Links round-up

Hi all,

I’m absconding from the office for almost a month next week (the result of basically forgetting to take any real holiday this year and needing to use up my leave days before the end of the year), so this is the last links round-up till the back end of November. Stay your tears, though –  this round-up is a bit of a monster – plenty of reading for the next few weeks. A month’s gap isn’t that long, anyway – Chuck Berry’s next album will be his first in 38 years, and will almost certainly be the most awesome rock album featuring a nonagenarian ever.

 1.       STOP STEALING MY CONSUMER SURPLUS! I cannot be the only person driven to a rage by self-checkout counters in supermarkets, though I may be more unusual in mentally picturing that area under the demand curve but above the equilibrium price being gradually eroded by the disutility of having to do someone else’s job less well than they can. Planet Money has the story behind the creation of the self-checkout (transcript), and it’s fascinating: a machine that was designed to do things faster and more efficiently ultimately failed in its objective because products and people are essentially messy – it’s hard for a machine to process them in a standard way. Which segues nicely into…

2.       Tim Harford (who features heavily this week) unwittingly provides me with the greatest piece of confirmation bias and self-justification I could have asked for, and timed it perfectly. My team moved offices this week, and I had what I thought would be the time-consuming and deeply depressing task of clearing out my locker. Anyone who has seen inside it will tell you it’s like opening a fridge in Ghostbusters – a portal to a dimension ruled by chaos. Well, it turns out, this is all a symptom of productivity and efficiency. I just shove stuff in when I’m done for the day, and find it again when I need it. Over time, all the most commonly used things churn at the top – the detritus settles at the bottom. The mess is actually an efficient system that provides me with the visual cues I need to prioritise my work – and the proof was in the move. It took me about 20 minute – I sorted through the top layers and chucked away everything else. The real truth may be that I’m constitutionally incapable of tidiness, but I like Tim’s explanation better.

3.       There’s another kind of apparent randomness he wrote about this week – random research. The Ig Nobel prize, given out to esoteric and weird research came in for some serious praise, with Harford pointing out that such random research often leads to findings of lasting and serious importance – including research that revealed that incompetent people are often unaware that they are incompetent (there’s a sentence that’ll make people anxious). There really is something to this – both the IMF and (I think) the Bank of England have researchers who are given free rein to write papers about anything, including cricket. The idea is that in thinking about all kinds of things, they’ll stumble on something – an insight, a method – that will provide the key to unlocking a policy relevant, real-world puzzle.

4.       Speaking of random research, this FiveThirtyEight article examines the economics of Ikea and is worth a close read – it is full of fascinating insights into how the global economy has changed over the last forty years – and a few little hints on what changes are still to come.

5.       Much less random research: I continue to be amazed by David Evans’ ability to read virtually everything that has ever been written, understand it, and then summarise it in a machine gun salvo of pithy observations – this time on education research. Heroic.

6.       The World Bank (thanks in no part to CGD and particularly their spectacular attempt to scrape all the data off PovCalNet) have finally started publishing median incomes as a basic indicator for all the countries they have data for. I could not confirm that the first draft of the press release was entitled: “Justin, please stop screwing with our servers”.

7.       I would say that Alan Winters has forgotten more about trade than I will ever know, but I doubt Alan Winters has forgotten anything about trade. Anyway, here he is with his take on the mood in Europe around Brexit. All impressions, and much can still change.

8.       Related, Theo Talbot suggests that post-Brexit, Britain should change the classification of students, taking them out of the long-term immigration figures – for the sake of exports. I like the idea, but it doesn’t look to be flying politically; the problem seems to be a perception that the rules around student visas are being gamed. If it’s going to fly, it might need to be combined with a different way of assessing criteria (or a correction of that perception, if it’s wrong). Related, again: Tarek Hassan on the impact of refugees on long term FDI.

9.       A short piece of political economy 101 – Alex de Waal on the dangerous potential consequences of trying to bankrupt a kleptocracy. Robert Bates made this point a decade ago – it’s shocking that we still haven’t learnt it.

10.   And finally, from the Department of Random Research I have no idea about the application of  – FiveThirtyEight looks at the strange community of speedrunners – people who can complete Super Mario World in under 5 minutes. Fascinating and very, very odd.

 Have a great month, everyone!


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Links round-up

Hi all,

So, I’m sitting here with a cold, feeling a little sorry for myself and bemoaning the fact that we seem to have gone from a fairly warm late September to Narnia-style frozen wasteland in the space of 4 days. I thought that would be my major complaint for the week, especially because I was quite happy with this year’s Economics Nobel winners, though not so happy as I was when Angus won last year. Sadly not:

1.       Hari Kunzru got it right: “This feels like the lamest Nobel win since they gave it to Obama for not being Bush”. Bob Dylan has won the Nobel Prize in Literature in a move that manages to slap literature in the face while simultaneously kicking music in the groin. That’s quite a feat. Some people think it’s an inspired choice. LitHub makes the case for the dissenters, however. Plenty of people have defended the award on the grounds that Homer wrote for performance (yes, but by the time the Nobel came along, The Iliad was literature and not a song); or that he’s stylistically similar to Tennyson. Call me reactionary (and I can see the progressive case for expanding the bounds of literature), but nothing Dylan ever wrote compares to this.

2.       So moving swiftly on to things that make me happy. I mentioned last week that Tim Harford has a new book out. It’s been excerpted in the Guardian, this section focusing on how the use of technology to smooth out the little quirks and inconveniences of life can lead to catastrophic outcomes when it erodes our learned abilities to correct problems on the fly. It’s typically interesting and well-written, though there is a deeper question here, which I wonder if he goes into in the book: are we worse off if we trade of lots and lots of little tiny inconveniences and mistakes for occasional massive catastrophes? The net effect on human welfare isn’t obvious. Related: he’s also made some book recommendations based on his research for Messy.

3.       Like many things related to Brexit, financial services passporting is both very important and very complicated. There are ways to make it more comprehensible, but no way to make it completely simple. This Medium article on the importance of passporting and the limits of the workarounds available isn’t exactly simple, but it is more easily understood than virtually any other account I’ve read. [My summary: financial institution which have passporting rights can headquarter anywhere and offer all its services anywhere in the EU. The key thing it affects is where the headquarters are – and this will in turn affect how much tax is paid where, and how strong the linkages with other parts of the economy are. It’s the kind of boring, complicated thing that turns out to be very important.]

4.       Australia is sneakily trying to migrate en masse to Europe, albeit very slowly.

5.       How do you design policy in a deeply imperfect, very second best world? Nice account of a study that Jishnu Das (everything I’ve seen him present has been interesting, actually) worked on, looking at whether it’s better to train India’s army of ‘fake doctors’ than it is to just try and stop them practicing.

6.       This is brilliant, and why it’s so important to look at many polls and not just the ones you want to believe: a single black man who is Trump-leaning may be exerting enough influence in the sample of one major poll of the US Presidential election to swing the overall result of the poll by himself.

7.       Branko asks all the big questions – how long can all of our theories about the world survive being contradicted by China? (Just hang on a moment, while I ring up Why Nations Fail).

I leave you, via Adam L, with the words of our new Nobel laureate in literature: “Wiggle wiggle like a bowl of soup, Wiggle wiggle like a rolling hoop”.

Have a great weekend, everyone!


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Links round-up

Hi all,

 When you go away for a week and come back to five hundred and eleven unread articles on your RSS feed it’s a sign that it needs some culling. Either that or you need a clone, but I’ve seen Multiplicity and read Calvin and Hobbes. That ends badly. And if I’m opening the links in a very mid-1990s way, it’s a good time to pay tribute to Kevin Garnett, retiring after approximately three thousand seasons as a generally terrifying and intense presence in the NBA. I’m old enough to remember when he was the future. The future doesn’t always seem as bright as it did back then, unfortunately. But for succour, there is always the internet.

 1.       ROBOTS ARE GOING TO RUIN EVERYTHING! ARRRGHGH! Recently an economist from DFID asked an external presenter if the best way to support the poor is to smash all the machines (complete with a quite scarily good luddite impression). Branko Milanovic is here to tell you to keep calm and not to anthropomorphise the robots. I completely share Branko’s Robo-optimism. We’re very good at discovering new things to do and to get paid for doing; very good at discovering new things we need that we didn’t know existed (or maybe didn’t exist) until last week; and we’re very good at getting more economical at using stuff that we thought would run out. We forget all three of these things with great regularity, but it’s not because we’re dumb. Keynes did, thinking that we’d run out of reasons to keep working ages ago; and Jevons apparently stockpiled paper in anticipation of the day it became too scarce to afford. For context, Jevons died in 1882. So yeah, stop worrying and love the bot.

2.       Besides, Bots do good. Haven’t you seen Robocop? Or its close relation, Statcheck? Vox reports on a clever little programme that trawls through published papers and looks for simple mathematical errors. It found a worrying number of them in psychology journals, but before we economists get too smug, I have three words for you: Reinhart and Rogoff.

3.       There might be dark side to tech, though. For example, what if all the awesome video games that exist now keep people out of full time employment and instead make them sit on their arse at home and put a whooping on M. Bison in Street Fighter 2 (and yes, I am aware this reveals both my age and my lack of technological sophistication)? My question is that even if this study is right, why does it matter. Here’s the key sentence: “The decision may not even be completely conscious, but surveys suggest that young men are happier for it” – my emphasis. Isn’t that kind of the point? Why should productivity matter more?

4.       Chris Blattman and Stefan Dercon (who may be known to some of us in DFID, or CSAE] have spent the last few years running a study about waged work in factories in Ethiopia. Blattman had the greatest elevator pitch for the study ever: ‘Can we randomize Marx?’ It turns out you can, but the results aren’t what you expect, as this Vox article summarises. This is a study I’ve had a really hard time fitting with my priors, but a hugely important one – because it finds that the direct benefit of working a factory may be small, or negative, in developing countries. Read the whole thing, because it’s complicated and worth understanding.

5.       Speaking of long-awaited economics, Tim Harford finally published his new book, Messy this week. Readers will know I’m a huge Harford fan, I recommend it highly, before having read it myself. He explains some of the underlying thinking here. It promises to be fascinating. Related, you’ll also know I adore FiveThirtyEight, and here’s a great Columbia Journalism Review about them, and specifically about Harry Enten, their brilliant (and painfully young) politics journo.

6.       Markus Goldstein summarises a load of papers from the recent IZA conference on labour economics brilliantly here, including presentations from Francis Teal and Vijaya Ramachandran, who discuss research I know a little about the background to and am eagerly awaiting the final findings of. It’s a quick read and will leave much better informed than you started.

7.       It just wouldn’t be the links if I didn’t put in anything depressing, so here’s a link about migration. First is CGD talking about Australia’s controversially high score on the migration component of their Commitment to Development Index. My only comment is that it’s worth thinking very carefully about each of the components they discuss. And, a bit better Americans think diversity makes them stronger. I agree. [The link is also hat tipped to Cardiff Garcia, which as a name both makes me happy and seems so appropriate for a link about migration].

8.       Dean Karlan is a hero for writing a book about his research failures, and so is Dana Carney for totally killing her own idea, Power Poses, when the evidence proved her wrong.

9.       There is so much more brilliance I could link today, but there’s a time limit to this stuff, and instead, here are some funny photos of animals.

 Have a great weekend, everyone!


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Are remittances shared after an aggregate shock? The impact of mobile money services on risk sharing.

Mobile money services offer a new way to quickly and easily send money long distances. After starting in Kenya in 2007, they’ve grown dramatically over the last decade, with mobile money services now available in 93 countries with over 400mn users. 19 countries now have more mobile money accounts than bank accounts and mobile money account use has now overtaken PayPal in terms of active users. The number of services offered by mobile money providers has also been rapidly expanding, starting with transfers and progressing through savings accounts, insurance and payment in shops.

In Kenya, some positive effects of mobile money services have been found, with Jack and Suri (2014) showing the potential for mobile money services to facilitate consumption smoothing after rain and health shocks and Mbiti and Weil (2011) finding that mobile money services increase the frequency of remittances and change the pattern of rural urban transfers. My recent CSAE working paper adds to this growing literature by examining how mobile money services have affected risk sharing in Tanzania.

The introduction of mobile money services allow new and previously difficult to maintain risk sharing networks to form, for example between a migrant in the city and the family back home in a village. When risk sharing was confined to the village, households could only share risk against shocks which were uncorrelated across households, for example illness or loss of employment. They couldn’t insure against aggregate shocks affecting the entire village at once, for example droughts or floods.

Mobile money services make it possible for households to smooth consumption after aggregate shocks, by sharing risk with someone in a location far enough away that it’s not affected by the same shock at the same time. However, these new risk sharing relationships can undermine traditional village based risk sharing networks, to the potential detriment of non-mobile-money users.

My paper asks:

  1. Do mobile money services benefit users by allowing consumption smoothing after an aggregate rainfall shock?
  2. Are the benefits of mobile money services shared with other non-users in the village?

To answer these questions, I use three waves of panel date from the Tanzania National panel survey in a difference-in-difference specification. I define an aggregate shock both as a self-reported drought or flood and as a 1 standard deviation absolute deviation from mean rainfall.

Overcoming self-selection effects into mobile money use

Since I am using observational data for my analysis, there are two potential self-selection effects which could bias my results. The first of these is selection into mobile money use by the household, if selection depended on a variable that was time varying and unobservable. I control for this effect by:

  1. Focusing on the interaction of a rainfall shock with mobile money use
  2. Showing that households which experience more rainfall shocks aren’t more likely to use mobile money

A second source of potential bias is agent selection into villages. A mobile money agent is required to withdraw and add money to your mobile money account and it is possible agents select into the most profitable villages where consumption smoothing is also easier. I control for this by:

  1. Showing that having an agent in a village is not correlated with observable characteristics of the village or of households living in that village. This seems reasonable considering most agents are small shop owners who traditionally sold sim cards and are present in most villages.
  2. Conducting a placebo test on future mobile money use using two rounds of data before mobile money services were introduced and find no effect of future mobile money use on past consumption trends.

Main results

 I find that households benefit from mobile money services when there is an aggregate shock but don’t share these benefits with their neighbours. Mobile money services help users of these services smooth household consumption after aggregate rainfall shocks, defined as a drought or flood. While an aggregate shock leads to a 5-10% fall in consumption per capita, households using mobile money services experience an increase in their consumption after an aggregate shock which balances this out. Mobile money services also lead to higher consumption of every household in the village (even those not using mobile money themselves) in periods when there isn’t an aggregate shock, resulting in average household being 10% higher than it would be with no mobile money users. However, when there is an aggregate shock, non-users of mobile money services don’t receive any help from users and so experience a drop in consumption. This is in a context where I cannot reject perfect risk sharing in response to idiosyncratic shocks.

These results are illustrated in the following figure:


Per capital consumption is increase in the proportion of the village using mobile money services. At the mean of 1/3 of the village using these services, average village per capita consumption is 3% higher. Once village mobile money use has been accounted for, own mobile money use has no additional effect on per capita consumption. This changes after a rainfall shock, which causes a 6% fall in consumption. Now village mobile money use has no beneficial effect, while own mobile money use leads to a 12% increase in consumption, more than cancelling out the negative shock. This means the non-mobile-money-using neighbours of mobile money users still experience a 3% fall in their consumption on average, while mobile-money-using households have money to spare.

Implications for policy and research

These results raise the question of why the consumption of non-mobile-money-users in villages with other mobile-money-users is not smoothed after an aggregate shock, especially considering mobile money users appear to experience a gain in their consumption after the shock. This is an interesting area of future research, with potential alternative explanations being lack of norms related to sharing after an aggregate shock and changing risk sharing relationships. It would also be interesting to examine why certain households take-up mobile money services and others don’t. Is there a subsection of people who are unable to benefit from these services and how can we help overcome any barriers to their use? Examining this in more detail would give insight into who benefits from new financial services.


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Links round-up

Hi all,

 I’m away next week, so this is your last links till the 7th of October – make it last! There’s been an absolute glut of great stuff online, though, so it’s a good one – though not particularly cheerful (is good economics ever cheerful?). As with cricket, the collapses seem so much more interesting…

 1.       Let’s start with some good news, though – do you remember that great paper from a couple of years ago that used fake CVs to see if firms discriminated against people with ‘foreign sounding’ names? Rather depressingly, it did find that many firms did. Fear not, though! Alex Tabarrok reports on a follow-up paper showing that the firms that discriminate are more likely to go bust. Obviously, if discriminating against otherwise qualified people makes you less efficient by making it harder to match the right people to the right roles, your business will suffer. I’d suggest that even if this is the mechanism, we can’t rest on our laurels – it would only work in really competitive industries, not something the kind of countries we work in are known for. (Full paper here).

2.       A phenomenal (but long) post by Andrew Gelman about replicability of research findings and the political economy of academia that makes even small improvements in research practice quite difficult. He takes aim at Susan Fiske, a psychologist who published an opinion piece basically slating people who use social media to criticise research, and he doesn’t hold back [note, I am obviously not unbiased in this debate being a person who uses social media to criticise research]. It’s really worth reading if you want to have a better sense of the personal and professional politics that influences the quality of the research we use, and why it’s so important to be discerning about it.

3.       A few people have pointed this one out out to me, but I’ve only just got round to listening/reading: Planet Money did a podcast on the research of Christopher Udry and Dean Karlan on supporting farmer expansion in Ghana. Both Chris and Dean have presented this research in DFID, which makes it even more impressive to keep me gripped throughout the pod – I already knew how it was going to turn out. The Planet Money guys frame it as an intellectual death match between two theories: that farmers are credit constrained, on the one hand (what farmers say); and that they are constrained by risk on the other (what Udry observed). It’s brilliant, and a good lesson in why we shouldn’t just take what people say at face value – we’re very often not the best judges of the constraints that hold us back (Transcript).

4.       Another popular piece about a recent bit of research, but in this case I’m slightly less convinced: Eric Verhoogen suggests that labour standards can be a spur to innovation. I think his real claim is more limited: that in a specific second best world, they were in one instance. I don’t think you can generalise from his example to a universal truth.

5.       Everyone has been very complimentary of Dani Rodrik’s piece on the need to tame globalisation – but I worry about it slightly. Dani is a reasonable and thoughtful man, but I think people in power may seize on his ideas and turn them into a new form of mercantilism and retreat from cultural and economic exchange, which I think would not be what Dani intended, or good for the world.

6.       The format is hell, if you want to read the transcript, but it’s worth wading through this EconTalk (or listening to it!) with David Autor. David’s research on China’s effect on US manufacturing jobs is fascinating, and was quoted by Francis Teal in a talk to DFID recently – Francis points out that it shows that globalisation is not the main reason for the decline of certain industrial regions, and I think he’s very convincing.

7.       And lastly, to end on a scholarly (indeed, Nobel-winning!), but positive note – here’s Robert Schiller on what he describes as the next great global revolution – one against the arbitrariness of economic circumstances being decided by the lottery of where you were born. His world view is different to Rodrik’s – he sees more globalisation, not less, as the answer, so much that it eliminates the differences between countries through factor mobility. I like the idea of a more prosperous, fairer world, even if I think Schiller is hopelessly optimistic here. But I wanted to end on a positive note that didn’t depend on Taylor Swift gifs, and this is the best I’ve got.

 Back in two weeks, have a great weekend, everyone!


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Links round-up

Hi all,

 Ok, so I’ve just been co-chair of a conference so I’m going to be honest: I am exhausted. I was advised to just link to every paper that was presented and post my favourite shake it off gif at the end for the nineteenth time, but I’m going to try and do the right thing. And then collapse in pile on my bed and sleep for a day (without having to shout at people to make sure they move from the coffee room to the main conference hall in time). Grrr.

 1.       One speaker from the conference I will link to the work of is Raul Sanchez de la Sierra. Raul joined us at about 5am (or something ridiculous like that) California time and his presentation on data collection was extraordinary – so far ahead of what any of us are doing that very few of us could even think of the appropriate questions to ask. His paper on stationary bandits (as opposed to stationery bandits, who were out in force in the conference, judging by the number of pens I lost) is a bravura performance of economic reasoning and extraordinary data collection.

2.       Globalisation and the forces against it came up repeatedly at the conference, so this next one feels appropriate: Tyler Cowen’s says globalisation isn’t slowing down, it’s just moved within national boundaries. This is called nation building, and if he wants to redefine globalisation like this, he also needs to take into account all the nation building that already took place over the last two hundred to three hundred years. Getting the baseline right takes him right back to square one – or worse.

3.       Dietz Vollrath, possibly my favourite growth economist currently working, writes a largely critical (highly, highly critical) piece about Eric Hobsbawm, easily my favourite historian and writer of the 20th century. Dietz strongly criticises much about him – his lack of empirics, some of his theses; but he finds one idea in particular difficult to shake off – that the sense of social disruption that economic change brings about is huge; but unevenly huge. And those who are affected (socially) least are often those who benefit the most. In the modern era, this means you: if you read this e-mail you’re probably not a blue collar worker in a declining industry, but an overeducated professional or academic, one of those people who the changes we’re undergoing is going to favour, not render unnecessary. Dietz ends with this line: “if one includes social disruption in the accounting, then structural shifts between sectors/industries/locations are perhaps the most important aspect of economic growth to consider, even more than the growth rate itself.” This is strong stuff, especially from an empiricist and economist of his quality.

4.       I have linked to the economics of David Evans many times, and have encouraged as many of my colleagues as possible to attend his talks. Here’s a totally different endorsement of my favourite economic polymath – his blog on African literature, this time looking at a “feminist mystery [that] turns the thriller genre on its head”, the Lazarus Effect by HJ Golokai.

5.       Another link about globalisation, but at least it’s a happy one. “The Census Bureau reported Tuesday that the median U.S. household made $56,516 in 2015, up 5.2 percent from 2014 after adjusting for inflation. That’s the first increase since 2007…” We spent some time grappling with the problem of earned income at the median in our conference, and the news was all bad. If only I’d read this, I might have left slightly happier. I almost never end these links on a piece of economics that makes you happy, so that’s all from me, and Taylor Swift be damned (or you can scroll back up to the intro).

 Have a great weekend, everyone!


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Links round-up

Hi all,

Yes, this is a morning edition of the Links round-up, a rare event that normally means that I’m on leave and have completely forgotten to warn you all, leading to a cobbled-together mishmash or random economic geekery and Taylor Swift gifs (what do you mean that’s what it’s like every week?). I’m in sunny, lovely Newcastle and don’t intend on sitting in front of the computer for long – so excuse the brevity!

 1.       First up, my favourite piece of the week came from FiveThirtyEight, gloriously confirming my priors. Ben Casselmen points out that firms often talk about ‘skills mismatch’ and a failure to fill skilled labour positions as a very specific form of labour market failure that they face. But the evidence that this problem is really acute is actually quite sketchy – he looks at a number of indicators that firms are actually constrained in skilled workers, and finds little evidence in any. This is for the US, but the logic and approach to evidence applies to developing countries too – we too often take the word of employers and firms without thinking about their incentives to misrepresent or the possibility that they themselves misdiagnose the problems.

2.       “The fundamental problem is a person trying to diagnose his own incompetence is — almost by necessity — likely to be missing the skills needed to make that diagnosis. Not knowing much grammar means you’re poorly placed to diagnose your ignorance of grammar.” Tim Harford on a new book suggesting that trivia, or knowing a little about a lot, is one of the best ways of being able to diagnose one’s own mistakes. It’s an interesting idea – even if it means that this scene was actually an intellectual exchange by two polymaths and not an irritating bit of Cameron Crowe cutesiness.

3.       Another bit of prior-affirmation: there is such a thing as too much transparency. I don’t agree with everything Matt Yglesias says here, but I do think there’s something to this.

4.       The Center for Global Development have finally announced their new President, and it’s a name that will be familiar to DFID – Masood Ahmed, who moves over from the IMF. Masood has a strong macro focus, and moves over to lead an organisation full of brilliant micro researchers. It will be interesting to see what new hires look like from here.

5.       GiveDirectly’s Basic Income experiment has had some unexpected issues with take-up – with some Kenyans simply sceptical that anyone would transfer them cash without an ulterior motive. It’s not going to stop them from assessing what impact it has on welfare, which is the most important thing, but I would be interested to see research looking at take up rates when the Government provides the transfer directly, too.

6.       I don’t have time to do this justice – but this is masterclass in Balanced Growth Theory by Dietz Vollrath. Part 1 and Part 2.

7.       And finally – the promised Taylor Swift gifs. Be honest – you scrolled straight down here, didn’t you?

 Have a great weekend, everyone!


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Links round-up

Hi all,

611666 (scroll down to Over 42). 10-0-110-0. 444-3. 275(a/o). I can translate those numbers for you: “ouch”. England are completely hammering Pakistan in the one-dayers, and one feels the need to check if this is really England playing one day cricket or if someone has genetically spliced Shahid Afridi with Virender Sehwag and put it in a dark blue uniform. Anyway, having completely lost 70% of my readership with that preamble, on to the comparatively comprehensible world of economics.

 1.       I know Ezra Klein likes the clickbait titles, but We can reduce extreme global poverty by three-fourths — right now? No, we can’t. Let me just rephrase that for clarity: NO, WE CAN’T. Andy Sumner crunches the numbers and finds that there are a number of high-poverty countries which have GDP high enough to just redistribute all poverty away in a single go. He also says that this wouldn’t be a disaster, since the IMF said that redistribution is good for growth. His main point is that poverty is political problem, which I agree with, but this is only really a step up from those Oxfam killer stats about how much we spend on ice cream compared to the cost of free education for the globe. Let’s say we redistribute to eliminate all poverty today. What about tomorrow? The IMF paper finds that some redistribution, achieved indirectly, is good for growth – that’s very different to the implication that a one-off total redistribution would have no effect on growth. It implies that inequality has emerged solely from unwillingness to redistribute, rather than economic and political characteristics that are inherent in the structure of production. Andy’s right that poverty is largely political, but it’s not primarily redistributive politics that creates it, it’s the politics around the kind of growth and the kind of economic model pursued. And cash transfers do not solve this.

2.       And moving swiftly on to a piece that I really did like: Tim Harford on whether Universities actually add any value to the world (through their education and certification function). It’s a great piece – like Tim, my gut tells me that universities are pretty good things. But I also can’t help but see the degree inflation around me (and the number of jobs which now appear to require a doctorate, few of which actually require any advanced techniques) and think that it’s become a signalling arms race. It used to be that an undergrad degree was a powerful signal in the job market. That’s not the case anymore, so people need to spend ever longer in the system, just to ‘prove’ they’ll be worth hiring.

3.       I’m no libertarian, but this Café Hayek piece is fantastic. The number of times I’ve heard people complain that pay for nurses is low compared to pay for actors is amazing. Don Bodreaux points out this is a sign that society is working, not failing: we produce loads and loads of nurses, and relatively few Tom Hiddlestones. I’m ok with that outcome. (However, I would like to see a substantial increase in the supply of Taylor Swift).

4.       This is a great blog by Justin Sandefur, about the extent to which informing policy makers about public preferences can change their opinions on policy issues. What makes it so good is that not only does it explain and visualise the results clearly, it’s also completely explicit about the shortcomings of the research it’s based on. That said, this was one of the more interesting research ideas I’ve seen for a while, and I hope it’s tried again in different places.

5.       Banking services are (or can be) a great thing for firms in developing countries. For the poor? Not so muchmany of the unbanked appear not to want to be banked. It can be more hassle than it’s worth, at least until totally different products and access strategies are designed.

6.       Every podcast from Planet Money’s five-part series on oil. They bought oil, they refined it, they sold it and told lots of great stories and slipped in some economics on the way. Really recommended.

7.       Ok, I’m going to miss the point here, but I can’t believe Lant Pritchett is an introvert – I’ve always assumed that charismatic speakers are extroverts, and Lant is definitely that. Oh yeah, and he doesn’t seem to be a big Jim Kim fan and has come up with five female alternatives.

8.       Lastly, Anthony Jay, writer of Yes, Minister (one of my favourite-ever TV shows) passed away recently. One of the obits threw up this incredible fact: the show started as a way of popularising public choice theory. Next I’ll be hearing that Rumpole was simply a vehicle for the popularisation of cheap red wine. I’ll leave you with my favourite Yes, Prime Minister quotes: “Government is not a team. It is a loose confederacy of warring tribes.”

 Have a great weekend, everyone!


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Links round-up

Hi all,

This week’s links are brought to you from half-way through a leave day in my blistering-hot, sunshine-soaked garden and you’ll forgive them for being a tad cursory – as much as I love you all, you come (a distant) second to my birdwatching and pile of sunshine-reading. The only way this day could be better is if Sri Lanka were playing a test in Galle. To the links!

 1.       I recently linked to a Planet Money podcast about how all the garment jobs are in (distant) danger of being mechanised. Well. Turns out the danger isn’t that distant, and some companies are already investigating the prospect. I’m not a techno-pessimist – we’ll always come up with something to do or make; but there’s something about garments (one of the easiest things to make with unskilled labour in difficult economic environments) that makes this process of mechanisation feel different. Nick cheered me up last time by pointing out the timescales involved (my generally high discount rate makes most things bearable). He may have to find a new way today.

2.       Anyone who’s old enough to remember Devon Malcolm going through one of those strange periods when he felt like the greatest bowler since Malcolm Marshall will probably believe in some version of the ‘hot hand’ theory – that sometimes players respond to success by becoming even better, eventually reaching a state of sporting Haal (read this, btw – best sports article ever?). It was a huge letdown when researchers debunked the idea, suggesting it was mere randomness… until recent advances in statistics and data analytics have revived the theory. The hot hand lives!

3.       When Bill Clinton changed the laws about how welfare can be delivered, he promised to revolutionise the system to support the poor in the US. He did. Whether it was a good thing or not… that’s open to debate, as it appears that less and less welfare money goes directly to the poor, and more and more is only tangentially related to its original purpose. There’s a lesson here.

4.       Justin Sandefur is basically an astronaut. That’s my main takeaway from this piece about measuring poverty from space, but you might argue I’m missing the point. On a serious note, that repeated thump you hear is the sound of a thousand anthropologists banging their heads against the wall – research so decontextualized a Martian could have done it. Literally. (To be clear, I think there’s great merit to this approach. But at the same time, it’s hugely important to understand the experience of being poor, not just the incidence of it. These are complements, not substitutes).

5.       I recently had a discussion about Hernando de Soto with some friends. They – to put it mildly – are not fans. I see some merit in his work, especially in examining how laws and institutions evolve as part of a society, rather than as abstract universal principles (*cough*chartercities*cough*) but have had to concede that there is simply no empirical basis for most of his claims. Here’s another nail in the coffin.

6.       Okay, that’s quite enough of this. Look how sunny it is!

 Have a great weekend, everyone!


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Links round-up

Hi all,

Well, just in time for the weekend, the sky has turned a dull, heavy grey; a persistent drizzle has started to fall and there’s just enough wind to make me want to wear a jumper while simultaneously being just too humid to be comfortable in one. Oh joy. Still, it’s Friday and I’m about 15 minutes from the door, which means it’s time for all the good and geeky that I’ve seen this week – and it was very good, and very geeky.

1.       Well, the weather has put me in a vile mood, so I’m going to break with tradition and  start with something completely frivolous: #realisticIndianaJones. Academics and archaeologists suggest what Indy would have been like if he had to live on a planet even remotely like ours (which, while we’re on the topic, is TOTALLY MISSING THE POINT of Indiana Jones, goddammit, just look how cool he is). The best one: “Indiana Jones & the conference question that is not a question at all, but actually a really long statement, of doom”.

2.       Now that I’ve got that out of my system, here’s some actual economics: Branko Milanovic and Diane Coyle have a maddeningly good-tempered back and forth on the overall welfare implications of the commodification of previously non-commercial goods and activities. Branko suggests that the extent to which we used to do for no pay, like childcare, or the assets we left idle, like our flats when we went on holiday, are now ‘commodified’ has undermined the development of deep and systemic bonds of trust. (As an aside, Tim Harford looks at this from a slightly different angle here). Diane Coyle takes aim at him, arguing that much of this commodification is an unambiguously good thing, particularly from a gender perspective. Branko listens, clarifies and responds here, making more interesting points about the depersonalisation of the economy. It’s all very disappointing. I was kind of hoping for a few insults and a Hitler-comparison, but I guess not every spat can be Sachs vs. Easterly.

3.       Let’s keep to gender for a second. 538 explain very succinctly why the gender pay gap is still a thing, and a thing that isn’t narrowing nearly as fast as it used to: “Hourly pay has risen more than twice as fast over the past three decades for men working long hours [than those working normal 9-5 jobs]… Men make up a bit more than half the full-time workforce, but they account for more than 70 percent of those working 50 hours a week or more. So as wage gains have gone disproportionately to people working long hours, they have also gone disproportionately to men.” An excellent piece which makes many other good points, too.

4.       We love to talk about ‘rapid growth episodes’ – what economist doesn’t get slightly hot under the collar when we see those juicy numbers in the ‘China/GDP Growth rate’ row of the World Economic Outlook database? It’s exciting. Fortunately, here’s Tyler Cowen to tell us that the world sucks and this isn’t really a thing, and we’re all going to go back to 2% growth for the next hundred years: “In the next generation, the emerging economies may return to these 19th century patterns. Either they will learn to build slowly and steadily, or quite possibly they will go into reverse.” Bah. Check in with me after a generation. I reckon he’s wrong, and there will be plenty of catch-up superstars. We just don’t know who they’ll be yet.

5.       DFID’s own David Rinnert on evaluating the value of evaluation, thereby setting us off into a wormhole of evaluating the value of evaluating evaluations. I’m fairly sure this is the plot of 12 Monkeys.

6.       My favourite paper of the last few years, Nick Bloom’s Firming Up Inequality is now starting to get more of the attention it deserves – setting off a bunch of follow up questions from Claudia Sahm. They are all interesting, as is her discussion, and I encourage all economists seriously interested in inequality to read both the original paper and the blog.

7.       Lastly, VS Naipaul has written novels about how Indian businessmen have long travelled to remote and sometimes dangerous places to set up businesses. This article in the Caravan by Rajiv Golla explores this phenomenon in the context of the South Sudanese civil war. It’s fascinating from beginning to end: ‘“We chase the money. We don’t care if we die,” one commodity trader said, “We’ll be born again anyway, right?”’. Culture matters.

 Have a great weekend, everyone!


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