers—it’s quite possible that they are doing a better job of maximizing utility than I am. And I certainly don’t expect poor people to save lots of money, my post had nothing to do with the poor (much less race.) The point of the post was that we shouldn’t be redistributing income from upper middle class high savers to upper middle class low savers. That is all. Does anyone disagree with what I actually said in the post, instead of what they assumed I really meant?

    The reactions from (mostly progressive) commenters to this post shows just how hard it will be to abolish all taxes on capital. It’s like a red flag in front of a bull. Many become so unhinged that they can’t think clearly, and just toss out insults.

  65. Gravatar of Amy Amy
    27. March 2011 at 10:03

    A quibble:

    “If you make 80K, you are solidly middle class, not upper middle class – if you have a family. ”

    This is only true in coast cities. Flyover country you can have a middle class life style for well under 80K and 80K is upper middle class in those regions.

    “The reactions from (mostly progressive) commenters to this post shows just how hard it will be to abolish all taxes on capital. It’s like a red flag in front of a bull. Many become so unhinged that they can’t think clearly, and just toss out insults.”

    Yep. It’s why I’m totally against a VAT, as much as I’d prefer consumption taxes to income taxes. There is no history to support that with a VAT, income and capital taxes go away. In fact it’s quite the opposite: you get stuck with both because the lack (or even reduction in) of income/capital taxes whips up all the middle class “I’m a complete and total victim of The Man” into a total frenzy. (Ironically, the truely poverty stricken have other things to worry about, but that’s a story for another day.)

    (PS – We’ve never made more than $60K in any given year but have somehow how not managed to have The Man completely knock us around. Go figure.)

  66. Gravatar of ssumner ssumner
    27. March 2011 at 17:35

    Amy, Just to be clear, I wans’t necessarily saying $80,000 was upper middle class–I meant someone who averged about that much over 40 years was upper middle class. That includes low incomes during one’s youth, and over $100,000 in one’s 50s. I was describing my own situation.

    I only support VAT is the income tax )plus corporate income tax) is compeltely abolished, as otherwise we end up with both. In that case I’d oppose the VAT. I could live with a payroll tax plus VAT, however, as long as I didn’t have to file a tax return.

  67. Gravatar of sourcreamus sourcreamus
    29. March 2011 at 11:35

    Blighter writes parody, he was not being serious in calling your post rascist.

  68. Gravatar of Zenon Gudrun Zenon Gudrun
    29. March 2011 at 14:41

    Scott, I fear you have fundamentally misunderstood the primary finding of the Mischel study and the followup observations.

    The initial study showed that by age 4, children already had significant differences in their capacities to self-regulate. The followup studies suggested that this innate capacity is more-or-less a PERMANENT trait.

    Think about it. If four year olds who couldn’t keep themselves from eating the one marshmellow were capable of later choosing to exercise more self-control, you wouldn’t see the correlations with SAT scores, income, health, etc.

    In other words, what the studies show is that sometime before age 4, our fundamental capacity to delay gratification is already set. They show that the ability to delay gratification is like hearing or not hearing perfect pitch, being or not being colorblind, etc. It is an innate, immutable cognitive characteristic of a person.

    This (correct) understanding of the study implies something very different than what you’re arguing. For example, you say, “In my view there is nothing egalitarian about redistributing income from two marshmallow eaters to one marshmallow eaters. They’ve already had their fun when young, loading up their three car garages with all sorts of fun toys. I’ve never even had a garage.”

    Think about how that sentiment looks if one can’t change how much one can self-regulate. It’s like saying “In my view, there’s nothing egalitarian about designing roadsigns that the colorblind can read.”

    Maybe you do have a great innate capacity to self-regulate. If so, despite what you might have convinced yourself, you did not do anything to earn this capacity any more than you earned your height or your sex. THAT is what this study shows.

    When I was Libertarian, I recognized that not everyone had the same gifts. Because of that, I said I believed in “equality of opportunity” as opposed to “equality of result”. After studying cognitive neuroscience, however, I asked myself what “equality of opportunity” means when some of us are fundamentally incapable of exercising it. How could it be an opportunity in any meaningful sense of the word?

    These days I no longer consider myself Libertarian because I think the central concept revolves around an erroneous view of human nature. I’m not sure where I fall politically, anymore. I do feel this, though. Laws ought to reflect how people actually ARE and not punish them for having or lacking some innate trait.

  69. Gravatar of ssumner ssumner
    29. March 2011 at 17:16

    Zenon, You misunderstood my argument. Being a low saver is not some sort of “defect” if the person’s lifetime income is the same as mine. They have simply chosen to consume their income at a different point in their life as I have. To each their own. it might be smart to consume when you are young. There is no reason to transfer money from me to a low saver who has the same lifetime wage income as I do. That was my point.

    If the bad habits you cite cause the person to somehow end up worse off in terms of wage income (and I agree that is quite possible), then I have no problem with redistribution.

    To claim otherwise would be to argue that we should redistribute money to someone who earned $100,000,000, but who also spent $100,000,000.

  70. Gravatar of ssumner ssumner
    29. March 2011 at 17:20

    BTW, You said;

    “These days I no longer consider myself Libertarian because I think the central concept revolves around an erroneous view of human nature. I’m not sure where I fall politically, anymore. I do feel this, though. Laws ought to reflect how people actually ARE and not punish them for having or lacking some innate trait.”

    I have the exact same view as you, and consider myself a libertarian who favors income redistribution, like the two most famous libertarians of the 20h century (Friedman and Hayek) So please consider re-joining the libertarian movement.

  71. Gravatar of Zenon Gudrun Zenon Gudrun
    31. March 2011 at 09:31

    Scott, first and foremost, thank you for replying to my comment.

    I respectfully disagree, however, that I misunderstood your post. Allow me a second chance to illustrate.

    The difference between the two groups of wage-earners that you describe is not what the wage is, but how the wage is used. Correct? You save your money, probably invest, and prepare for future wants and needs. To do this, you rely on the ability to delay gratification. Your immediate spending is limited by more than just your absolute means; it’s also limited by your willpower.

    Now, imagine you didn’t have this willpower. Imagine the only thing that could stop you from spending on something you want is running out of money. It’s not that you can’t picture the long-term; it’s that for some inexplicable (to you) reason your knowledge of the long-term carries no “teeth”. You’re not dumb; you are just literally incapable of saving significant amounts of money on your own.

    Most of the time, “two marshmallow people” (TMPs) can manage their long term finances responsibly on their own, while “one marshmallow people” (OMPs) cannot. Note that’s CANNOT and not CHOOSE NOT TO. So when might it be ethically permissible to “redistribute money to someone who earned $100,000,000, but who also spent $100,000,000″? When that person wasn’t capable of handling $100M in the first place.

    Thinking about the problem in terms of absolute income and absolute expenditure is the wrong way to frame the discussion when you’re dealing with OMPs and TMPs. No matter how much money or education or training you give them, a OMP will never be able to regulate their spending in the way a TMP can. OMPs’ brains simply don’t function that way.

    So if you asked me whether two people (one OMP and one TMP) who are each given $100K/year for 20 years could ever be in a situation where redistributing income from the TMP to the OMP is justified, I would have to say, “Yes.” The injustice already happened BEFORE the redistribution. The OMP should never have been expected to be able to manage their money. They simply can’t and never could and never will be able to.

    It’s not a matter of bad habits. It’s a difference in constitution. It’s the same reason children cannot sign legal contracts. Yes, a kid could hold a pen in their hand and sign their name on the lines, but that’s not the same. When the kid inevitably breaks their contract, the kid hasn’t done anything wrong; the people who let a child sign in the first place have. Likewise, when a OMP “squanders” their earnings, they haven’t behaved irresponsibly; the people who expected a different outcome have.

  72. Gravatar of Scott Sumner Is Confused on Voting Patterns | DC Skeptics Scott Sumner Is Confused on Voting Patterns | DC Skeptics
    1. April 2011 at 12:43

    [...] 10 days back, the libertarian economist blogger Scott Sumner of The Money Illusion commented in this article about the marshmallow test, a famous study that potentially demonstrated that 4 year olds who delay eating a marshmallow [...]

  73. Gravatar of ssumner ssumner
    2. April 2011 at 05:29

    Zenon, You said;

    “So when might it be ethically permissible to “redistribute money to someone who earned $100,000,000, but who also spent $100,000,000″? When that person wasn’t capable of handling $100M in the first place.”

    Congrats on having the courage of your convictions. But I don’t see the point of this. If someone earns $100,000,000 and blows through the money, why would the solution to the “problem” be to give him even more money?

    And why is this assumed to be a problem? I don’t buy the entire premise of your comment, that low savers have some sort of disability. I could argue that high savers like me have the disability. I save huge amounts that I will never spend, and I will die with lots of money in the bank. I deprive myself of consumption when young, and thus when most able to enjoy the consumption. (What’s an 80 year old going to do for fun?) So the government should give people like me (who have a miserly gene) some sort of prepaid debit card that needs to be spent when young, or the money is lost forever.

    Absurd idea? Is it any more absurd than giving over-spenders even more money to spend?

    Here’s where we might agree. I favor a Singapore-style forced saving plan for reasons completely unrelated to this discussion (or the marshmallow article.) If we did that, then those making $80,000 would never suffer from having not saved enough. So our debate would be a moot point.

  74. Gravatar of How to Monetize a Blog « Contrarian Moderate How to Monetize a Blog « Contrarian Moderate
    12. April 2011 at 08:21

    [...] of combinations.  And $200k is a pretty sizable chunk of cheese for an economist, judging by this Scott Sumner post.  The free-rider problem might take effect, but since there’s a real threat of losing [...]

  75. Gravatar of Scott Sumner, Preacher | jakewruss Scott Sumner, Preacher | jakewruss
    6. May 2011 at 12:58

    [...] which he uses the famous marshmallow experiment to explain public policy decisions on Social Security. [...]

  76. Gravatar of Means testing and implicit taxes | Matt Rognlie Means testing and implicit taxes | Matt Rognlie
    11. May 2011 at 02:22

    [...] inefficient proposal, wrapping an income tax and a severe capital tax into one. As Scott Sumner once pointed out, this proposal would place the burden of fiscal adjustment entirely on responsible savers like [...]

  77. Gravatar of TheMoneyIllusion » The two marshmallow party TheMoneyIllusion » The two marshmallow party
    6. April 2013 at 16:44

    [...] years ago I did a post on the famous marshmallow experiment.  At the end I made an offhand comment that the Dems were the “two marshmallow party.” [...]

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