Links round-up

Hi all,

You know the downside of spending a week in Thailand eating the ocean short of prawns and a week in Sri Lanka developing a section of midriff devoted entirely to rice and curry? (There is no downside, obviously, but I have to say something now). It’s coming back to 1600 articles in your RSS feed, several hundred e-mails and a meeting calendar that qualifies as a cruel and unusual punishment. The links probably miss some brilliant stuff– apologies. I confess to not actually reading all 1600 and instead doing actual work.

Quickly, though: Last time, I asked for the economic ideas that we should shred, and I got some glorious answers. Some of them are properly brave – Coase theorem into the bin, anyone? And should we junk the idea that education is a prerequisite for economic convergence? Someone guessed my own pet hate (Gary Becker), but my favourite answer came from Thom A who proposed the late William Baumol’s theory of contestable markets in industrial organisation, introduced in a hilarious AEA paper which casts him as the Luke Skywalker of an intrepid band of economic rebels.

1.       I made some strong predictions in private about the outcome of the recent General Election, and these turned out to be spectacularly wrong,  so wrong that I wrote a navel-gazing e-mail about the mistakes and biases my predictions had fallen prey to. I almost certainly would have avoided that e-mail if I’d just read the 538 coverage of the elections, which came out only after I went on leave. Nate Silver’s piece on the range of likely outcomes and what the polls really say was magisterial and addresses the major biases I suffered from. His analysis was spot on, and he – almost uniquely – was able to say that the result wasn’t much of a surprise. Related: Nate also thinks that Trump might be behind recent political trends in Europe.

2.       A lot of good stuff on migration came out while I was away. Most excitingly, Michael Clemens did a piece for Vox summarising stuff I’ve already linked, but dropping the bombshell that he’s about to publish a book called The Walls of Nations. If I come round to your place and you don’t own this book, we’re done. Also from CGD, how migration to the US drove India’s tech boom, while 538 cover new research on the possible economic benefits of refugees. And lastly, a great piece on what distinguishes those who leave from those who stay. It’s packed with interesting ideas, so much so that I want to see the original research…

3.       A wide ranging interview with Dani Rodrik, covering the usual bases: globalization, trade and internationalism, and what the limits on these should be. It had never occurred to me that Rodrik is an optimist in pessimistic clothing. Consider this quote: “If national economies were run properly, they could generate full employment, they could generate satisfactory social bargains and good distributive outcomes; and they could generate an open and healthy world economy as well.” That’s a bold claim.

4.       Gabriel Zucman and co look at tax evasion in Scandinavia using the Panama Papers and Wikileaks – most people seem to mainly pay what they owe, but the super-rich are masters of avoiding this: up to 30% of their taxes are avoided. Also on inequality – how do Americans and Europeans think about inequality and their ability to overcome it? Despite Raj Chetty taking it out back and delivering a thorough thrashing to it, apparently the American Dream lives on. Emphasis on ‘dream’.

5.       Dan Rogger on the different kinds of civil servants who staff bureaucracies in developing countries. Engaging, interesting and a hugely under-studied topic.

6.       Need a reading list on gender? (The answer is yes, by the way). This one is really good, covering wage gaps, participation in roles of power, incentives to collaborate and more. Recommended. And equally useful – a stopwatch that measures the relative time women and men spend talking in meetings. I’m more than happy to report results back next week if you use this. Just send me a screenshot of the final score and the number of men and women in the meeting.

7.       LeBron lost, yes, but I’m going to quote D’Angelo Barksdale to you: “the King stay the King“. He averaged a triple-double in the finals, in which he appeared seventh straight year. As The Ringer noted, nothing changes for him: if he wins the championship again, people will ask if he was better than Jordan. And if he never does, they will still ask themselves the same question. That’s his only competition now, that ghost. Also, he did this in the NBA finals. It was disrespectful to the Warriors, his teammates, gravity and my credulity. Anyway, Pakistan won the Champions Trophy in the most Pakistan way possible – completely unexpectedly and punctuated by moments of utter genius. You can’t have it all, and at least we got that.

 There’s heaps more in my RSS feed, but my patience has worn thin – it’ll have to wait till next week.

 Have a great weekend, everyone!

R

Share
Posted in Uncategorized | Tagged | Leave a comment

Links round-up

Hi all,

 I’m going on leave tomorrow and won’t be back to my regular linking until the tail end of June, so I’m afraid this one is going to have to last you for a while, though the next will undoubtedly be about 25 links long to report on all of the drama I miss while I’m away. It also means that today’s links are totally threadbare and barely coherent, because let’s be honest – I’ve mentally checked out already. I may be in a grey suit in Whitehall in body, but in spirit I’m knee-deep in Thai street food and enjoying an ice-cold beer at the Rajadamnerrn.

1.       Let’s start with the important stuff: the NBA finals start tonight. You have to have the Warriors as favourites (indeed the betting odds on them are prohibitive) – how do you beat a team with four of the best nine or ten players in the world on it? Yet part of me quails at the idea of betting against LeBron. Last year, he was so good that you had to invent new adjectives for it: he was thumpfunkalous. In a way, though, it doesn’t matter. His influence has gone well beyond basketball now: he’s probably the most political sporting superstar since Ali (how many sports press conferences include a discussion of Emmett Till’s open casket?) and – here’s the economics – he creates jobs by his sheer presence. Maybe this is the answer to recessions: deploy LBJ.

2.       The dust has not yet settled on the ‘Romer vs. “And”’ superfight (And is ahead on points, but Romer has forced it into significant concessions). The Economist reports on the numbers behind the brouhaha; and Tim Harford suggests Dr. Seuss is a substantially better style guide than the typical World Bank report. My final take: muddled and incomprehensible writing is more often than not the product of a muddled and incomprehensible idea. Trying to tackle the problem with a style guide is the literary equivalent of attempting to polish a turd. A good WB paper (think the typical Markus Goldstein or David Evans publication) is normally the product of good ideas and good research. Focus on the ideas and then refer to The King’s English if you still feel you need to improve the writing.

3.       Speaking of English, don’t be afraid of long words. It’s the short ones that trip up contestants of those slightly odd Spelling Bees that have turned into a cultural phenomenon in the States.

4.       Is Liberal Democracy (apparently it’s a proper noun now) on the retreat? Has it ever truly been in the ascendant? Branko puts the case forward that capitalism has always been characterised by crises and the apparent retreat from globalisation that many fear characterises the new world we live in is simply the latest of these.

5.       I’m not going to leave you on this one, as it’s pretty depressing, but Duncan Green on an excellent response to his new book: “Most bad things are amazingly durable.  Take racial inequality in the US – we might as well admit it is constitutional to offload X percent of the population indefinitely, so long as you do it in the right way.   “Doing it right” changes, but the inequality does not.”

6.       Lastly, something to keep you all occupied until I’m back: VoxEU ran a blog considering what economic ideas we should all just quietly forget about and pretend never happened. I like this idea – I’d happily shove one particular Nobel winner’s work down this black hole, given the chance. But I’m going to open it up – send me your best example of an economic theory that keeps hanging on for dear life despite clearly being wrong an I’ll report back on the best suggestions when I’m back.

 Have a great couple of weeks, everyone!

 R

 

 

 

Share
Posted in Uncategorized | Leave a comment

Links round-up

Hi all,

 It’s been an eventful week, to say the least, but one of my favourite things about the UK is how resilient it is – an appalling attack and increased security all around and people quickly settle back into their old routines: the tube keeps running, continuing to tell us that the train that will eventually huff up to the platform in about a quarter of an hour is  “two minutes away”; six people still stand around the one empty seat on the carriage because they’re too polite to take it and too shy to ask others to; twitter trolls still pop up spouting hate at every opportunity; and despite a day off, the links still go out.

 1.       I’m going to tread lightly with the first link. After all, Robert Shiller is a Nobel-winning economist of incredibly high standing across the profession and I, not to put too fine a point on it, am not. However, when I see an article with the title ‘The economy is stagnant because people fear for the future’, arguing that people aren’t spending because they have vague fears about robots eventually taking their jobs and exacerbating inequality, my sceptical face gets an airing (no, that’s not me). I’m going to go out on a limb here and say he’s wrong. People have been scared of machines taking their jobs since the first sharp stone was discovered. And, if they are worried about the future it might have more to do with the fact that the future prospects of most economies are pretty uncertain at the moment, which wouldn’t be the case if we were all about to hire Alex Murphy as our personal bodyguards. Poorly thought out techno-pessimism really winds me up.

2.       Of course, Americans might be uncertain about the future because a budget has been presented to Congress that can best be described as a ‘hot bag of crazy’. It cuts taxes to the bone while maintaining a great deal of spending, but claims it is deficit-neutral because is assumes US growth will be 3% for the foreseeable future. 538 lay out the problems with this assumption, but to put it simply: it’s the equivalent of me going to a bodybuilding competition and predicting I’ll win because I’ve assumed a six-pack, huge biceps and good teeth. The problem is US productivity has gone stagnant, so growth isn’t likely to swing upwards any time soon (so much for the robots). NPR report on the lack of evidence for the march of the robots here (transcript).

3.       You’ve all been reading this for long enough that I don’t have to sell a Michael Clemens blog on migration, but this one is particularly good for economists, as it gets right into the data on the Mariel boatlift, and explains why Borjas’ recent paper arguing that it reduced wages is wrong. Just in case you need more evidence, David Roodman, one of the most careful researchers in the world, also digs into the data and agrees with Michael.

4.       This rendered me speechless for a while. Paul Romer causes a stir at the Bank with what some might term a tyrannical approach to the English language – so much of a stir that he may have been ‘moved sideways’. I like parsimony in writing (well, excepting the links, which is my opportunity to drone on to a captive audience), but this does seem a little extreme. Romer’s side of it, with the not-at-all-hysterical title ‘Paul Romer slaughters kittens is here. As an aside, measuring the frequency of the use of the word ‘and’ is only a good indicator of wooliness as long as people don’t know it’s being used as an indicator. And and and and and and and and and and and and. And.

5.       A nice summary by Duncan Green of a new research programme into state authority in fragile places, which he will be part of. Looks fascinating.

6.       Is three weeks in a row of Lant Pritchett too much? Obviously not, even though a lot of this has come up in previous links. This is Lant on Russ Roberts’ EconoTalk podcast talking kinky chickens, development and the role of aid and what’s wrong with how we think about poverty (hint: a lot). It’s been recommended to me as a good thing to listen to while doing the ironing.

7.       And lastly, it’s been a pretty stressful week, so I think we all deserve a few photos of hamsters on the run and meerkats doing calisthenics.

 Have a great weekend, everyone! I’m on leave from Friday next week, so I’ll send the links out on Thursday night and that’s your lot till mid-June.

 R

Share
Posted in Uncategorized | Leave a comment

Links round-up

Hi all,

I used to open these emails with asides about the cricket and weather (quiet, and terrible today), but recently it just seems to be obituaries and rants. 2016’s Final Destination-like run through my favourite musicians has apparently extended into 2017. There was a point (and not too long ago) when I owned virtually every song Chris Cornell appeared on, from the mega-hits to the relatively obscure. Of the 25 most listened-to songs on my iPod, two are from his side projects – both among my favourite songs. Here’s a lovely tribute on NPR. Depression sucks.

1.       I want to cheer up immediately, so I’m going to mock some research now. In a candidate for the Stating the Bleeding Obvious Hall of Fame, researchers have spent actual money surveying students to ask them if they like prefer ‘agreeable, open and reliable’ lecturers to those who are ‘disagreeable, closed-off and unreliable’. Incredibly, they’ve discovered that students express a preference for professors whom they can talk to, who aren’t assholes and who don’t randomly miss lectures and fail to mark work. Bravo guys. I look forward to the follow up study, in which they ask people if they would prefer to be kicked hard in the nether regions or given a cash grant.

2.       I love Excel so much I want to make a version of Jerry Maguire in which the Renee Zellweger character tearfully tells a spreadsheet (played by Bryan Cranston) “You had me at =COLLAR($B$12,C3/D3,$B$13)”. So when I discovered that Planet Money did a show about the creation and use of Excel (transcript), I did a small dance of joy and read it gleefully. Spreadsheets used to be done by hand. Imagine that! Their invention has completely revolutionised our ability to ask speculative questions of data – not always a good thing, mind. Apparently, there is an annual Excel Geek-Off in which the best Excel programmers in the world compete to build models. DFID should send Nick Lea and frame the golden keyboard he inevitably wins.

3.       This is one of the best things I’ve read all week – a VoxEU summary of superb research that takes the insight Nick Bloom had in Firming Up Inequality, that most inequality growth has been between firms, and not within them (i.e. inequality has grown more based on who you work for than on your position in the hierarchy) and investigates how this relates to productivity, and which firms are driving the effect. It’s superb all the way through and has substantial policy implications. Related, and also from VoxEU, Branko Milanovic on how we should tackle inequality if Picketty is right and it’s primarily because returns to capital are greater than returns to labour.

4.       Another superb Lant Pritchett piece, this time about how China used just the right mix of prescription and freedom for its bureaucrats and officials to empower them to find ways of achieving rapid growth – and with it poverty reduction.

5.       A couple of weeks ago I made an attempt at explaining William Baumol’s cost disease theory. Dietrich Vollrath does the same here, much better than I did. The key point he makes is this: “Baumol’s cost disease is a result of incredible affluence.” If you’re lucky enough to have an engine of growth that pushes up the pay for the thing that most other people do, count your blessings. This is exactly what is missing in most poor countries, but I don’t think anyone would rather live in Somalia than the US just because a haircut might be cheaper.

6.       Messing with markets leads to odd arbitrage opportunities and weird outcomes, like a petrochemicals company buying a talking cat app for about a billion dollars. I feel like that sentence would fail the Turing test, and yet I really am human (I think).

7.       Lastly, I do think the Warriors are going to win, because four of the 15 best players in the world are on their team, but never count out LeBron. The man is a human cheat code.

 Have a great weekend, everyone!

 R

Share
Posted in Uncategorized | Leave a comment

Links round-up

Hi all,

 Well, I don’t know about you, but I’m still on a high after Martin Wolf’s talk at DFID yesterday. As Nick said, how do we top that – exhume Keynes? It’s only slightly dampened by the fact that just two weeks after I celebrated his longevity Misbah ul-Huq, 103, has finally retired. Worse, his old mucker Younis Khan has gone with himone of the greatest  batsmen of all time, and almost indisputably the most underrated. So, on to the links (and by the way, if you work for DFID and want to know more about trade, Huw Lewis has started to put together a similar collection of bits and pieces on the topic every week – e-mail him for inclusion).

 1.       Most of the people reading this will already know that asking if aid ‘works’ is basically an incoherent question. Works for what? For whom? Yet it doesn’t stop critics blasting out huge headlines, bereft of fact, logic or humanity. Steven Radelet got a little sick of these headlines and decided to write a superb, balanced piece in Bloomberg. He shows that, if by ‘work’ you mean ‘helps extremely poor people have better lives’, the answer is yes, aid works. But he’s modest in his claims: it doesn’t achieve everything (what does?) and it’s not possible have a perfect record with everything we try (who does?).

2.       Planet Money totally outdo themselves with this fantastic show on India’s demonetisation (transcript) – when Modi basically woke up one morning and said “Morning everyone! All your cash is useless. Enjoy the queues at the bank.” and then dropped the mic. It’s fascinating and moving. It covers the genesis of the policy – a crazy, surprising story; and gives a glimpse of the human cost it imposed.

3.       I get the feeling that Lant gets to use the CGD blog differently to everyone else: every once in a while, he pops up with a bit of a rant with a great title. Being able to read Lant’s rants are one of my favourite things about being literate, so I’m glad they let him do it. He writes here about the problems of doing development research that focuses on specific interventions (for example, paying teachers more), rather than starting from the point of developing a plausible and powerful theory about the thing you want to effect (for example, literacy). It reads as a backhand to the RCT movement, but to me it’s most powerful as a (much-needed) reminder that a good theory matters enormously.

4.       Tyler Cowen interviews Garry Kasparov. It is full of fantastic exchanges. Kasparov has had a much more direct interaction with a robot that was out for his job than anyone else, and he is correspondingly thoughtful about the impact of machines on human labour. His optimistic vision is wonderful: “More intelligent machines … will take over more menial aspects of cognition and will elevate our lives towards curiosity, creativity, beauty, joy…”. Also, Kasparov wrote a book with the most Russian title in history. It’s called Winter is Coming and makes Crime and Punishment sound like one of the Mr. Men series.

5.       Doug Gollin came to DFID a few years ago and presented research about ‘consumption cities’ as opposed to ‘production cities’. I know people who don’t fully buy this distinction (I’m a fan), but it’s now showing up in the media. This very interesting piece on Kinshasa makes basically the same argument. Very much related – The Economist on the barriers Africa will have to overcome in order to industrialise effectively. Investment (in the broadest sense – including investing in systems and people) is at the root of all of it.

6.       I’m not sure I can summarise this, but I encourage people interested in gender and economic development to read it: a status-check of how India’s economic growth patterns have translated (or not) into improvements in gender equality. It’s full of interesting description, though I think it’s lacking in a good set of theories to explain its findings.

7.       Lastly, because there hasn’t been enough frivolity this week – a Chinese music video about reducing the costs of trade, sung by children. And yes, it’s every bit as crazy as it sounds.

 Have a great weekend, everyone!

 R

Share
Posted in Uncategorized | 1 Comment

Links round-up

Hi all,

 Today’s links start, as too often recently, with an obituary. No, I’m not making veiled allusions to the local council elections, but to the passing of William Baumol. Baumol’s famous ‘cost disease’ argued that productivity increases in the tradable sector (he focused on manufacturing) led to substantial increases in the wages non-manufacturing workers despite the absence of any similar gains in productivity in those sectors. There have been many criticisms of Baumol’s theory (many of which I agree with), but the basic observation that a minority of workers in high and increasing productivity activities can have substantial effects on the livelihoods of the majority of workers elsewhere is powerful, and remains underutilised as an explanatory narrative for developing countries.

 1.       I’m going to start with something boring, but it’s boring in the best way possible: Martin Ravallion goes into detail in a discussion of the merits of a universal Basic Income Guarantee. He talks sensibly about the logic behind a basic income, about the relative merits of a universal programme compared with targeted programmes and its likely effect on incentives to work. He argues based on common sense and practical experience, acknowledges the grey areas where the basic income resembles more standard social protection, and acknowledges where trade-offs will have to be made. It’s not exciting, but it is careful. Related: Raj Chetty’s work on The Death of the American Dream also gets the VoxEU treatment here. It’s had a lot of coverage before (including here), but really is fascinating.

2.       A few papers have shown that giving money to male entrepreneurs often has higher returns than giving money to female entrepreneurs. Lots of people explain these results away, arguing that women face more barriers to success so cash is a more binding constraint for men than women. One explanation that hadn’t occurred to me is that the money has the same effect for both sexes, but for women the effect is on a household enterprise which isn’t covered in the data. This is quite plausible: in many households where a man and a woman both run an enterprise, the male may be running the enterprise with stronger growth potential. A woman receiving a cash grant maximises household income by investing the money in the male-operated enterprise. Markus Goldstein has a really good blog examining a paper which finds some (tentative, not-1000%-convincing) support for this theory.

3.       “If I told you that a school or a hospital could pass a cost-benefit test even after ignoring the benefits to the pupils or patients, you might reasonably conclude that the school and hospital were impressive organisations. You’d also tell me it was a very strange way to do cost-benefit analysis.” Tim Harford panders directly to all of my priors in a very thoughtful piece on immigration. He doesn’t belabour the point that immigrants (or expats, as we describe ourselves when we become migrants) bring economic benefits to native-born workers, even excluding the benefits to the migrant. Instead he focuses on the human aspect, showing that the mindset that we adopt when thinking about migration is strikingly absent of the most basic human test: how would I feel if I was in their place?

4.       David McKenzie wears his Grinch hat and considers the vogue for ‘transparency in science’ and sees a way of pimping up underwhelming research to improve publication prospects.

5.       I haven’t actually listened to this, but Tyler Cowen, my favourite robot, is interviewed by Cardiff Garcia, my favourite name, over at the FT. I’m going to take this opportunity to say “Cardiff Garcia” again. Cardiff Garcia.

6.       Lastly, a rambling, er… ramble, about basketball. Growing up, my favourite player was Magic Johnson. I loved everything he stood for: he was unselfish (a pass-first point guard), played the game with joy (have you ever seen him not smiling?) and was completely unconventional (a six-foot-nine point guard!). I loved him so much that I was blind to the obvious fact that he was not nearly as good as Michael Jordan, to the extent that I was unable to enjoy watching Jordan play – and I’m a complete idiot because I missed out on enjoying the greatest player ever. Something similar is happening to LeBron James. There are so many more charming and interesting players, and it blinds people to the fact that he is, by an absolutely massive distance, the greatest player of his generation, and the only one whose claim to rival Jordan wouldn’t get laughed out of court. 538 makes the case for LeBron, again; it’s astonishing anyone still has to do it.

Have a great weekend, everyone!

R

Share
Posted in Uncategorized | Leave a comment

Links round-up

Hi all,

 In absolutely appalling news, Giannis Antetokounmpo (you can call him Giannis if that surname frightens you, but I’ll judge you and assume you’ve got no idea how to pronounce mine) has been dumped from the playoffs. This is AWFUL. I was counting on the sheer insanity of watching a man who can dunk the ball while his feet are still touching the floor to distract me from the near-constant abuse of fact and reason that the election has heralded, but alas it was not to be. At least fans of the improbable can still enjoy Misbah-ul-Haq, 63, winning test matches by biffing consecutive sixes.

 1.       Dave Evans reads a lot, as I never tire of mentioning here. He’s also a particularly meticulous researcher. So, when he read Chimamanda Ngozi Adichie suggesting that if a child doesn’t take to reading one could pay them as an incentive, he went to the literature to see if there was any evidence to support that it’s a good idea. Michael Sandel would argue that the effectiveness is irrelevant, as it debases the deeper value of reading, but Dave doesn’t go down that route. Instead, he discovers that for some kids, payment does help – but it seems to be the kids that already want to read who benefit the most. Monetary incentives simply deepen the reading inequality. Sort of related – the books that made writers want to become writers.

2.       I’ve linked to various bits of coverage of this so many times, but an op-ed by our Chief Economist in the NYT deserves a link. Stefan and Chris Blattman did a fascinating RCT on the effect of factory jobs on the poor who take them on, expecting to discover that they were a reliable route out of poverty. Instead, they found that reliability isn’t really part of it. Industrialisation is almost certainly the path that leads an economy into higher prosperity and the wealth we all want to see developing countries achieve. But it’s a damn costly process, and as they note: “workers seem to share few of the benefits but a heavy burden of the risks — a burden borne by the desperate and the uninformed.” Chris once described this paper as ‘Radnomizing Marx’, and that’s sort of what it did – but the results provided support for another mid-19th Century visionary, Elizabeth Gaskell, whose North and South had the same findings Blattman and Dercon did, but preceded them by around 170 years.

3.       Berk Ozler criticises a paper for inaccurate reporting of its results. In the abstract. It’s a very good blog, and also worth reading the comments. He suggests many of the difficulties of the study could have been avoided in the design stage.

4.       I really liked this: given the increasingly integrated nature of global production, shouldn’t that mean that inflation is increasingly a global phenomenon rather than a local one? This research finds some evidence to support this idea, and also reinforces my belief that a backlash against globalisation is doomed in the long run. The world economy has just changed too much to undo.

5.       Another great paper via VoxEU on the effect of migration on child height, which finds that migrating to the UK removes the effects of stunting from Indian children in a way that growth in India still hasn’t done, an oblique way of making the point that development is more than a change in incomes; it also involves a change in the entire infrastructure that informs the way we live.

6.       This week in unsurprising research results: people who took acid are more likely to be liberal, and past cocaine use has no such predictive power. Having read American Psycho, this seems completely plausible.

7.       Lastly, some stunning photos (and text!) about leukitic ravens in Canada, a population suffering from a rare genetic disorder that renders them entirely white – and ethereally beautiful.

Have a great weekend, everyone!

R

Share
Posted in Uncategorized | Leave a comment

Links round-up

Hi all,

 Sorry about the radio silence last week. In typically dedicated civil servant fashion, I completely forgot it was Easter until it was right upon us and so forgot to warn you all I’d be offline. I’d like to think you all missed it, but if you’re anything like me (and I accept this is a remote possibility unless you, too, are a cricket-obsessed birdwatcher with a weakness for gifs of face-melting dunks and children overreacting to things [note: this is the best thing on the internet]), you were probably too busy enjoying the now even-more-efficient 24-hour-Summer England has patented. It’s gloomy outside, a general election has been called (which reliably brings out the worst in… oh, just about everything) and so I’m going straight to the economics.

 1.       Election season doesn’t seem to be a fashionable time for evidence or logic, but let’s try some, shall we? There is vanishingly little evidence that reducing the rate of migration will make things better for local-born workers. It’s a very difficult area to research, but Michael Clemens, Ethan Lewis and Hannah Postel have had a go by looking at data from the exclusion of Mexican workers in the US agricultural sector, the Braceros, in the 1960s. Their results are fascinating. Essentially, what happened was farms faced with the deficit of Mexican workers did not turn to hiring new workers from other countries or local workers – they mechanised their production instead. This shouldn’t be a surprise: faced with a change in the relative price of inputs, any private sector entity will seek to reorient production processes away from the relatively more expensive one. I’ve linked to this work before, but it bears repeating. Evidence won’t trump emotion, but it can’t hurt to have.

2.       From migration to inequality: first, FiveThirtyEight reports on health and mortality inequalities in the US, and demonstrates that the places with the worst outcomes are incredibly easily predicted from a map drawn in the 1860s – one which shades each county by the number of slaves at the time. While Deaton and Case got a lot of attention for their finding that mortality among older white males may be rising, 538 point out the reason why black people weren’t included in that graph: their mortality rates are so high they would be literally off the chart. Also, Tyler Cowen reports on a paper that argues that fairness matters more than inequality. This may be the case, but there’s a deeper problem he has always ignored: unfairness can be intergenerational, and what may look ‘merely’ like inequality today becomes much closer to unfairness when you look back a decade or two. What is the half-life or unfairness?

3.       Rodrik gets into the whole fairness vs. inequality issue, and argues that people see losing out due to trade as ‘unfair’, but losing out due to domestic competition as ‘fair’. I’m not sure I buy this.

4.       What Superpower would you choose? And how would you use it? An ingenious paper uses these questions to discover how fundamentally altruistic people are, and comes up with predictably depressing results. [And also, super-eyesight and birdwatching, respectively. Birdwatching is a altruistic, because I can then tell you about what birds there are outside].

5.       Tyler Cowen thinks that people are becoming more complacent: they move less between jobs and locations; Tim Harford suggests that there are other explanations for this phenomenon. They both see it as a pity, and I very much agree with Harford: being forced out of your comfort zone is a good thing, one that we all undervalue.

6.       Everything David Evans writes is worth reading, which is an enormous compliment because he writes more than virtually any other development blogger out there. This piece is about scaling up successful programmes, and like most of his work is directly relevant to making aid work better. Also from Development Impact, Markus gets into the weeds on agricultural yield measurement – this is absolutely brilliant, and gets towards solving something that has puzzled me for years.

7.       Finally, I would never have guessed William Burroughs was a cat-lover, but so it appears. And also from LitHub, ten writers whose first work was also their masterpiece. It could have gone on for many more than ten . If you haven’t yet read The Heart is a Lonely Hunter, it’s a good thing I’m ending the links here, because you can start immediately.

 Have a great weekend, everyone!

 R

Share
Posted in Uncategorized | Comments Off on Links round-up

Mining and Growth in Africa

By Sambit Bhattacharyya, Nemera Mamo, Alexander Moradi – University of Sussex

Living standards appear to have improved in Sub-Saharan Africa over the last two decades, mainly riding on the back of relatively high global commodity prices. For example, Figure 2 panels A and B below reveal that mineral extraction and mineral discovery lead to significant improvements in economic activity measured by night-time lights. Panel A zooms into Zabre District in the Boulgou Region of Burkina Faso. Zabre has produced her first mineral commodity, gold, in 2008. The change in the economic fortunes of Zabre is visually apparent here via the satellite images of night-time lights before and after gold production. In 2007 before gold production, the mean pixel value of night-time lights in Zabre is 0.00577. But, in 2008, the mean pixel value increased to 0.3056. The following year, 2009, Zabre again experienced an increase in night-time lights. So much for night-time lights, what about population? In 2007, the Socioeconomic Data and Applications Centre estimates Zabre’s population to be 135,582 and the population five years later in 2012 is estimated to be 160,150. Again, an 18 percent increase. Panel B reveals a similar story before and after the discovery of a Sapphire mine in 1998 in the town of Ilakaka in the Ihosy district of Madagascar. The town Ilakaka did not exist before 1998.

These positive case studies notwithstanding, very little is known about their durability and potential spillovers to other districts. In a recent CSAE working paper, Mamo et al. (2017) examines the effect of mining on development in Sub-Saharan Africa at different levels of spatial stratification. In particular, they analyse the effect of mining expansion at the intensive (production expansion in existing mines) and extensive (new production and discovery) margins on development measured by nightlights. Using spatial econometrics and GIS, they also analyse the extent of spillovers from a mine.

They find that mineral production and mineral discovery significantly improve living standards at the district level in 42 sub-Saharan African countries over the period 1992 to 2012. Night-lights increase due to mining expansion at the intensive margin. However, the effects are large at the extensive margin following new production and new discoveries. In particular, night-lights expand by 55 percent on average due to mining expansion at the extensive margin as opposed to 2-4 percent at the intensive margin. They observe that the positive influence of mineral production takes effect approximately two years prior to the actual start of mineral production. This is consistent with the view that installation of mining infrastructure and worker arrival typically predates production.

In order to precisely identify the effect of mining on development, Mamo et al. (2017) exploit the exogenous variation in the discovery dates of giant and major deposits of 21 minerals. They find that the positive effect of discovery on night-time lights enter approximately six years after the first discovery. The magnitude of the effect of first discovery is 19 percent on the sixth year and continues to rise to 44 percent on the tenth year.

Mining of exhaustible resources is often transitory. Therefore, an important question is to ascertain what happens in mining districts after mine closure. They find that night-time lights after mine closure decline precipitously undoing most of the gains.

Economic development is a general equilibrium phenomenon. Therefore, analysing the extent of linkages from mines is crucial. For instance, focusing on the subnational district level data might mask the fact that mining districts gain at the expense of non-mining districts. In order to unmask such patterns, Mamo et al. (2017) estimate a spatial model. They also test the model at the level of regions and whether the economies of the capital city and the largest cities respond to mining. They do not find evidence of spillover beyond the host district.

The results attest to the theoretical ideas of an earlier literature that that mining in a developing country is typically an ‘enclave’ (Singer, 1950; Murphy et al., 1989). The lack of spillover indicates that there is very little backward and forward linkages associated with mining.

 

Figure 1: open cast mine, Ilakaka, Madagascar (creative commons: Wayne77)

Figure 2: Mining Production, Mining Discovery and Nightlights

References:

Mamo, N., S. Bhattacharyya, A. Moradi and R. Arezki (2017), “Intensive and Extensive Margins of Mining and Development: Evidence from Sub-Saharan Africa.” CSAE Working Paper Number WPS/2017-05, University of Oxford.

Murphy, Kevin M, Andrei Shleifer, and Robert W Vishny (1989), “Industrialization and the Big Push.” Journal of Political Economy, 97, 1003–1026.

Singer, H. W. (1950), “The Distribution of Gains between Investing and Borrowing Countries.” The American Economic Review, 40, 473–485.

Share
Posted in Uncategorized | Tagged | Comments Off on Mining and Growth in Africa

Links round-up

Hi all,

I’m not going to lie – this week has been pretty tepid for the normally reliable econogeekery that the internet seems to be so reliable for. Rather than spend the first day of the County Championship scouring the internet for clickbait (and miss Glamorgan being 26-6 at one point – thanks, Tom), I’m going to go rogue: instead of keeping all the general marginalia for the last link, this week most of them will be the random stuff that was actually interesting, and hopefully next week the geeks-that-be online will return to form.

1.       I’ll start with some business-as-usual, though, and open on a piece of semi-depressing development news. Owen Barder reports on what sounds like some bog-standard rent seeking, with separate arms of the same bureaucracy coming to an agreement to reduce efficiency of the development intervention they are being charged with implementing in order that each get paid. Only it’s not some hopelessly corrupt Government he’s describing, but the UN system in Syria. All donors care about attribution of results (that is, being able to prove the reach of the support they provided, as a way of accounting for their funding). But it’s pretty poor form if that imperative results in redesigning support to be less effective.

2.       I’ve seen (and linked) versions of this argument in the past: there may be a merit in doing ‘nothing’ in pursuit of achieving more. Darwin, Dickens and countless other characters of genius apparently cultivated the habit of working for relatively few hours per day, spending significant amounts of time going for leisurely walks, gardening, napping, birdwatching [I may have added this to the list without a scrap of evidence] and so on – and yet produced prodigious amounts of high quality work. Two caveats – the obvious explanation is that at the height of genius, one can spend a great deal of time goofing off without much loss in quality. And secondly, all that ‘nothing’ was probably integral to their thought process. Sometimes the best way of thinking about a problem is obliquely. Anyway, I’m going to use this as justification for my daily 3pm coffee, and I pity the fool who tries to schedule a meeting during it.

3.       This week in things I wish weren’t true: apparently reserving both sides of the escalator for standing is actually the quickest way of clearing congestion. Many people are surprised at this finding (it backs up a London underground experiment at Holborn a couple of years ago), though I’m sure it’s to do with the fact that most people don’t walk, and it could be reversed with a culture change so most people walk by default. Till then, I may have to concede that the lazy, non-walking, let-me-sit-down-for-the-30-seconds-between-Covent-Garden-and-Leicester-Square irritants are right.

4.       LeBron James is so good at basketball that one interpretation of the failure of the Eastern conference of the NBA to produce any title-challenging teams he doesn’t play for is that it might be a fool’s errand – you won’t beat him, so it’s best to keep rolling over assets to cash in the future when he one day slows down. Could he be so good that an entire half of the US basketball world just stopped trying?

5.       And speaking of sporting genius: an appreciation of the 16-fight winning streak, spanning almost 7 years, during which Anderson seemed not just unbeatable but invincible. If you have any tolerance for fighting sports, scroll down and watch the Forrest Griffin fight – it’s like watching Neo from the Matrix, but in real life.

6.       In which Franz Kafka goes to India: the 17 year struggle of one man to have his death stricken from the record.

7.       NASA is going to fly a satellite straight into Saturn in an attempt to get some final bits of unprecedented data from it before it becomes obsolete. If they don’t have this playing in the control centre as it enters its final descent, I’m going on strike.

Have a great weekend, everyone!

R

Share
Posted in Uncategorized | Comments Off on Links round-up