Freakonomics Radio - “One Does Not Know Where an Insight Will Come From” | People I (Mostly) Admire: Kerwin Charles

Episode Date: September 19, 2020

The dean of Yale’s School of Management grew up in a small village in Guyana. During his unlikely journey, he has researched video-gaming habits, communicable disease, and why so many African-Americans haven’t had the kind of success he’s had. Steve Levitt talks to Charles about his parents’ encouragement, his love of Sports Illustrated, and how he talks to his American-born kids about the complicated history of Blackness in America.

You are, in fact, talking to a black person who is the dean of the Yale School of Management. That's a fact. Who is your colleague at Chicago. We have friends who are deans at similar places or prominent faculty at other places. I can go on. But if one takes the African-American experience panoramically and one weighs these obvious and undeniable aspects of success with the bad things.

One would have to say that there are ways in which our hopes have been realized and there's a healthy dose of stuff that's pretty bad. Disappointment and failure intermingled with success. So Kerwin Charles is such an interesting character. He's a top economist. He's the dean of the Yale School of Management. And most interesting to me is he's done all this when he was born in a small town in Guyana. Welcome to People I Mostly Admire with Steve Levitt. Kerwin has a way of understanding that's not academic, but intuitive. Somehow Kerwin can see what's important. And that's what he does in his research. He's studied things as varied as the black-white income and wealth gap, and how video games might be the reason why young males are no longer working in the labor market, and how we beat tuberculosis. And I have to say,

of all the economists I know, I think Kerwin gives me the best advice. It is such a pleasure to be talking today with Kerwin Charles, a good friend and a deep thinker who teaches me and clarifies my thinking every time we talk. So you sit today at the pinnacle of academic success, but I gotta say, from where you started, it has to be an incredibly unlikely outcome. Could you just tell us a little bit about growing up in Guyana? So I was born in a small village where my parents met when they were in their late teens. Buxton is the village. It's where I began my education. And in some ways, I think you're right to observe that the path from that place and time to here is an unlikely one in some ways. Guyana was during my childhood and still a

relatively poor, very poor country. But there are aspects of the path and journey that are less unlikely. Despite the fact that I was born in a small village, I was enveloped always by loving, attentive parents, family and friends, elders. a village raised me, as they say. And because of what had been poured into me, despite the challenges that were inevitably to lie across my path as I moved through, I was given equipment to surmount them. That's a sense I genuinely had my whole life long. And so there's a sense of unlikelihood, and then there's a sense of that whatever I wanted to do, it would be difficult to achieve, but achievable.

Were your parents educated or no? They were. The government of Guyana was sending some select persons to study fields that were of great need in that country. My father, when he came to Miami, which is the closest U.S. school to my country, became interested in marine biology. My mother did special education. I was already born and left with my grandparents in Buxton while my parents pursued their education in the States. My parents are still alive, and I am incredibly close to my parents. I talk to my mother and father every morning.

I talk to my mother at the close of every workday. And on weekends, it might be more frequent than that. About my mother, I will say that she remains the best teacher I've ever had in my life. And there became a point when the things that interested me could not be taught me by my mother. But she gave me a sense of excitement about things I didn't know and an eagerness to test myself and challenge myself that I've carried with me my whole life long. Stick-to-itiveness, grit, not whining, and so forth, is one important lesson taught me by my mother.

She taught me, too, the importance of being open to new experiences and people. Because one does not know, as one traverses one's life, where a helpful relationship will form, where an insight will come from, and so on. And you were an incredible student, as I understand, which opened up the opportunity to come to the U.S. Can you tell us about that? I was a good student. I was fortunate because of my parents' early exposure to the States and because of my deep reading about America throughout my life, which I did. I spent a lot of time as a kid at the John F. Kennedy Library in my country.

Guyana was a socialist country throughout my life. But the John F. Keldy Library was this American outpost to which I repaired frequently in between school and lessons or basketball practice to read old issues of Sports Illustrated and other American magazines. I am to this day obsessed with Sports Illustrated. Every time I move, it's the first thing I make sure is forwarded. And I would talk to the American guys there. America fascinated me as a place. And so when it came time to go to college, I had the chance to come to Miami. I had a chance to get a scholarship there and came to

Miami with the intention of going home because I had an incredibly happy childhood. And one thing led to the next thing, and here I am. So I think the first time I ever ran into you was in the context of you being a public speaker. And I was blown away. You took the stage, no notes. And unlike other people, you spoke in paragraphs rather than sentences. Steve, that's nice of you to say. I'm curious of whether that's a learned skill or something that came naturally, and if you have any advice to people who don't have off-the-chart ability for public speaking.

So, some of it is learned. I would, as a child, be called upon by my mother to speak about some matter. And it might be a matter of relative insignificance. We lost the cricket match to what's-his-name's team and I was cheated. Yeah? What happened? Explain that thing

with a minimum of ums and ahs and likes and so forth. And just do it over and over. And then one becomes better at it. So some of it was learned. Some of it's personality. Practically, I think what is very useful to me is slowing down.

If there's a single bit of advice I would give people speaking in public is to say, one, however slow you think you're going, go half a it slower, and have in mind something you want to say at the beginning and some fundamental point you want to say at the end. And let it flow naturally.

I feel this way about writing, too. Slow down, have something to say, and you'll be good. Great advice. So you went through Miami, you got your PhD in economics in Cornell, you went to University of Michigan, where you got tenure in economics, you came to Chicago and were a standout there, and now you're dean of the Yale School of Management. You've done such a wide variety of fascinating topics. And one that really caught me, especially in a COVID time, is that you've been studying tuberculosis. And I learned so much from that paper. Could you just share a little bit about the history of our public health interventions against tuberculosis? Yeah. So we begin in the early 1900s with TB being the second leading

cause of death in the United States. And over the next 40 years or so, that thing plummets. It plummets despite the absence of medical interventions to address the thing. Wow. I think there are very few people today who would have guessed that tuberculosis was the number two cause of death. So if there's no new treatment for it, why do people think that deaths from tuberculosis plummeted? One could imagine that TB rates might have fallen because of public health. There were anti-spitting laws, to pick one example, or because of things having to do with a decline in overcrowding, the improvement in meat inspection, and improvement in water quality, all the rest. So you analyzed the impact of these public health interventions did not have the effect that much of the literature had before us concluded. I want to be very careful,

because it is natural for people to say, oh, Kerwin is saying that public health interventions now wouldn't work for some other thing, or public health interventions then also didn't work. I'm not saying that at all. I'm saying that what we thought about the effectiveness of public health interventions in the States was overblown. There's some other thing at work. Thinking about what those other things were and what the implications of those other things might be for other countries and contexts will be something I'll be doing over the next few years. Do you play video games, Kerwin?

I don't. That's probably a good thing because your research suggests that video games are an important driver of some very negative trends in the U.S. economy. Yes. So this is work with my dear, dear friend and frequent co-author Eric Hurst and the Marks, Mark Aguiar and Mark Bills. It's important to mention Eric in this context because he and I have written a series of papers about the decline in participation

and the labor demand explanations for that. We've thought about automation in one paper. And the labor demand explanations for that. We've thought about automation in one paper. We've thought about sectoral decline in manufacturing in multiple papers and how that has caused a sharp increase in non-work among men. Okay, so what are the facts, Kerwin? We're talking about 20-something young men. They're not in school. They're not working.

They're not locked up. Yeah, that's right. Nobody really knows what they're doing, but there's a whole lot more of them than they used to be. Look, much of that is explained by demand side factors. That the labor market is not, especially the less skilled ones, is not hiring these guys the way it once did. Places where they live, some of them have been particularly buffeted by manufacturing decline. Housing booms and busts have interacted in interesting ways. All demand side stuff. Okay, so what share of young men are in this category of doing nothing? A ballpark,

I want to say, you know, a fifth. And one of the things that we spec in the paper is that the technological shocks have been one of the main sources of demand side changes. And there might well have been, and indeed we believe there were, technological shocks that had the effect of raising the opportunity cost of going to work. Why? It might show up in things like, might increase utility flow from Facebook timing, Instagram, video games, all of it. And what we do is attempt to document the role that that factor, technology shocks in the out of work space, which people are calling the video game space. Because that for men is the key activity that is technology related. Whereas for women, it is social media. I got to say, Kerwin, I saw one of your co-authors, Mark Aguiar, gave that paper at the University of Chicago. It was one of the most distinct occasions of walking into a room thinking this was the stupidest idea I had ever heard in my entire life.

Walking out as a complete 100% believer. I mean, you're really good at collecting data in a thoughtful, sensible, simple way and exposing a fact that nobody would have thought of. It's a real talent and one that isn't always encouraged or rewarded in our profession, but to me is among the most important things we can do. You know, I think in our field, and I think in every intellectual scholarly field, one has to find one's place and say,

look, there's some things I can do. And let me find a way to answer questions that interest me and perhaps interest the world using the set of things I can do reasonably well. And I've had some success at doing that. Now, I've sat by as you've made some very hard decisions, and I would not describe you as a good decision maker. You are the most fraught and uncertain and wish-washy decision maker. Nonetheless, often the people who are the worst at

something have good advice to give. Could you give listeners advice about making good decisions? I have found that across contexts, the speed with which I have to make decisions has had to shift. So if I'm a referee or an editor, I could sit with a paper for a long time, and I talk to friends who've been editing, and they say I decide on a paper an hour. Not me. Can't do that. Being comfortable with heterogeneity across contexts in your decision-making style is point one. There are things you should do immediately. As dean, I've got to decide whether we will do this thing or not. I do that right away.

There are decisions, though, about what we will do as a school in response to the George Floyd matter. My style, then, is to be contemplative, is to sit with it, is to walk with it, to turn it around and not be rushed. And because I'm comfortable with the different styles of decision-making across contacts, I'm at peace with it. I believe that we should be open to revision, especially those of us in leadership

roles. Events might prove me wrong. And if events prove me wrong, you should not feel belittled by that. You should just pivot and change after due diligence has been done, information has been acquired, and some reflection has occurred. And then there are things about which I genuinely do not know. You're listening to People I Mostly Admire with Steve Levitt and his conversation with the Dean of the Yale School of Management, Kerwin Charles. They'll return after this short break. We'll talk a lot, I'm sure, about race in the U.S. So you were an immigrant.

You were, I'm sure, about race in the U.S. So you were an immigrant. You were, I'm sure, perceived as being African-American by everybody, even though you were Afro-Guyanese. What was that like? What was it like? It was considerable culture shock. My whole life long, certainly my whole life beyond age 13 or 14, even in Guyana, I didn't conceptualize African Americans as being fundamentally different from me or me from them. There was, in Guyana, a pan-Africanism that spoke about the oneness of Black people around the world. And so when I met African-descended brothers and sisters in the States, I felt like one of them. On the other hand, I quickly discovered, I want to describe it as a shocking thing. Of course, I knew that there was cultural nuance that was specific to one's place of origin. Of course,

I understood that. And so it's one thing to say that I feel like I'm the same as a brother from Philly. It's one thing to say that. But a fellow from Philly has a different life experience. He has seen particular things here. His granddad experienced things that mine did not. By the way, the reverse is also true. But there are differences, and I'm respectful of those differences. And so early on, sought to understand that lived difference. My first girlfriends in the United States were African-American women who would say, let me take you down to this place here and show you some aspect of things you didn't know or understand. And it had a profound effect on me. It showed me one similarity and sameness.

Hey, hey, when I hear go-go music from D.C., I heard that beat before, man. In reggae music or calypso music. Let me play something for you. Kind of like that. Also made me respectful of difference. It's not an unbridgeable chasm, but there are differences between me and African-American persons born and raised here that are important. So let me ask you a hypothetical question. Let's think about some high point in American history, whether it's the Emancipation Proclamation or Brown versus the Board of Education in 1954, Civil Rights Act of 64, Martin Luther King's I Have a Dream speech. Imagine you and I sitting

and having lunch at one of those times, projecting forward to what we imagine this country would be like in 2020. Do you think that we would be disappointed in the economic progress that African Americans have made or surprised? What's your take on that? Let's step back a second, go to the fundamental amendments that guarantee equal citizenship to African Americans. And the day that signed and passed, looking forward, what could one imagine? Indeed, if one had a short-term view, one might say, you know, it'd be amazing. It'd be amazing if there's African-American representation in the national legislature. It'd be amazing if there are African-American property owners to large numbers. It'd be amazing if there's unification across the

country. It'd be amazing if racial violence were, if not at an end, then dramatically reduced. And if one fast-forwarded to 1884-ish or so, one would have thought, boy, every aspiration is being met. Reconstruction has been a fantastic thing. There are black senators. There are not a thousand of them. There's enough. African-Americans are making all kinds of inroads. And then those hopes are dashed. In 1960, how many black attorneys are there in the major law firms in the country? How many black accountants working not just for black clients? Those numbers are incredibly small. Incredibly small.

They're way higher today. And so there is good news. And yet, and yet, always mixed in with the good news is some bad or some very bad. The experience of African-Americans at the bottom of the earnings distribution, the employment experience is worse than you would have predicted in 1960. The incarceration experience today is way worse than you predicted in 1970. No one, I think, could have reasonably predicted in 1970 that more than a million Black people, as we talk on the phone, would be in jail. The share of African American men are measured in the whole population who are not working today, meaning you take into account the institutionalized, the unemployed, and the out-of-the-labor force, is more than 30%. That's astoundingly high,

okay? And then there are other disappointments. You mentioned Brown, and in some ways it's been incredibly successful. The black graduation rate is not hugely dissimilar from the white graduation rate. That was not true in 1960. At the same time, we have these other measures of lack of performance, of lack of investment. In what share of American school districts, larger than that, you know, 50,000, does at least the majority of African-American children read at grade level? It's a handful. That's a national disgrace. That's a national disgrace. That's a national disgrace. But if one takes the African-American experience panoramically,

yeah, there's good things, and then there's a healthy dose of stuff that's pretty bad. And you're not just talking anecdotally as well. This comes out of your research. You've done this profoundly important research that has shown really exactly what you're saying, which is at the very top, African-American success has been fantastic. But, you know, in the bottom part of the distribution, blacks have even lost ground relative to whites since, I don't know, 1970 or some period like that. Exactly correct. And an African-American boy who goes to Princeton today and majors in actuarial science or chemistry or whatever, he will be not especially dissimilar from his white counterpart. They're going to be fine. Let's forget that. And let's think about the many millions of African-Americans who are not that

poor. Think about an unemployment rate I just talked about. Think about the decline of manufacturing, the rise of automation and other things, all of which especially adversely affect blacks at the median and below. You can imagine a society tugged, stretched, affected by forces that let's, for purposes of our conversation, call them race neutral. The overall widening of the earnings distribution, the running away of one percentile from the one adjacent to it. Notice that its effect, this race-neutral thing, will be to exacerbate already existing gaps based on initial condition. African Americans close the high school gap right at the time that being a high school

graduate doesn't matter the way it once did. African-Americans in one of the world's great migrations leave the South, where they were clustered and spread to the Midwest and the Northeast and to industrial centers in the rest of the country, and have a good life for a while. And then manufacturing declines, collapses. The timing is bad. African Americans in the late 1990s, for the first time, dramatically increased home ownership rates, and then the housing market collapses. The effect of a housing bust is not felt equally by race. A collapse in housing prices especially hurt certain groups who were unable to move, who have to congregate together because of other reasons. You see.

So that's the backdrop. Historians can give you other examples. I think my work shows that in the aggregate, these distributional forces have been the prime mover for observed black success at the median between 1940 and 1970 or so, and have also been the preeminent mover for what has occurred subsequent to that time. That is not to say that what we'll call in this conversation race-specific forces do not matter. There's a discrimination. There is occupational exclusion, which is discrimination's twin. There are skill differences. There's stigma. What do I, as a society, find discomforting, alarming, anomalous, odd, weird, peculiar, all that? Because humans are limited, we cannot be animated about every single thing. And a country has to pick and choose

what it's going to be animated about. The things it becomes animated about are things that seem to run afoul of how it thinks the world ought to be. Imagine I told you that the majority of people in prison were women. That would be weird. When one observes that there are things about African-Americans that place them at the bottom of the earnings distribution, the skill distribution, the opportunity distribution, it strikes people as less anomalous. And therefore, they are inspired less to dig into it to understand thus and so. I don't know what one calls that. Does one call that prejudice? Does one call that animus?

Backs are especially buffeted by some forces. This buffeting need not only be negative. Here's a positive buffeting. Brown v. Board and its application had the effect of disproportionately raising spending on African-American students and schools. In the absence of that closing, that race-specific closing, the negative outcomes we just described at the median and below would have been worse. So imagine you were in charge of policy on race in this country, and imagine you had a big budget, let's say, I don't know, a trillion dollars or $500 billion, what would you do? Well, so let me preface that by saying,

so somebody asked me that question the other day, and I've been thinking about race in America for the last 20 years, and I didn't have a good answer. I wasn't sure what to say. So I'm genuinely curious, what three things would you try to do to improve the situation, the economic and the social situation for African Americans? Okay. There is, as you know, we call the college premium. And the college premium is where the action is. And so one thing I would do would be to increase college among African

Americans. Why are we doing this college thing? We're doing this college thing so as to equip people with the analytical and technical skills that the labor market increasingly demands. Maybe those skills can be otherwise acquired in some context. Thinking about creative ways to provide to students, whether they go to college or not, the kinds of skills that the market will increasingly demand would be a second skill or education related thing I would do. A third thing I would do would be to look the income difference between African Americans and whites is large, especially at the median,

but it is completely dwarfed by the wealth difference. The difference in wealth between African Americans and whites is gargantuan. Now, wealth, unlike income, has, in a family perspective, the benefit of being directly transmittable. I can, upon my demise, leave my thing to my kid. In fact, the thing for the overwhelming majority of Americans, the overwhelming majority of wealth is in their house. This notion about history and intergenerational dynamics is, in my view, incredibly important in the African-American context and cannot be easily dismissed.

And it has its origins, its historical root, in denial from years ago. African-Americans at the dawn of the Civil War were sixth and seventh generation Americans. They did not benefit from the great land grab in the West that other people did. And your one's great-great-grandfather being able to go and stake a claim, as it was said, in Illinois or Indiana territory or California. The consequences of that might redound over time. I don't know where I come down on what is called the reparations debate. But there are transfers one can make that address the thing I just described. Can we ease liquidity constraints in a racialized way? That seems to me a kind of thing I would encourage deep thought about and stare at some of that many trillion

dollar hypothetical thing you told me. It is really shocking the degree of racial segregation which persists in our country, not by some evil designs, simply, I think, by preferences and happenstance, as far as I can tell. I think that's right. racial segregation. I believe his name was Andrew Hacker, the sociologist. He talked about the cultural cleavage in the country. And he had the top 10 television programs by race. And the thing about it that was amazing, there was exactly zero overlap. No, I think there was one. Monday night football, Monday night football. Leave football out of it. Yeah. Throw that away., one can say, well, these don't matter. I am not convinced about that. There's kind of deep comprehension and deep sensitivity

that comes from being closely connected with and not segregated from other people. I taught at places like Chicago and Michigan, and there are styles of talk among the very privileged black and white students that I taught at those places. African Americans who have not interacted with whites, who are meeting them for the first time, bring to those interactions, culturally conditioned, styles of talk. And someone's use of an expression unfamiliar to you, or their incorrect use of a slang term,

causes you innocently to ascribe to them less talent, less initiative. But if you knew them, if you know that African Americans can be bilingual, then you would be more forgiving about those slippages, perhaps. What's race like in Guyana? There are Afro-Guyanese who are descended from African slaves. When slavery was abolished by the British in the early 1800s, they then brought or encouraged to come large numbers of people from the Indian subcontinent.

And so those groups, the descendants of those groups, Afro-Guyanese and Indo-Guyanese, constitute the overwhelming bulk of the population. There are other groups that matter. One is the native people, people we call Amerindians in Guyana. Then we have a relatively robust Chinese population. And we have a group of people who are descended from Portuguese. But there was a healthy mixing in one's social context. On the one hand, there was more easy and natural racial mixing than I would come to observe when I got to the States. On the other hand, there has always existed in Guyana, especially after independence, racial tension around politics. Any Guyanese listening to this thing will know that over the five days of the week, their mother, their aunt, their wife, they themselves are making six dishes over the course of the week.

It's every kind of dish. It's pepper pot, which is a native dish. It's cook-up, which is an African-American dish, a black dish on Tuesday. It's dal and bindi on Wednesday, and fried rice and chow laumain on Thursday. That's how every dine is lived. And yet, at election time, people retreat to these racial camps and snipe at each other in very unhelpful and indeed very unhealthy way. So race has, on the one hand, is more fluidly and comfortably lived there, but on the other is a much more salient feature of politics, of official social organization. There was a massive oil discovery by ExxonMobil in Ghana, I don't know, seven, eight years ago, which could potentially transform the entire economy there. And yet there's also,

I think, a lot of challenge. And I'm just curious, there can't be many people better situated than you to think about the economics of what lies ahead. So various kinds of questions arise, and these questions concern matters like how the resource might be used, what kinds of inequality and related concerns might be brought to the fore, how the discovery of the oil might cause simmering racial tensions to rise at the forum. And one sees traces of some of the downsides of the oil discovery in the following fact. Guyana had a national election on March the 2nd. As we speak here today, in early July, the winner has not been declared. Into this toxic stew

is the matter of race. And so I have seen over the last three months on social media and emails and other things, more negative race talk, more disturbing racialized talk than I've seen in many a year, and I'm quite disturbed by it. To find some way to use these resources, first, to reassure people that the gains from this resource will be evenly spread by race, is in a country that has the kind of racial and ethnic divisions I mentioned, unbelievably important. This thing threatens to cleave the country apart. I speak with no hyperbole. We need lots of infrastructure in the country.

The country needs a massive investment in education, in transportation, infrastructure, sewage, lighting, all that stuff. And all of that can be done. There are resources enough to do all of that. But I worry that despite this incredible discovery, not much good will come from it unless we solve this fundamental race and ethnicity problem. So, Corinne, I know you have two young boys, and I have observed you and the deep love you have for your sons. Your attachment to your sons is really heartwarming to watch. It's beautiful to watch. Do you have advice on parenting that you would hand out to listeners?

Oh, boy. So my two sons are both very different. I love nerdy things, but I also really love all sports, especially basketball, college and pro, college football. And when one engages with one's kid, there is often a surprise upon discovering that something that is so fundamentally a part of me is not shared by this kid.

How is that possible? I took my son to see LeBron James play, and we had fantastic seats. He could not have been less interested. And there is an acceptance that a parent has to have. They're saying, you know, you have this being for X number of years under your roof and with you side by side. Accept him or her as they are, and let their passion become your passion. And let disappointment in what they do or who they are never enter your mind. It's hard, but try as best you're able to make that visa. I wonder what you tell them about growing up and being African American.

And we haven't talked at all about the murder of George Floyd. Do you talk to your boys about those things? My boys are very young. I talk to them more as they age. This is something I think about a lot. What do I want to communicate to lot. What do I want to communicate to them? What do I want to tell them about race? So one of the things I want to communicate to them is to be calmly proud and confident about who they are without bravado or pot clanging,

to feel about oneself, that one is the same as what's-his-name over there. I think it's a very important thing. I feel that about myself. That's vastly more important, vastly, than whatever econometrics I know or didn't know or something. I want to communicate that to them. And there is a community from which you spring with traditions and history and so forth. Not every element of which you must like or mimic, but there's things about which you must be proud. Part of that communication necessitates exposure to people from this community.

Here is the food we make on Thursday back home. You see? I want you to listen to this. Listen. I love hip-hop music. A lot. I love the blues. And I want you to understand why it's genius.

Satchmo, they called him, this guy. Don't nobody blow the horn like him. Yeah? Can you hear that? And he's like you. You understand. There's that. And then there is, like, how much history to teach them. And what aspect of history? You know, my boys were born in

America. And so, Frederick Douglass is part of their legacy. Okay? King is part of their legacy. Harry Tubman's part of their legacy. What about Lincoln? He is part of their legacy. Okay. King is part of their legacy. Harry Tubman's part of their legacy. What about Lincoln? He's part of their legacy too. Alexander Hampton's part of their legacy. And so I'm teaching them to love the special thing about them, what distinguishes them from other Americans. And then to say, look, you belong to the American family. And that American family has got one heck of a history. Contributed to by black people, true.

But contributed to by lots of white people. And what's his name in your class who happens to be white? Has no greater claim on Lincoln than you. He doesn't. How one is navigating that is tricky. But that's how I think about it. Thank you. Freakonomics.com. Thanks for listening. Man, I miss Chicago. I look forward to seeing you soon back home. Back there.

That was a slip. New Haven's home. Not going to cut that one. That was Stan. That was Stan.