Bruce Sacerdote has graciously agreed to let me post this reply to my last post.  Here’s Bruce:


Dear Bryan, thanks for the heads up!  I am perfectly 
happy with your description. I would make two key
points. First, my effects are indeed significantly
larger than the 0 effects found and trumpeted in the
BG literature. More importantly, most economists
including me believe that the entire effort to
engage in this sort of variance breakdown is
misguided. The very quote by Pinker gives one
reason why.

50% is genetics and 50% is some mysterious own
environment factor that we don't know what it is ?
And the mysterious environment factor is not shared
family environment. I mean come on. No parent
believes this stuff. These strong results stem
from the strong assumptions needed to parametrize
a BG model. But don't believe me...read Goldbergers
work from the 1970s. Many have shown how modest
tweaks to the model give you a different variance
breakdown.

The more scientific and accurate point that
economists make is that knowing the heritability of
something tells you nothing about whether a given
environmental intervention is worth doing. To take
Goldberger's famous example, knowing that eyesight
is 90% heritable tells us nothing about whether
provision of eyeglasses is a good idea. This second
point is largely accepted by economists and probably
by many or most behavioral geneticists.

My paper was really about simplifying the problem to
simply ask "what is the treatment effect from being
assigned to a particular type of family."

Thanks for the kind post and opportunity to respond.

Yours truly,
Bruce


Here’s my reply:

50% is genetics and 50% is some mysterious own environment factor
that we don’t know what it is?  And the mysterious environment
factor is not shared family environment.  I mean come on.  No parent
believes this stuff. 

I’m a parent, and I basically do believe this stuff – especially for
long-run effects.  So do most of the dads I know who are familiar with
BG.  The moms are another story, of course…

The more scientific and accurate point that economists make is that knowing the heritability of something tells you nothing about whether
a given environmental intervention is worth doing.  To take
Goldberger’s famous example, knowing that eyesight is 90% heritable
tells us nothing about whether provision of eyeglasses is a good idea.   This second point is largely accepted by economists and
probably by many or most behavioral geneticists.

This seems a little hasty to me.  A variance decomposition does tell
you something useful.  Suppose your original cost-benefit analysis
assumed that shared family environment explained 50% of the variance, so
a 1 SD improvement in environment leads to a .7 SD improvement in
outcome.  Then you learn that the variance explained by shared
environment is only 10%, so a 1 SD improvement in environment leads only
to a .3 SD improvement in outcome.  This means that a given
environmental improvement is a lot less likely to pass a cost-benefit test.

When I was arguing about this with Bill Dickens, he kept saying that
it’s the regression coefficient, not the variance explained, that
matters for policy.  My reply to him is that both are useless without
price tags attached (either $/unit or $/SD), and both are equally useful
with price tags attached.  Isn’t that right?