Sunday, October 07, 2012

Voting With Your Feet

You go where you know. That's not rational choice migration. It is "Thinking, Fast and Slow." I'm currently engrossed in Daniel Kahneman's book about how everyone struggles, among other things, to assess risk effectively. I had hoped that Kahneman could teach me a different way of understanding how people make relocation decisions. I'm almost halfway through and he hasn't disappointed. A better term for modelling migration is "irrational choice". You go where you know.

You vote with your feet. This is rational choice migration. It dominates our thinking and informs our perception of brain drain in the face of numbers that suggest otherwise. A region is experiencing demographic decline. There must be something wrong. You calculate where life is better. You move there. You vote with your feet.

Where life is better, the population is increasing. Kahneman would have a field day with this conventional wisdom. System 2 is lazy. Figuring out why people move where they do is a difficult question to answer. We settle for heuristic analysis. You vote with your feet instead of you go where you know. Therefore, the migration to Reading, PA is ironic:

In the economically ravaged rustbelt city of Reading, Pennsylvania, ranked as the poorest metropolitan area in America, the majority Latino population is suffering from the double blow of vanishing jobs and poor education. Almost half of the 87,000 residents – 58% of whom are Latino – are living below the federal poverty line.

"Reading is the face of America," said community leader and former city councilman Angel Figueroa, the first Latino elected to the council. "And if we can fix Reading as a mid-sized city we can fix many mid-sized cities in the country." ...

... Two decades before the current economic crash, Latinos from New York and other north-eastern cities came to Reading, lured by a steady job market. Reading's history is infused with the stories of Latino immigrants from Mexico, Puerto Rico and the Dominican Republic who, since the early twentieth century, have moved into the city to work the mushroom fields and manufacturing jobs.

The above migration doesn't, on its face, appear ironic. Reading didn't become a Rust Belt city thanks to the current economic crash. From 1987-2007, Latinos were lured from New York City to Reading because life was better in Eastern Pennsylvania? Looking at the unemployment rate history, the attraction is plausible. After the economic crash, such a journey ceases to make sense. Using IRS data via Telestrian for 2007-2010, the migrants are still coming from NYC and Philadelphia. Over 6,500 on net arrived in Reading from those two metros. Furthermore, Reading's poverty problem preceded the crash. Things were really bad locally before they got really bad nationally.

Migrants streaming in from New York City were exacerbating poverty rates in Reading. People kept coming despite the problems. Population growth over the last Census decade wasn't a vote of confidence in the regional economy. What may have begun as a rational choice has long been an irrational migration. You go where you know.


Matthew Hall said...

I've often suspected a dynamic like this to explain why Cincinnati is the least 'hispanic' U.S. metro over 2 million. Less than Cleveland, Detroit or Providence, RI, for example. Cincinnati has a fairly good economy and as many low-skill jobs as anywhere, so why have hispanics avoided Cincinnnati? This article suggests it's because hispanics in the past did the same; that a hispanic migration path was never established to Cincinnati. Even the few hispanics who've come are clearly drifting away over the last few years. There just wasn't enough social and institutional support for them to make a go of it in Cincinnati.

Done By Forty said...

It seems like Kahneman sheds some doubt on the field of Economics (and a lot else) with these ideas. If people don't act rationally, how effective can public policy or private enterprise be in driving desired behavior? Does it really matter if Pittsburgh public officials try to attract new residents, or if Arizona policemen ask Latinos to show their papers, if in the end, we're moths to the same flame?

It's all a bit depressing.

Jim Russell said...


I've encountered anecdotal evidence that there is a pipeline of Latinos to Cincinnati. I haven't dug into it. Looks like Los Angeles is the source. Cleveland established a pathway directly from Puerto Rico decades ago. I was told that steel mills in Lorain desperately needed workers. Providence is a secondary migration destination (i.e. spillover from NYC gateway). I've never looked at Detroit's inflow.

Jim Russell said...

It seems like Kahneman sheds some doubt on the field of Economics (and a lot else) with these ideas. If people don't act rationally, how effective can public policy or private enterprise be in driving desired behavior?

Acting irrationally doesn't mean people aren't predictable. Furthermore, we aren't doomed to make irrational decisions. Employing economics is a good way to test your intuition and guard against bias.