Dynamics in Human Capital Production

I. The concept of dynamics in human capital production tries to derive the proxy variables that affect both cognitive and non-cognitive skills after childhood together with self-productivity & cross-productivity. It is a dynamic factor model made to solve the problems within the endogeneity of inputs over the lifetime, along with a multifactorial approach to determine positive outcomes in later time periods of life (Cunha & Heckman, 2008). This concept has been quantified by economists estimating a linear dynamic factor model to identify general classes of technologies (such as skilled-based formation) recalled on these endogenous inputs. Given that there are numerous inputs that affect outcomes in childhood, economists have had to overcome this issue of multiplicity by creating indices of inputs (to create more manageable dimensions) and by anchoring scales (such as adult earnings or test scores) (Cunha, Heckman & Schennach, 2010). Such studies have found that it is more optimal to invest in children in the beginning of their lives rather than later. These effects have been found to be salient for cognitive skills (such as test scores, reading ability or parental cognitive skills) whereas for non-cognitive skills, investments in human capital are effective throughout longer periods of life.

A study done by Almond (2018) has proposed many policy interactions that provide naturally occurring experiments to substantiate economic hypotheses. A clear example is the introduction of policies made to increase paternity around birth to increase human capital of the child through marriage. Externalities of these policies included negative effects on children’s health due to easier access to the utilization of child-support rather than employer health insurance (Rossin- Slater, 2016). Within human capital production it is important to note that there are major differences when applying policies and programs for different lifetime periods: efficacy cannot be generalized throughout childhood and adolescence. There is in majority a focus on prenatal and early years of life, but policies can affect various periods of life in different ways.

II. In this next section I will be exploring possible interactions between the policy discussed by Rossin-Slater (2016) and welfare reform which was rolled out during the same period. The introduction of in-hospital voluntary paternity establishment (IHVPE) in 1993 for unmarried parents in all of the USA, overruled the long and tedious process of new parents to establish paternity through the courts and DNA testing. Given a third of children are born out of wedlock, this policy was aimed to encourage marriage which has been proven to provide more positive financial outcomes for the family (Rector, 2010). Unfortunately, in this study it was found that while IHVPE does indeed increase paternity establishment rates, it does not affect marriage rates and may even reduce such rates. IHVPE has no benefits on human capital as child household resources and health do not ameliorate or respond to such policy.

In 1996 the Personal Responsibility and Work Opportunity Reconciliation Act was one of the many reforms made in the decade to change welfare programs. This act had the goals of ending dependence on government for needy parents, aiding families caring for children by promoting job preparation, work and marriage as well as preventing and reducing out of wedlock pregnancies and encouraging two-parent families (Bitler et al., 2004). It has been found that this policy gave women greater financial independence, actually decreasing marriage incentives, leading to fewer new marriages as well as divorces. After controlling for economic forces, the 1996 reforms had little impact on work behavior since they were not well-distributed across the less skilled women. Waivers granted in the early 1990s increased income unlike the 1996 reforms. The proximity of these reforms to IHVPE may have created interactions between the two, as well as the externalities such as reducing the amount of two-parent family structures (Bitler et al., 2006).

Rossin-Slater analyses in their paper the possible interaction of IHVPE and the welfare reforms of the 1990s. They disconfirmed the previous studies by Bitler (2004; 2006), showing that welfare reform did not affect marriage rates in their sample. This suggest a higher endogeneity of IHVPE when compared to welfare reform and human capital production.

III. Given that Rossin-Slater and Bitler used two different samples, it would be interesting to compare both samples, both as a cohort and independently to a new random sample. Stratifying such samples across various states and cities according to when we believe both IVHPE and welfare reform were implemented could be helpful in finding new interactions. This has only been done by Rossin-Slater and stratifying Bitler’s sample in this manner as well could be helpful. Creating vectors for various cognitive and non-cognitive outcomes of children could bring us a step further into understanding the role of marriage as an institution as well as the role of non-paternal fathers. This data could be achieved by finding a model sample from the original samples of Rossin-Slater and Bitler, by following up on the families 30 years later. A longitudinal study even if with a sample size leaning on the smaller side, due to the difficulties of reaching out to the participants could still show sizeable effects of the policies aforementioned.

Secondly, Rossin-Slater and Bitler use a linear model. Considering that there are increasing complexities when doing multiple hypothesis testing, using a dynamic factor model as proposed by Cunha (2010), all the data from different states and applications can be left to pick the best combinations of family dynamics in response to these policies. When using a production function approach, the endogeneity of inputs must be accounted for, as well as the wealth of each person. Given that there are some gaps in the data, since not all dates of the beginning of these programs are known for different geographic areas, assuming that the data is missing randomly the sample likelihood can be used instead. This is an endeavor that through online interactions may have very minimal costs to do, linking adults to some of their past exposures to policy through a growing accessibility of “administrative data”.

It would be also interesting to add data regarding child-support establishment and collection. It has been shown that policies that increase child support, such as the ones of the 1980s increase family financial stability and child outcomes (Nepomnyaschy, 2007). Producing policies that create contracts distributing parenting responsibilities, rather than paternal or spousal agreements, may be the key to increasing marriage and therefore family financial capacities.

References

Cunha, F., & Heckman, J. J. (2008). Formulating, identifying and estimating the technology of cognitive and noncognitive skill formation. Journal of human resources, 43(4), 738-782. Cunha, F., Heckman, J. J., & Schennach, S. M. (2010). Estimating the technology of cognitive and noncognitive skill formation. Econometrica, 78(3), 883-931.

Almond, D., Currie, J., & Duque, V. (2018). Childhood circumstances and adult outcomes: Act

II. Journal of Economic Literature, 56(4), 1360-1446.
Rossin-Slater, M. (2016) Signing Up New Fathers: Do Paternity Establishment Initiatives Increase Marriage, Parental Investment, and Child Well-Being? Forthcoming at the American Economic Journal: Applied Economics.

Bitler, Marianne P., Jonah B. Gelbach, Hilary W. Hoynes, and Madeline Zavodny. 2004. “The Impact of Welfare Reform on Marriage and Divorce.” demography 41 (2): 213–36. Bitler, Marianne P., Jonah B. Gelbach, and Hilary W. Hoynes. 2006. “Welfare Reform and Children’sLiving Arrangements.” Journal of Human resources 41 (1): 1–27. Nepomnyaschy, L. (2007). Child support and father-child contact: Testing reciprocal pathways. Demography, 44(1), 93-112.

Rector, Robert. 2010. “Marriage: America’s Greatest Weapon Against Child Poverty.” Heritage Foundation Report 2465.

Sofia Wolfson
Emory University
University of Miami

Fechner and Experimental Aesthetics

One of the oldest research areas of psychology is experimental aesthetics (Fechner, 1998). Experimental aesthetics is an approach to researching artistic phenomena developed by Gustav Theodor Fechner (1801-1887) in Leipzig. He was a physicist, philosopher and physiologist who along with others psychologists like Hermann von Helmholtz and William Wundt gave birth to the field of psychophysics (Debru, 2001). In 1860 Fechner publishes the book Elements of Psychophysics (1998) in which he talks about the relationship between the properties correspondent to the physical world and the conscious experience of individuals. To measure sensations, the use of a reliable and quantifiable variable such as differential thresholds allowed to establish a minimum amount of energy to add or subtract from an already active stimulus so that the change is perceived subjectively. This threshold became a value that can only be approximated, given that it varies between subjects due to different psychological indications based in probability (Scheerer, 1987). This threshold value is considered as the intersection between the physical intensity, which is linear, and that experienced by the observer which is non-linear and heterogenous.

For example, if you were to light an extra candle when 10 are already lit the difference in light can be perceived, but when one candle is added to 100 we can hardly discern such difference. Weber (1795-1878) concluded that the difference between these two signals is proportional to their value. The formula that can be derived is the integral of the ratio known to this day as Weber-Fechner’s law shown below (Chukova, 2012). With the discovery of number neurons, neurons that are assumed to be the basis of mental number scales, an experiment found that the brain is able to discriminate between linear and logarithmic scales. When numbers increased, monkeys adopted an “approximated compressed scale” which confirms the approximation model through the use of logarithms rather than linearity, affirming Fechner’s law from 150 years ago (Dehaene, 2003).

𝜓 = 𝜒 log ( 𝐼 ) , 𝐼0

where 𝜓 is sensation, 𝜒 is a constant and 𝐼0 is the intensity of the stimulus in conditions of absolute threshold of sensation.

In the years following the release of his book, Fechner begins to study art from a psychophysical perspective. His studies surround mostly the inquiry around reactions of grandeur and preferences for aesthetic materials. He is one of the first to apply an experimental approach to art, controlling for different variables. To do this he strips art down to basic elements, such as lines or geometric figures (Phillips, Norman & Beers, 2011). His most successful studies surround the golden ratio, where participants had to express their preferences regarding a series of rectangles of different shapes. Observers tended to prefer rectangles which sides where related to each other with specific proportions, similarly in what is observed with the golden ratio (Hoge, 1995). This phenomenon has been known as the “golden rectangle”: where the sides are in proportion. There have been many findings since then regarding this specific proportion, “the golden section”, where a side a must be approximately .62 of side b. Recently the role of conditions in different types of presentation have been questioned, finding that rectangles that are smaller are more preferred than larger rectangles (Benjafield, 1976). An interesting facet of understanding why people prefer certain rectangles is still unknown. It has been found that using different measures such as the Big Five, Need for Cognition, Tolerance of Ambiguity, Schizotypy, Vocational Types and Aesthetic Activities have no correlation with rectangle preferences (McManus, Cook & Hunt, 2010).

Thanks to experimental aesthetics we return to the line of thought that from Plato to this day has reigned in aestheticism. Beauty and grandeur of the visible world is measurable and therefore can be rationally applied. There are implications for guaranteeing a certain level of aestheticism that can be measurable in both works of art and of functional purpose. Fechner proposes a bottom-up procedure founded on elementary perceptions received by the observer such as preference. This seems to be in contrast with art philosophy which uses as top-down approach, speculating on what might be beautiful.

To analyze aesthetic phenomena empirically, Fechner proposed that there must be different avenues and methods of research. Namely the methods of choice, production and use. The method of choice is showing subjects aesthetic stimuli to evoke preference. The method of production is submitting a subject to a stimulus conformed to their preference (stimulus doubling). Finally, the method of use (or application) is a formal, controlled statistical analysis of elements of a work of art and their relationships (Fechner, 1876; Hoge, 1995). To this day the method of choice is used widely, but the other two are widely neglected (Westphal-Fitch, 2019).

With the shift that occurred in psychology at the end of the 19th century Fechner along with Wilhelm Wundt started proposing more experimental approaches. Fechner’s interests in artistic phenomena highlight the importance of understanding behavior and experience of art in life. It is no coincidence that some of the first experiments involved aesthetics, underlining their power over our psyche, helping us understand who we are through aesthetic perception.

Works Cited

Fechner, G. T. (1998). Elemente der Psychophysik. Bristol: Thoemmes Press.
Debru, C. (2001). Helmholtz and the Psychophysiology of Time. Science in Context, 14(3), 471. Scheerer, E. (1987). The unknown Fechner. Psychological research, 49(4), 197-202.
Chukova, Y. P. (2012). New Phase in History of the Weber-Fechner Law. SCIENTIFIC COSMOPOLITANISM AND LOCAL CULTURES: RELIGIONS, IDEOLOGIES, SOCIETIES, 658.
Dehaene, S. (2003). The neural basis of the Weber–Fechner law: a logarithmic mental number line.Trends in cognitive sciences, 7(4), 145-147.
Phillips, F., Norman, J. F., & Beers, A. M. (2011). Fechner’s aesthetics revisited. In Fechner's Legacy in Psychology (pp. 183-191). Brill.
Benjafield, J. (1976). The 'Golden Rectangle': Some New Data. The American Journal of Psychology, 89(4), 737-743. doi:10.2307/1421471
McManus, I. C., Cook, R., & Hunt, A. (2010). Beyond the Golden Section and normative aesthetics: Why do individuals differ so much in their aesthetic preferences for rectangles? Psychology of Aesthetics, Creativity, and the Arts, 4(2), 113–126. https://doi.org/10.1037/a0017316 
Höge, H. (1995). Fechner's experimental aesthetics and the golden section hypothesis today. Empirical Studies of the Arts, 13(2), 131-148.
Fechner, G. T. (1876). Vorschule der aesthetik (Vol. 1). Breitkopf & Härtel.Westphal-Fitch, G. (2019). Revisiting Fechner’s Methods. In The Oxford Handbook of Empirical Aesthetics. DOI: 10.1093/oxfordhb/9780198824350.013.9

Sofia Wolfson
Emory University
University of Miami