AEIdeas The public policy blog of the American Enterprise Institute Tue, 21 Oct 2014 04:29:22 +0000 en-US hourly 1 If only 12% of campus sexual assaults get reported, then only 1 in 32 women at Ohio State are sexually assaulted, not 1 in 5 Mon, 20 Oct 2014 20:54:49 +0000 read more >]]> Assuming that only 12% of campus sexual assaults at OSU are reported.

osuAssuming that 1 in 5 women at OSU are assaulted over 4 years.


In May, I wrote a CD post titled “Using White House claim of under-reporting, only 1 in 34 women at Ohio State are sexually assaulted, not 1 in 5.” The analysis in that post was used by syndicated columnist George Will in an op-ed (“Colleges become the victims of progressivism“) that appeared in several hundred papers around the country, including the Washington Post on June 6. Here’s George Will’s reference to my May 9 blog post:

The administration’s crucial and contradictory statistics are validated the usual way, by official repetition; Joe Biden has been heard from. The statistics are: One in five women is sexually assaulted while in college, and only 12 percent of assaults are reported. Simple arithmetic demonstrates that if the 12 percent reporting rate is correct, the 20 percent assault rate is preposterous. Mark Perry of the American Enterprise Institute notes, for example, that in the four years 2009 to 2012 there were 98 reported sexual assaults at Ohio State. That would be 12 percent of 817 total out of a female student population of approximately 28,000, for a sexual assault rate of approximately 2.9 percent — too high but nowhere near 20 percent.

George Will’s column generated a lot of controversy, especially from women’s rights activist groups and a group of US senators, and the St. Louis Post-Dispatch, one of the largest newspapers in the Midwest, dropped Will’s syndicated column following the outburst of criticism. None of the other approximately 449 papers nationwide that subscribe to Will’s bi-weekly columns dropped him. Washington Post Editorial Page Editor Fred Hiatt defended George Will and his column, saying it “was well within the bounds of legitimate debate.”

My original post and George Will’s column were both based on OSU’s campus crime data from 2009-2012. Now that Ohio State University has just released its Annual Campus Security Report for 2014, updated data for the years 2010-2013 are displayed in the top table above. From my previous post in May:

In a January 2014 report titled “Rape and Sexual Assault: A Renewed Call to Action” (which led to the creation of the “Task Force to Protect Students From Sexual Assault” headed by Biden), the White House made the following two statements:

White House Statement 1. Sexual assault is a particular problem on college campuses:1 in 5 women has been sexually assaulted while in college.

White House Statement 2. Reporting rates for campus sexual assault are also very low: on average only 12% of student victims report the assault to law enforcement.

There’s a huge, irreconcilable statistical problem here. Using actual reported crime statistics on sexual offenses at almost any US college and applying the White House claim that only 12% of campus sexual assaults actually get reported, we have to conclude that nowhere near 1 in 5 women are sexually assaulted while in college. Alternatively, if the “1 in 5 women” claim is true, the percentage of sexual assaults that don’t get reported to the campus police would have to be much lower than 12%. In other words, the claims that the White House uses don’t work together and they therefore both can’t be simultaneously correct.

Here’s an updated analysis of sexual assaults at the Ohio State University, summarized in the top table above. Over the most recent four-year period from 2010 to 2013, there were 104 reports of “forcible sexual offenses” to the OSU’s Department of Public Safety, which included incidents that allegedly took place on campus, in university residence halls, on non-campus properties including fraternity and sorority houses, and on public property adjacent to or accessible from the campus. Using the White House claim that only 12% of campus sexual assaults get reported, there would have been 763 unreported forcible sexual offenses at OSU during that period, bringing the total number of sexual assaults (reported + unreported) to 867 (see top table above).

The Columbus campus of OSU has a total female student population of about 28,000. Dividing the 867 estimated sexual assaults over a four-year period into the 28,000 OSU female students would mean that only 3.1% of OSU women, or about 1 in 32.3, would be sexually assaulted while in college. Certainly that’s still too high, but not even close to the White House claim that one in five (and 20% of) female students are sexually assaulted while in college.

Further, these calculations make the assumptions that: a) 100% of the 104 forcible sexual offenses at OSU from 2009-2012 were male on female incidents (and none were female on male, male on male, or female on female), and b) none of the 104 reported offenses were filed falsely or later retracted (see recent example here of a campus sexual assault that was falsely reported and later retracted). If either of those two assumptions don’t hold perfectly, the 3.1% figure above would be even lower, and the 1-in-32.3 ratio would be even greater.

Alternatively, we could ask the question: For the “1 in 5 women” claim to be true at OSU, what level of under-reporting would support that claim based on the actual reported assaults over the last four years? If one of every five of OSU’s 28,000 female students had been sexually assaulted from 2010 to 2013, there would have been 5,600 sexual assaults during those four years – or 1,400 sexual assaults every year and almost 4 every single day of the year. For that to be true, fewer than 2% of the actual sexual assaults would have been reported, and more than 98% would have to go unreported.

Bottom Line: From a political standpoint, using the totally implausible statistic that “1 in 5 women” are sexually assaulted while in college certainly gets a lot of attention. The “1 in 32 women” statistic found at Ohio State University over the most recent four years, though not as attention-grabbing as “1 in 5,” are probably pretty representative of college campuses around the country and much closer to the truth than what the White House is claiming. And for the “1 in 5 women” claim to be true, it would imply an unbelievably low reporting rate of less than 2% for campus sexual assaults. That would be almost 53 actual sexual offenses that take place on campus for every one that gets reported), which is an under-reporting rate so low that it must be insulting to women. Women and men attending college today, their parents, their college administrators and professors, and society in general, are all much better served by the truth about college sexual assault than by Team Obama’s misleading, exaggerated, and false claims about “1 in 5 women will be sexually assaulted while in college.”

]]> 9
Wow. Five years into a recovery, 65% think the US is on the ‘wrong track,’ while 64% say things are ‘out of control’ Mon, 20 Oct 2014 18:48:46 +0000 read more >]]> Which of these polls is more depressing? This one:

The depressive donkey in A.A. Milne’s “Winnie the Pooh” stories pretty much matches the mood of Americans lately, according to the new Wall Street Journal/NBC News poll released last week. When 1,000 potential voters were asked whether they think the nation is on the right or wrong track, 65% of them said the country had taken a wrong turn, and only 25% said the U.S. was on the right path.

The only time the public has felt worse was in October 2008, during the first, deep spasms of the recession. Then, 78% said the nation was on the wrong track, and only 12% felt good about the country’s direction. The last time “right direction” beat out “wrong track” was in January 2004 — and the last election cycle where that was the case was 2002.

Or this one:

An overwhelming majority of voters in the most competitive 2014 elections say it feels as if events in the United States are “out of control” and expressed mounting alarm about terrorism, anxiety about Ebola and harsh skepticism of both political parties only three weeks before the Nov. 4 midterms.

In a POLITICO poll testing the hardest-fought states and congressional districts of the year, two-thirds of likely voters said they feel that the United States has lost control of its major challenges. Only 36 percent said the country is “in a good position to meet its economic and national security” hurdles.

I mean, the Ebola outbreak is scary, but more than five years into an economic recovery, and most Americans think the country is on the “wrong track” and “out of control.” Maybe it’s time for another Washington pep talk about how bad the economy was in January 2009 …


]]> 0
Here’s another way Yellen’s big inequality speech was a missed opportunity Mon, 20 Oct 2014 18:19:55 +0000 read more >]]> The apparent decline in US startups is bad news for two reasons. First, it means fewer potential Googles and Apples and Twitters and other high-impact businesses. Second, it also means fewer small businesses that — while they may not make their owners millions or billions — might provide a rung or two up the economic ladder. Although I had many problems with Fed Chair Janet Yellen’s inequality speech last week, at least she did address the business formation issue:

For many people, the opportunity to build a business has long been an important part of the American dream. In addition to housing and financial assets, the SCF shows that ownership of private businesses is a significant source of wealth and can be a vital source of opportunity for many households to improve their economic circumstances and position in the wealth distribution. …

Owning a business is risky, and most new businesses close within a few years. But research shows that business ownership is associated with higher levels of economic mobility. However, it appears that it has become harder to start and build businesses. The pace of new business creation has gradually declined over the past couple of decades, and the number of new firms declined sharply from 2006 through 2009. The latest SCF shows that the percentage of the next 45 that own a business has fallen to a 25-year low, and equity in those businesses, adjusted for inflation, is at its lowest point since the mid-1990s. One reason to be concerned about the apparent decline in new business formation is that it may serve to depress the pace of productivity, real wage growth, and employment. Another reason is that a slowdown in business formation may threaten what I believe likely has been a significant source of economic opportunity for many families below the very top in income and wealth.

Still, while Yellen had plenty to stay about public funding and education, she had nothing to say about how regulation is sapping our startup culture. I mean, not even a word about the terrible burden of occupational licensing on lower-income Americans. What a missed opportunity to bring some light to an issue that plenty of folks across the political spectrum agree on..

]]> 2
What happened to our entrepreneurial society? Mon, 20 Oct 2014 17:32:43 +0000 read more >]]> I have written a lot about the secular decline in US entrepreneurship. As economist Ian Hathaway noted in a podcast with me:

If you look at the number of freshly launched firms in a given year and you take that as a share of all firms, that rate declined from about 15 percent or so in the late ’70s to about 8 percent in 2012, which is our latest data.  We actually just had a data release yesterday.  So the startup rate has declined by about half over that period.

What’s more, the number of young tech firms—the kinds of firms generating new ideas, products, services, and jobs—has fallen below 80,000 from a high of 113,000 in 2001. Blame the tech bubble if you want, but that was 14 years ago. And as Irving Wladawsky-Berger noted in the Wall Street Journal earlier this month (h/t to Jone Dearie), this is supposed to be an age of entrepreneurship:

Five years ago, The Economist published a special report on entrepreneurship. “Entrepreneurialism has become cool,” it said, and called it “An idea whose time has come.” The Economist concluded that “The rise of the entrepreneur, which has been gathering speed over the past 30 years, is not just about economics. It also reflects profound changes in attitudes to everything from individual careers to the social contract. It signals the birth of an entrepreneurial society.”

Moreover, as plenty of books and articles remind us, it’s never been easier to become an entrepreneur and start your own company. Digital technologies are inexpensive and ubiquitous, startups have access to all kind of cloud-based business services, and customers can now be easily reached and supported over mobile devices. What happened to our entrepreneurial society?

I have my theories.

]]> 1
Why the days of superfast Chinese economic growth may be over Mon, 20 Oct 2014 16:54:26 +0000 read more >]]> Back in 2010, there was an issue ad showing a “Chinese professor” in the year 2030 lecturing his students about America’s collapse. “Why do great nations fail?” he asked. “The ancient Greeks, the Rome Empire, the British Empire, the United States of America — they all make the same mistakes, turning their back on the principles that made them great.”

Sure, America faces some big economic challenges. But what about the other side that equation? Does China have the right principles and institutions to dominate the 21st century?

Consider: China currently has a $9 trillion economy vs. $17 trillion for America. It makes a great deal of difference how fast China grows in the future. For instance: If China were to grow as fast the next two decades as it did 2000-2010, about 9.7% a year, its GDP would grow to $60 trillion by 2033. Such an increase, Lant Pritchett and Larry Summers write in their new paper “Asiaphoria Meets Regression to the Mean,” would mean a gain in GDP “more than three times as large as the current U.S. economy. The continuation of current growth rates would make China far and away the world’s dominant economy.” This is the future depicted in the Chinese professor ad.

But most economists don’t think that scenario as likely as a slowdown. So let’s knock off a couple, three percentage points and figure 7% growth. If that were to happen, China GDP would grow to $36 trillion by 2033.

But Pritchett and Summers are even more pessimistic. As they calculate, historical trends suggests Chinese growth of just 3.9%, meaning a 2033 China GDP of $21 trillion, not $60 trillion. By contrast, US GDP — modestly assuming 2% real growth and 2% inflation — would be $36 trillion. America would remain the world’s dominant economy.

Here is why Pritchett and Summers are gloomy about China (and India for that matter):

Consensus forecasts for the global economy over the medium and long term predict the world’s economic gravity will substantially shift towards Asia and especially towards the Asian Giants, China and India. While such forecasts may pan out, there are substantial reasons that China and India may grow much less rapidly than is currently anticipated.

Most importantly, history teaches that abnormally rapid growth is rarely persistent, even though economic forecasts invariably extrapolate recent growth. Indeed, regression to the mean is the empirically most salient feature of economic growth. It is far more robust in the data than, say, the much-discussed middle-income trap.

Furthermore, statistical analysis of growth reveals that in developing countries, episodes of rapid growth are frequently punctuated by discontinuous drop-offs in growth. Such discontinuities account for a large fraction of the variation in growth rates. We suggest that salient characteristics of China—high levels of state control and corruption along with high measures of authoritarian rule—make a discontinuous decline in growth even more likely than general experience would suggest. 

In other words, not only does history suggest superfast growth is tough to maintain, but that finding may especially be true of nations with awful institutions. Authoritarian states or those with statist macroeconomic policies rife with crony capitalism are typically not the sort able to generate dynamic growth over the long term. (You need to think about this, too, Washington.)

This is hardly good news, though. The faster China and India grow, the faster the global economy grows and the faster millions of people move out of poverty. What’s more, slower growth might affect the stability of the Chinese regime with unpredictable consequences:

 … much geopolitical analysis has focused on the implications of a rising China, and certainly Chinese international relations theorists have extensively studied past rising powers. Contingency planning should also embrace scenarios in which Chinese growth slows dramatically, presumably bringing with it a range of domestic and international political implications.

Then again, without regime change China may be unable to transition to a more organic, free enterprise-driven economy capable of better generating and using innovation. I think I have a few questions for that Chinese professor.

]]> 1
Falling oil and gas prices are unambiguously good for the US economy, could save consumers $83 billion over next year Mon, 20 Oct 2014 15:44:26 +0000 read more >]]> gaspricesoilOver the last six months, the average retail price of a gallon of gas has fallen by 62 cents, from $3.71 per gallon in late April to $3.09 per gallon currently, according to (see blue line in chart above). That’s almost a 17% decline in prices at the pump, and have followed a 22% decline in oil prices over that period, from about $105 per barrel in August to about $82 per barrel currently (see brown line in chart above).

How does that fall in retail gas prices translate into savings for consumers and households? The EIA estimates that Americans consume an average of 368,510,000 gallons of gas every day, so every one cent decline in the price of gas saves consumers $3.685 million per day, and $1.345 billion per year. Therefore, the 62 cent decline in gas prices since April will save consumers more than $83 billion over the next year, compared to the amount that would have been spent if prices stayed at $3.71 per gallon. On a per household basis, that would translate to an annual savings of more than $700 on average for every one of America’s 118 million households.

Bottom Line: For every additional penny that prices at the pump continue to fall, we can think of that as an additional $1.345 billion annual “tax cut” for consumers and alternatively as a $1.345 billion “economic stimulus” for the US economy. And therefore, those lower oil and gas prices are “unambiguously good for the US economy,” as Larry Kudlow pointed out in a recent commentary, here’s an excerpt:

One of the absolutely stupidest things I have heard in recent weeks is that the recent drop in oil prices is bad. Serious people on financial television are saying lower oil prices are a signal of worldwide economic collapse. Here at home that translates to recession, deflation, a profits collapse, and rising unemployment.

But the recent $20 drop in crude oil is an unambiguously good thing for the American and world economies. Unambiguous.

As I understand the lower-oil-prices-are-bad argument, the shift to around $80 a barrel from $100 a barrel will somehow close down the American energy revolution and destroy all the new jobs and related infrastructure services that have fueled our recovery.

Nonsense. I spoke with a CEO who is literally at the cutting edge of the horizontal-drilling and hydraulic-fracturing revolution about the so-called “profit break-even point,” or the marginal cost of producing the next barrel of oil. He told me it averages between $50 and $60 a barrel. And a new report from Citigroup energy analyst Edwin Morse argues that oil has to fall to $50 or less to fully halt shale-production growth.

More important: Virtually all consumers and producers will benefit from lower energy costs. Households could save as much as $100 billion because of today’s lower fuel costs. Business fuel savings will also be substantial. The result is a much more competitive U.S.

All these factors will increase U.S. economic growth, not reduce it. Basically, the fracking revolution has delivered a powerful and positive supply shock to the economy. It means that more output increases real growth and reduces inflation for any given increase in nominal GDP — the exact opposite of what we saw in the 1970s.

Let me help all those analysts who have lost their minds in this stock correction. We’re witnessing a big outward move of the energy supply curve. By nearly doubling our oil output in recent years, it’s surprising the oil-price break hasn’t come sooner. It has very little to do with falling demand.

Finally, a political message: Falling energy prices are so good for the economy that a new Republican Congress, in its first 90 days, should put a bill on President Obama’s desk authorizing the Keystone Pipeline, opening federal lands to energy development, and ending oil export restrictions. Totally pro-growth. Let the GOP dare the president to veto it.

]]> 21
What are the most and least conservative cities in America? Mon, 20 Oct 2014 14:51:56 +0000 read more >]]> This chart, via boingboing, is from the MIT paper “Representation in Municipal Government” by Chris Tausanovitch and Christopher Warshaw:

"Representation in Municipal Government"

“Representation in Municipal Government”

And from the paper’s summary, which challenges the idea that there isn’t a liberal or conservative way to collect the trash:

Municipal governments play a vital role in American democracy, as well as in governments around the world. Despite this, little is known about the degree to which cities are responsive to the views of their citizens. In the past, the unavailability of data on the policy preferences of citizens at the municipal level has limited scholars’ ability to study the responsiveness of municipal government.

We overcome this problem by using recent advances in opinion estimation to measure the mean policy conservatism in every U.S. city and town with a population above 20,000 people. Despite the supposition in the literature that municipal politics are non-ideological, we find that the policies enacted by cities across a range of policy areas correspond with the liberal-conservative positions of their citizens on national policy issues.

In addition, we consider the influence of institutions, such as the presence of an elected mayor, the popular initiative, partisan elections, term limits, and at-large elections. Our results show that these institutions have little consistent impact on policy responsiveness in municipal government. These results demonstrate a robust role for citizen policy preferences in determining municipal policy outcomes, but cast doubt on the hypothesis that simple institutional reforms enhance responsiveness in municipal governments.

]]> 5
Video Saturday Sat, 18 Oct 2014 17:15:18 +0000 read more >]]>

1. In the video above, Milton Friedman explains how the essential notion of a capitalist society is voluntary cooperation and voluntary exchange, and the essential notion of a socialist society is fundamentally force.

2. In the video above, learn how the world’s poorest people suffer and die from environmentalism.

]]> 4
Some key principles for fixing Obamacare Fri, 17 Oct 2014 19:48:06 +0000 read more >]]> I am on the record as being dubious about the “repeal and replace” approach to Obamacare. I think the politics are formidable, to say the least. Now that does not mean I am arguing for the status quo. Far from it. Avik Roy has an impressive reform plan that would “transcend” the Affordable Care Act. So do James Capretta and Lanhee Chen, who makes their case over at Politico. In Capretta and Chen’s very good piece, this may be the most important bit:

Returning to the pre-Obamacare status quo will not appeal to most voters because the problems were rampant. A Republican plan to replace Obamacare needs to provide secure insurance for the sick and put affordable coverage within the financial reach of all Americans. And it should not disrupt the employer coverage that most middle-income families have and like. These principles can form the basis of a practical strategy to replace Obamacare, and Republicans would be wise to rally around them to set the stage for the next presidential administration, rather than engaging in a protracted debate over the perfect reform plan.

No going back, and everybody gets affordable access to health, quality insurance — important principles for reform.

Follow James Pethokoukis on Twitter at @JimPethokoukis, and AEIdeas at @AEIdeas.

]]> 4
The US is $40 trillion ahead of China Fri, 17 Oct 2014 18:02:54 +0000 read more >]]> The world’s three largest economies are the US, China, and Japan. If you knew they had the following growth rates – +16%, +2.7%, and -3.6% — you’d probably be fairly confident in matching the economy to its growth. And the answer is: the US at +16%, Japan at +2.7%, and China at -3.6%.

How can this be? Credit Suisse releases an annual private wealth report. It compiles private wealth in current terms (no inflation adjustment) at the mid-year point.

At mid-2014, American private wealth stood at $83.7 trillion. The second highest national figure belonged to Japan at $23.2 trillion, less than one-third of the American total. China was third at $21.4 trillion. Using Credit Suisse figures for mid-2013, the US saw rapid growth, Japan modest growth, and China a contraction.

Now the acknowledgements. First, Credit Suisse doesn’t publish explicit on-year growth rates, possibly because fluctuations for a single country can be sharp and misleading as to the country’s longer-term performance. Looking back to 2000, China’s wealth record is clearly superior to Japan’s.

Second, these calculations are difficult cross-nationally. The Federal Reserve publishes a series on American net household wealth that puts the value at close to $80 trillion in mid-2014 (adjustment is for non-profits), reinforcing the Credit Suisse figure. But determining the equivalent number for China is much harder, due essentially to government distortions of the economy.

Most important in terms of substance, this is just private wealth. There’s also public wealth.

In the US, high federal debt means net public wealth is negative. The same is true for Japan. China also has serious debt problems but the state owns so much in the way of assets that net public wealth is almost surely positive and fairly large.

So Credit Suisse’s $62 trillion American private wealth advantage over China is an exaggeration. The true gap between the two countries is more like $42 trillion.

The trend may also be somewhat misleading. According to the Fed, the growth of net private US wealth from mid-2013 to mid-2014 is 10.4%, not 16%.

Inexact calculations for China mean private Chinese wealth may not have declined from mid-2013 to mid-2014. At the same time, rising Chinese debt is mostly due to public enterprises, which means net public wealth may have declined.

While Credit Suisse’s measurements of private wealth are incomplete and inexact, they are real-world figures. Individuals, companies, and governments hold or utilize wealth, and change their economic fortunes by doing so. The distribution of wealth matters a great deal.

In contrast, gross domestic product adjusted for purchasing power parity (GDP PPP) is a book-keeping device modified in a way that makes it less applicable to the real world, whose distribution is of no interest to anyone. Good luck buying a car, building a solar plant, or funding a military expansion with a share of GDP PPP.

The International Monetary Fund says China may have already passed the US in GDP PPP. Credit Suisse implies the US is roughly $40 trillion ahead in wealth and the gap just widened. Is there a patriot in either country who would hand over $40 trillion (or half that, or a quarter of that) to be tops in GDP PPP?

Properly measured, the US economy is much bigger than China’s and may even be pulling away.

Follow AEIdeas on Twitter at @AEIdeas.

]]> 0