3. Kerwin Charles: “One Does Not Know Where an Insight Will Come From”

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1:03You 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. And I can go on. But if one takes the African-American experience panoramically, and one way is these obvious and undeniable asterisks 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.

1:48So 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. She'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.

2:35And I have to say, of all the economists I know, I think Kerwin gives me the best advice.

2:45It 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 got to 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.

3:27Guyana 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.

4:12Were 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.

4:54About 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. and 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.

5:58I spent a lot of time as a kid at the John F. Kennedy Library in my country. Diana was a socialist country throughout my life. But the John F. Kennedy Library was this American outpost to which I repaired frequently in between school and lessons or basketball practice to read all the 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.

6:36I 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 a nice thing 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.

7:21So some of it is learned. I would, as a child, be called upon 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. So that'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 of each slower, and have in mind something you want to say at the beginning and some fundamental point you want to see at the end.

8:17And let it flow naturally. I feel as if you're about writing to slow down, have something to say, and you'll be good. Great advice.

8:34So 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 Center.

9:14And 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. They 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, an improvement in water quality, all the rest.

9:52So you analyzed the impact of these public health efforts. Were they effective? One thing that is emerging from our work, both with TB and for other diseases, is that 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.

10:37There'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.

10:58you're listening to people i mostly admire with steve levitt and his conversation with the dean of the yale school of management kirwin charles they'll return after this short break

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12:19ever notice how life's best stories don't happen in your living room they happen on the open road out on the water or parked under the stars at progressive they get that you want to focus on the experience not worry about the what-ifs that's why they offer quality insurance designed for your ride, whether that's a boat, RV, or motorcycle. Adventure with confidence. Visit Progressive.com and see how easy it is to protect your favorite way to get away. Progressive Casualty Insurance Company and Affiliates. Not available in D.C. Prices vary based on how you buy. This episode is brought to you by Charles Schwab.

12:52Is there a right time to sell a stock? Are you taking the right risks with your portfolio? Financial decisions can be tricky, and often your own cognitive and emotional biases can lead you astray. Financial Decoder, an original podcast from Charles Schwab, can help. Join host Mark Repe as he offers practical solutions to help overcome the cognitive and emotional biases that may affect your investing decisions. Listen at schwab.com slash financial decoder.

13:24Do 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. We've thought about sectoral decline in manufacturing in multiple papers and how that has caused a sharp increase in non-work among men.

14:07Okay, 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 demands that stuff.

14:43Okay, 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 speculated in the paper is that the technological shocks have been one of the main sources of demand side changes. 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 my increased 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.

15:30Because 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 Aguirre, 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. Walking out is 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.

16:17You 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.

16:46Now, 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 for an hour. Not me.

17:29Can'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 role.

18:19Events 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. Ever notice how life's best stories don't happen in your living room? They happen on the open road, out on the water, or parked under the stars. At Progressive, they get that you want to focus on the experience, not worry about the what-ifs. That's why they offer quality insurance designed for your ride, whether that's a boat, RV, or motorcycle.

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20:10We'll talk a lot, 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.

20:55On 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 brother from Philly has a different life experience. He has seen particular things here. His granddad experienced things and 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, I sought to understand that lived different.

21:31my 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 DC, I heard that beat before, man. Yeah. In reggae music or calypso music. Let me play something for you, kind of like that. Also, it 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.

22:09So 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 v. Board of Education in 1954, Civil Rights Act of 1964, Martin Luther the 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-American.

22:52And 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's been a fantastic thing.

23:30There 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.

24:14The 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. 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.

24:55That 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, I don't know, 50 ,000, does at least a majority of African-American children read at grade level. It's a handful. 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 At the very top, African-American success has been fantastic.