Links round-up

Hi all,

 In a parallel universe, one where I haven’t been mainlining coffee in an increasingly desperate attempt to maintain some level of functionality at work today, I am writing an incredibly witty intro to these links, weaving together the junior doctors’ strike, the end of days sunshine-rain-sunshine-hail weather we’re getting in London and the plummeting price of renewables that we can’t work out how to use effectively. Instead I’m going to try and type this e-mail with my eyes closed and my head on the desk. That said, my energy will return as I write – I really struggled to pick which link to lead off with, there were so many brilliant ones.

 1.        In the end, what won the race for first link was this sentence: “So we were trying to think of how to get around that, and then someone suggested that we actually just mail all of our female users a Bane mask like from ‘Batman.’” We all know, by now, that discrimination is costly for firms, for consumers, and for the economy as a whole, but it still happens. Why? Because so many of the shortcuts we take to guess at ability levels when we’re sifting job applicants hinge, at some deep level, on an unconscious bias against some group that we have, a bias that might have no bearing on ability to the job. Planet Money have a great podcast that looks at some of these biases and documents cases where overcoming them increases performance for the firm and worker – including the hiring of criminals with felony convictions in the states. That opening quote comes from one way of introducing ‘blind interviewing’, to remove all the signals that my trigger the interviewer’s unconscious biases. Theatricality and deception, Mr. Wayne. (Transcript).

2.       I very nearly led with this: Chico Ferreira thoughtfully and intelligently reviews Branko Milanovic’s new book. This is glorious, high quality thinking about inequality here, from two of the best researchers around on the topic. Sample quote: “… inequality is … a general equilibrium outcome, reflecting … very different factors: the quantity of schooling…, the changing nature of the demand for skills (affected in turn both by technical change and by trading patterns), changes in labor market institutions (such as unionization rates, or minimum wage policies), changes in tax and expenditure regimes, changes in marriage patterns, changes in returns to capital, changes in land prices, etc. The list is almost endless.” I think this is a good time to renew my call for a “I think you’ll find it’s just a little bit more complicated than that”.

3.       This was the third strong contender for first link: Tim Harford uses the threat of closure of Tata Steel in Port Talbot as a springboard for an excellent piece of thinking about how we should respond, socially, to the effects of declining industries: prop them up forever? Let them die on the vine and trust the market? Like most sensible people, he thinks the answer is somewhere in the middle, and he suggests three ‘middle-way’ policies. He closes with the suggestion that we ‘just give cash’ and promises a future post on the topic – but in the meantime, here’s a good long read on the topic from FiveThirtyEight.

4.       A colleague of mine told me this week that she’s worrying about a decline in the attention to detail with which we (by which I mean technocrats, policy wonks, and institutional researchers) use household data. She’d probably love this piece from Jed Friedman, a clever experiment to find out how biased household survey measures of consumption are, and what causes their biases. Really interesting, and I hope many of you click through.

5.       Via David McKenzie – this made me really smile: a paper about brilliant economists getting the smack laid down on them via journal rejections.

6.       In a week in which I haven’t very often felt good about humanity, in a monumental turn-up for the books Tyler Cowen provided a reason to be optimistic: a market uptick in positive opinions about migration in the US. Let’s just hope this travels.

7.       “What kind of degenerate only wants to own 30 books (or fewer) at a time on purpose?” LitHub writes about Marie Kondo’s The Life-Changing Magic of Tidying Up, and in doing so perfectly expresses my relationship to my books.

 Have a great weekend, everyone!

R

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Links round-up

Hi all,

The economic punmaker in me wants to start this round-up with a joke about 2016 being the year of ‘creative destruction’, but the wound is too sore. I was in a pub restroom last night when I got a text letting me know about Prince and I unleashed a howl of anguish (side note: howling in pain in a pub restroom is frowned upon). I was only properly introduced to him a couple of years ago (I know, I know), but because of that introduction, Starfish and Coffee will always be one of my favourite songs – and in that video, combined with muppets, well: smiles for hours. As the New Yorker put it, ‘now we begin the collective, active experience of remembering Prince’. LitHub has a piece on his musical origins, and another asking three writers to summarise what he meant to them (“his defining legacy will be his genius for individuality, and his defiance of reductive identities…”). And FiveThirtyEight crunches the numbers on his brilliance. Now, before we get into the weekly geekery, if any of my readers are in Brighton can you pop over to his house and wrap Nick Cave in bubble wrap? 2016 has taken quite enough heroes already.

1.       Tim Harford was in coruscating form this week (and apologies for the bad language here). If you read only one non-Prince-related thing this weekend, make it this brilliant piece on how politicians have corrupted statistics with bullshit. Not lies, mark, but bullshit: “the liar care[s] about the truth… The bullshitter … was indifferent to whether the statements he uttered were true or not.” It’s marvellous. Harford carefully examines the language and evidence politicians use in justifying their work, and finds little that is outright incorrect or a lie, but finds that almost all of it is basically meaningless – so carefully chosen and selected, and so carefully divorced from context and nuance that it might as well be a lie. The practice is akin to being asked, “How old are you?”, and responding with “I have ten fingers”. It’s not a lie, it’s just functionally meaningless in the context. Alongside this, he assesses three claims about Brexit. Anyone want to guess what he calls?

2.       Matt Collin runs Tim close this week, with a piece of rationality shot through with feeling here: he takes Chris Bertram to task on his own criticism of Branko Milanovic’s proposal to increase migration by reducing migrant rights (I heard a similar proposal made by someone else recently). I don’t fully agree with Matt – there is also a philosophical all-or-nothing case that can be made, arguing that we either protect the world we believe in or lose it, without compromise. I’m not saying that it’s the right position, but it’s a philosophically defensible one.

3.       Chris Blattman had a number of great pieces this week but my favourites: one on how eliminating deadlines dramatically reduced applications for a particular grant. His theory, which I think has a great deal of merit, is that only a deadline can stir a bureaucracy to action. The other link he had which I loved: oil prices reimagined as a rollercoaster. Would you want to put all your eggs in a basket on the back of that rollercoaster? Of course not – which is why it’s so important that oil exporters diversify, and so frustrating that so few do.

4.       Angus Deaton writing about Raj Chetty’s recent research into income inequality and healthcare outcomes in the US. Seriously, this does not need any further selling. It’s Angus. Talking about Raj Chetty. Why haven’t you clicked yet? It’s obviously excellent, full of the kind of points you only make if you understand something intimately. Angus understands a lot intimately.

5.       Excellent piece by Dietz Vollrath considering under what conditions increased market concentration is good for innovation. It’s a complicated topic, explained as clearly as it can be, and I recommend economists read it closely.

6.       I love this: in honour of the Queen’s birthday, someone told the worst story ever. Seriously, it’s worse than the story I told about me howling in a pub loo.

7.       In any other week, this would be the last link – six bulldozers getting into a massive mechanised brawl, tenuously linked to an economic slowdown. It’s like Anchorman for construction workers.

8.       But, let’s be serious. I was never going to end on anything but this, was I?

 Have a great weekend, everyone!

 R

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Links round-up

Hi all,

 It’s the end of an era. Kobe Bryant, basketball savant or ball-hogger extraordinaire depending on your viewpoint, has retired. It’s appropriate that a player so obsessed with his own statistics should have had such an effect on the way in which basketball is analysed, but I’ll leave that to the last link, below. For now, let’s just remember this and accept that only a ball hog of epic proportions is capable of such excitement. I may have to turn in my economist card, but some things are more important than efficiency (that last link makes me grin from ear to ear). So some token economics before we get to Kobe-by-statistics. [As an aside, it’s also the start of a horrifying era, as James Cameron has announced, in what is presumably not a late and vicious April Fool’s, that he will make four sequels to Avatar. Four. Seriously, four. 4. My only consolation is that my discount rate is sky-high, and the negative effects of the third and fourth films aren’t tipping me into a suicidal mood].

 1.       This week in things that should be a far bigger deal than they are (also in this category, William Fiennes’s The Snow Geese, Beat Takeshi’s latest movie Ryuzo and his Seven Henchmen, and everything that Nick Bloom does): Tyler Cowen picks up some of the coverage of Nigeria’s economy. “Factories are closing because they can’t find dollars to import parts. Supermarkets are struggling to keep shelves stocked. Power plants have virtually stopped producing electricity because they can’t pay for maintenance… Nigerians abroad are stuck with ATM cards they can’t use because the central bank has limited withdrawals outside the country.” This is one to keep an eye on. They may manage their way out with nary a scratch, but it would be an escape worthy of Steve McQueen.

2.       When I lived in Zanzibar, there was a shopfront upon which the announcement “Mr Credit is dead. Living only his son, Mr CASH!” was emblazoned. I loved that. We’re getting to a stage where international development might need a version of this slogan. First Dave Evans suggests that cash is might be a pretty good counterfactual for most development programmes (always ask “should we just give cash instead?”) I agree with that, depending on what the programme is trying to do. It escalates though. Give Directly, in a move that makes me queasy, is attempting a massive pilot of a basic income in Kenya – without, it seems from a glance, much input from the Kenyan government. Berk Ozler suggests ways of improving the evaluations here, very thoughtful. But it strikes me that we lack even flimsy theoretical justifications for using cash as a substitute for deep institutional development; and while few us take it as such, it seems like some do. And if GD are doing this around the Kenyan government, there might be some ‘do no harm’ questions they need to ask themselves.

3.       There’s loads of interesting stuff in this Tim Harford article looking at how the framing of choice can affect our decision-making. But the sentence I cannot get over is this: “Starbucks offers about 100,000 drink combinations — millions, once the syrups are taken into account.” I mean, seriously – millions of drinks and they all taste like a sock steeped in hot water and then shot with a cannon full of sugar? HOW?!

4.       A colleague sent this to me today, with the qualification ‘far be it for us to cast stones, but…’: the NYT on the lack of concrete language in World Bank reports. Choice quote: “[The study] found a sharp decline in factual precision, replaced by what the researchers call management discourse, a bureaucratic gobbledygook whose meaning is hard to decipher.” I agree. To combat the issue, I suggest we take this offline, so we can take a deep dive into the issues and facilitate a systemic mapping of the low-hanging fruit adjacent to our vector of possibilities.

5.       Nice, thoughtful Berk piece on the apparently rising trend of Peter Singer-type experiments to induce altruism by teachers with a ropey grasp of moral philosophy. I wonder what Michael Sandel would make of this? It’s a gussied up version of those guilt-tripping Oxfam ‘killer stats’ like “every year we spend more on ice cream than on preventing malaria” [sound of head thumping the table].

6.       In a modern equivalent of being shamed into helping people, I always find it a bit weird that we have try to prove that helping migrants or refugees or women achieve economic equality is good for the rest of us. It almost certainly is, but is that really the point? Related, a nice photo essay about migrant workers from the Graun.

7.       That’s quite enough of that rubbish. Let’s get back to the Mamba. 538 points out that the wave of advanced stats that rejected Kobe’s claims of greatness were… well… not really all that advanced. As they improved, they became more likely to capture the specific benefits that Kobe brings that other players just can’t. Does it make him the new Jordan? Of course not, but he was still pretty damn good. We tend to underestimate the great ones while they’re playing – the number of people who somehow forget that LeBron James is a cyborg from outer space at MVP voting time completely amazes me – but the numbers stack up for Kobe. So in that frame of mind, two more links: first, the Warriors are ridiculous. And second, at the end of the greatest season of shooting in the history of people throwing balls into little hoops, an appreciation of all the hard work that goes into making Steph Curry look effortless.

 Have a great weekend, everyone!

 R

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Links round-up

Hi all,

 We’re not going to talk about this. Not at all. In particular, no mention will be made of the fact that seconds before the first delivery was bowled, I confidently texted a friend ‘England have this in the bag – amazing comeback!’. Further, we will gloss over that (not insignificant) portion of me that was howling with laughter inwardly at the ability of the England team to call up that awful temptress, Hope, only to reveal at the last moment her true identity – that of her evil twin: Despair. Very quickly, to the sweet balm of economics.

 1.       I have a friend whose immediate reaction when confronted by an opinion different to his is sympathy for the poor soul who has yet to discover the truth. This drives me nuts, but apparently it’s not uncommon. Tim Harford puts it thus: “We see what we want to see. We also tend to think the worst of the ‘idiots’ and ‘maniacs’ who think or act differently”, and has a really nice write up of the research into this phenomenon. I think this is particularly important for development  workers. When working for developing country governments it was a constant annoyance that every donor who wasn’t greeted as the messiah for suggesting that we institute an MTEF would ask me “Why don’t these pesky locals see the need for this?”. Rarely would someone think “well, these guys have been here way longer than I – maybe they know something about this that I don’t.” We did: MTEFs had been tried repeatedly and never worked, because the budget was a fiction anyway – you might as well keep it a relatively easy fiction to write.

2.       Speaking of things that drive me nuts: the mean (or arithmetic average) being used, even when it’s wildly inappropriate, because so many people assume it’s the ‘best’ or ‘normal’ average. There is no such thing! The right average depends on what you’re measuring and what you care about, and actually, I think the safest bet tends to be the median. Priceonomics has an interesting piece on the history of the ‘average’, and they must be right because they agree with me.

3.       One particular situation where the mean average is guaranteed to make me swear: analysis of incomes, when we should care very much about the distribution. Inequality guru Branko Milanovic writes here about The Great Gatsby Curve, and the erroneous idea that in the US high income inequality matters less because social mobility is high. Not only is this weirdly persistent myth wrong, the reality is the opposite: actually, when there’s higher inequality, the poor get poorer over time, relatively.

4.       On the value of information in crises, and how that value is eroded over time. A very nice breakdown, but I’m not sure how much this tells us without breaking down the different kinds of information and how their value-erosion varies – and how their value compares in absolute terms. More information is almost always better (almost: I have no desire to know about the hygiene of my favourite restaurants), but we need some way of prioritising what we invest in.

5.       Planet money on a sovereign debt default in that weird in-between place, Puerto Rico: part of the US, but kind of not. Debt crises can seem a bit remote, a bit difficult to really think about in concrete terms, and the Planet Money team do a great job of both accessibly explaining how this one came about, and giving some indication of the human cost (Transcript).

6.       Harvard’s 1953 economics exam was awesome. And I disagree with Chris. I think economists are still typically way behind the curve on history.

7.       Lastly, because these links have been depressing, two happy ones: first, remember that crazy depressing story about the guy who faked the study showing how exposure to gay people made people discriminate less? Well it has a happy ending! Real researchers who didn’t make up the data have found some pretty similar results, but even more positive in some ways. And lastly, the best poem I have read so far this year. What a line: ‘I was born aflame, I believe.’

 Have a great weekend, everyone!

 R

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Links round-up

Hi all,

 Even in an Easter-truncated week, the internet continues to astound me. There has been an absolute glut of brilliant economics this week, and a couple of truly glorious April Fools jokes as well – some I can’t share with you all, unfortunately, and some which I suspect may not actually be April Fool’s Jokes, in which case I shall be banging my head against the wall for a few hours.

 1.       Not all migration involves boats and horrific Daily Mail headlines. Justin Wolfers has a great write-up of research that shows that the economic gains to internal migration, especially for those who don’t want to move, can be enormous. This is a really interesting one, which agrees with my priors. ‘Home’ has a lot of value that has nothing to do with how much you earn or what your life-chances are; and sometimes, being forced away from ‘home’ can lead to you becoming, materially, much better off – though your overall welfare is much less clear. David McKenzie discusses this in the developing country context here. This really reinforces two things, for me: first, that productive people are the made from productive places, not vice versa; and secondly that the process of development, which involves so much change, much of it forced upon people, is incredibly distressing, though necessary in the long run.

2.       Speaking of the long run, Tim Harford explains the same insight in a very different context: what happens when all those adjustments economists assume away as ‘short run phenomena’ take a generation or two to work through (never forget Keynes: “In the long run, we’re all dead”)? Well, in the case of trade it means that many people are rationally, very much against it – even if it does make a long run difference to ‘their’ (really their descendants’) standards of living. Oh, yeah – one side effect is you get a nutter running for President, babbling about ‘winning trade’.

3.       A really interesting search-match model that explains both occupational segregation and differential earnings for women compared with men, summarised fairly accessibly on the CSAE website (and by fairly accessibly I mean, find an economist and ask him to translate some of this). I’m not sure I buy this. I think there are simpler explanations of the same phenomena, and in general, I tend to gravitate towards them. But this is interesting, and I probably need to think more deeply about it.

4.       Hmm. I’m a China optimist, but a friend of mine, who does a lot of work with Chinese firms (as in business, he’s not a researcher) sees more trouble on the horizon than I do – not in terms of growth, per se, nor in terms of the risk of total economic collapse as the pessimists keep anticipating, but in the form of widescale labour unrest fundamentally changing the way in which Chinese firms can work. This could be good news for the rest of the world’s poor, if it leads to the ‘great outsourcing’ we keep predicting.

5.       Markus Goldstein brought some of his colleagues to DFID recently to give us some excellent presentations on the most recent findings from the Gender Innovation Lab’s portfolio of research. I strongly recommend everyone who has to come to an organisation of policy makers like ours read his tips on giving a good presentation. They’re excellent. We all find our own interests fascinating. That doesn’t mean everyone else does. It’s not like I impose any of my hobbies on you, do I? By the way, if you only click on one link this week, make this it.

6.       Lee gets angry. Always good.

7.       Finally, a sad link and a happy one. Sad first: an amazing Lithub article about suicide notes. It opens with the last lines Virgina Woolf ever wrote, which are completely heartrending. And since there is no way I’m going to sign off on that link, here’s Taylor Swift, falling off a treadmill.

 Have a great weekend, everyone!

 R

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Links round-up

Hi all,

What, you didn’t think a piffling matter like a four-day weekend would cause a break in the economist-geek continuum, did you? No, this week has been chock full of great economics and random geekery, so I couldn’t in good conscience deny you your fix (well, that and I had to log on for work anyway, and this makes it that little bit more bearable – and I’ve just finished my last task of the day, so this is going to be brief and perfunctory, but at least it’s free).

1.       I absolutely loved this extended essay about the obscure economist Nathaniel Leff, his surprisingly prescient analysis of Brazil’s economic history (yes, prescient: he postulated things the data couldn’t tell him, but with modern statistical techniques, we’re finding that many of his postulates were true), and his sudden disappearance from academia. It takes in economics, friendship, religion and discrimination, with a nice excursion into the political economy of research: why do people wind up doing the research they do? There’s a blink-and-you’ll-miss-it cameo from Albert Hirschman, too, about whom one day a movie must be made: the economist who fought in the Spanish Civil War and rescued refugees in occupied France.

2.       Another excellent long read about a very different character: Russ Roberts, the libertarian who lets the left talk, and gave Keynes a fair hearing in a battle rap with Hayek (no, that’s not a joke, it’s awesome). I like Russ. I’m no libertarian, but I share his belief that economics is far too important to be the preserve of a few geeks who can think in abstract mathematics; and I believe that people need to understand things, not just know them. Tony Atkinson makes the same point in his book, Inequality: facts do not change minds if those minds are harbouring a strong theoretical construct that those facts don’t agree with. You have to explain to them why the facts are what they are, and that’s the principle behind almost all of the writing I do.

3.       One of the things about understanding things is that it’s not good for the ego. Getting the framing right usually involves being wrong for most of the time you think about a topic, but becoming less wrong over time. Christie Aschwanden at 538 has been documenting this process for scientific inquiry as a whole, and her latest piece has a great title: Failure is moving science forward.

4.       Of course, geekery is also driving science forward, and Dave Evans applies his very special brand of concision and precision to the CSAE Conference summarising what seems like 120 papers in one sentence each (part 2). A brilliant whirlwind tour of the latest research, but don’t forget to click through on the ones that catch your eye, especially if they disagree with your priors.

5.       Oh, god, it’s a sweet feeling when your priors are not only confirmed, but given a Presidential medal, high-fived by John Lennon on the left hand and Lemmy on the right, and awarded a UN pension in perpetuity (this may be an over-reaction). Cherokee Gothic reports on a potentially very significant methodological flaw in the literature on institutions in year dot and current income levels. What, you mean the number of mosquitos in 1687 isn’t the primary determinant of our incomes three hundred years later? My god, how?!

6.       Speaking of UN pensions, and having once worked for UNDP (though, in my defence, I was deployed as TA to a Government), this is horrifyingly familiar. Senior UN official leaves because of the bureaucratic black hole that sucks in money, dreams and good intentions. My only comment is that he was extremely lucky if he found recruitment as quick as 213 days there.

7.       Yeah, so this is kind of scary: we may already be locked in to the bad-case-scenario for climate change. I should have checked my discount rates 12 years ago.

8.       Risk diversification 101, World Series of Poker edition.

9.       Lastly, because I want to be a happy person and I’m about to have three glorious days off, two links that made me smile hopelessly: the Guardian has picked up LitHub’s wonderful Interview with a Bookstore series, and Hull Libraries tweets about some of the odder jobs reported in the 1881 Census. Is ‘Proprietor of midgets’ basically ‘Owner of the Golden State Warriors’?

 Have a great long weekend, everyone!

R

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Why self-employed women earn less: Building a search-match model with data from Ghana

In many African labour markets, women are over-represented in sectors where earnings gaps are largest. For example, in urban Ghana, self-employed women outnumber self-employed men by a ratio of nearly 3:1, but male earnings are double female earnings in that sector (at the median). In wage jobs, by contrast, there are nearly 50 percent more men than women, but their earnings premium is far smaller (around 25 percent at the median). Controlling for worker heterogeneity can only partially account for these patterns.

Figure 1 – Sex Earnings Gaps across Different Sectors of the Economy

Figure1Log of weekly earnings for women and men in different sectors, using pooled data from CSAE’s Ghana Household Urban Panel Survey (2004-2013). Earnings gaps are larger in the least formal sectors of the economy, even though this is where women work most.

In our 2016 CSAE working paper, we build a search-match model, which can help explain these trends. Our model allows workers to choose between wage-employment, where they must match and work with a firm, and self-employment, where they work for themselves. However, there are frictions associated with moving into these jobs, so individuals queue while they wait in a third unemployment sector.

Vitally, we allow for worker heterogeneity along two dimensions. Workers differ in terms of their marginal product in self-employment, determining not only how well they fare as an entrepreneur, but also their bargaining position with firms, and hence their potential wage. However, the labour force is also split into women, who face discrimination, and men, who do not. We introduce discrimination in a very simple way. Although firms are homogeneous ex ante, women’s matches face some extra probability of being immediately destroyed. In effect, this is like each firm having some fixed proportion of its HR team being prejudiced. If a woman’s application ends up with a prejudiced member of the HR team, it is rejected.

Solving and simulating this model by drawing on urban Ghanaian data (collected by CSAE 2004-2013) not only recreates the empirical picture described above, but also produces one particularly striking result: adding wage-sector discrimination into the model produces earnings gaps across all sectors, even if the underlying ability distribution for women and men is identical. This is surprising, because it is not clear a priori where the extra ability ‘goes’. Even if able women are pushed away from wage-employment, surely they must go somewhere else!

To resolve this puzzle, we can think in terms of Roy’s model of occupational choice. Adding discrimination into the model pushes women even further away from the job in which they have comparative advantage. In fact, our model’s equilibrium is characterised by finding ‘cut-off’ or threshold levels of ability, above and below which workers will only accept certain jobs. The most able workers will only ever take self-employment opportunities because, relatively speaking, wage jobs are not worth their time. The inverse is true for the least able workers. Meanwhile, workers in the middle of the ability distribution will be willing to take both types of jobs – since it takes time for either type of job opportunity to come along, it does not make sense for these workers to fully specialise. It turns out that these ability cut-offs are endogenous, so adding discrimination into the model causes them to change.

This has direct implications for the make-up of each sector. Firstly, unemployed women are less able, on average, than unemployed men, because it is the lower ability female workers that find it harder to get a job when firms discriminate. For exactly the same reasons, the self-employment sector becomes flooded by lower ability women – the least able have to consider self-employment, given the extra frictions associated with obtaining wage work. Finally, the average earnings of female wage employees is reduced by discrimination, because it is higher ability wage-employed women who are pushed away from the wage sector first. By adding discrimination into the model, these women are suddenly willing to take both wage- and self-employment job opportunities, even if those self-employment jobs had not been in their interest beforehand.

Why should we care about these results? Overall, they remind us that we need to think about the labour market as a whole, when trying to understand differences between women and men in self-employment. In our model, although the largest earnings gap arises amongst the self-employed, this has nothing to do with the overall ability distribution for women and men, but also nothing to do with extra frictions, such as credit constraints, within the self-employment sector. Instead, the main market failure occurs in the wage sector, where earnings gaps are far smaller. Thus, if the mechanisms in our model match reality, simply targeting training and micro-finance initiatives at the female self-employed may provide only a partial fix to earnings inequality in the informal economy.

Figure 2 – Self-Employment in Urban Ghana

Figure2Caption: Self-employed women and men line the streets around Makola Market, Accra.  

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Links round-up

This is the first instalment of a weekly round-up of interesting economics and statistics, development writing and general marginalia produced by Ranil Dissanayake, blogger in absentia at Aid Thoughts and now a senior economist at the Department for International Development. It’s an entirely personal, often sarcastic, and occasionally profoundly grumpy sideways glance at the world. It is most definitively not representative of the organisation for which he works, and has evolved from occasional ranting e-mails sent to colleagues into a mailing list to the great, the good and the crushingly insignificant of the development world. Ranil has agreed to publish his links on the CSAE website, on the condition that no-one takes it too seriously, gets too offended or assumes these views represent anything but his own, rather odd, mind.

 

Hi all,

 This week’s links may be punctuated by a shriek of joy as Joe Root orchestrates the most obscene chase in the history of English limited overs cricket. Oh, DAGUMMIT! As soon as I typed that, he holed out to Kagiso Rabada, but he’s done the hard work. I hope. He has, right? Oh god. This is what it’s like to support the English cricket team – basically a random emotion generator gone haywire. Funnily enough, that’s a pretty good place to start this week’s links…

 [As an aside, this week’s links are also being published, for the first time, on Oxford’s Centre for the Study of African Economies website. I’m not going to self-censor or change my style; and I’m certainly not going to stop sending this out as an e-mail.]

 1.       Reading Tim Harford’s blog this week was a little like watching a very high-functioning and extremely economically literate tantrum unfold piece by piece. It started with Tim in optimistic mood – outlining the opportunity the most recent UK budget had to inject some consistency and sanity into the mish-mash of random nudges and incentives that constitutes the UK’s tax structure. He then got annoyed when the actual budget didn’t live up to its promise by taking exactly the kind of fudge he warned against on the sugar tax (funnily enough – fudge would not be taxed under the actual ‘sugar tax’). And then he took a moment, and exploded into a full-blown tantrum, deciding that we don’t need a budget anyway. He’s correct, of course, but it’s never going to happen. Still, it was great fun to watch. [And England just won! But not before trying to give me a heart attack.]

2.       Duncan Green reports on the tentative re-emergence of industrial policy as an approach to economic development, summarising some rather different thoughts from Ha-Joon Chang and Mushtaq Khan. I’m basically sympathetic to this agenda, but with a big caveat: we know this can work brilliantly, and we know it can fail spectacularly. What we don’t really know is what the right amount/type of support is in places that fall short of the ideal political context for rapid development – or even how we tell how far from ideal they are. I’m willing to be convinced, but I need a bit more than anyone out there is giving. And if anyone mentions malarial zones 200 years ago or settler mortality, I’m going to scream. Sort of related: a new working paper from Karthik Muralidharan, Jishnu Das and colleagues on the fiscal cost of poor governance –looking at teacher absence in India.

3.       On poverty, but in a different context – Tyler Cowen reports on a new paper that suggests that the poor should probably be moving around a bit more to find better prospects for increasing their incomes, concluding: “Ultimately we wish to protect people, not places per se.” I couldn’t agree more, and by the way, would it be awkward if I pointed at the large boat-shaped elephant in the room, filled with poor people looking for exactly that?

4.       Ben Casselman at FiveThirtyEight illustrates one of the points I get very boring about: countries or firms don’t outsource or attract jobs, per se. They attract or outsource production, and this distinction has huge policy relevance. If you care about unemployment intrinsically or for inequality reasons (and I strongly feel you probably should), then doing things that make labour an attractive part of a production function is pretty important. Note – some people think I’m saying we should make capital more expensive. No. Poor countries need way more investment. However the choice of technology we embody through investment can be influenced. [And because Trump-face appears on that blog, here’s a reason to believe].

5.       Speaking of technology, yet another 538 link – a really good discussion of the AlphaGo overreaction here. Here’s the thing: Go is so complex that people aren’t very good at it, compared to any objective scale at which 10 is ‘can solve the game’. That means much of the human competition comes from very human soft-skills – reading the intentions of your opponent from his moves and expressions, psyching them out with aggressive opening gambits, learning about them – sometimes over the course of months. You can’t do any of that with a computer, so all it needs are slightly better heuristics on an objective level than a human to beat them most times. In a way, this is less impressive than Deep Blue beating Kasparov. That said, Andy Haldane is a bit more worried, so maybe I should be too. Can they make a robot that loves cricket and economics?

6.       Brilliant article about Mervyn King and central banking. I worry that finance is so different today than it was when most currently rich countries developed that this is just a fundamentally more difficult world for a firm in a poor country to ever get long term finance.

7.       Finally, I love the RPI updates. People are so gloriously weird: apparently there are people who eat ‘microwave rice’, which has my tastebuds recoiling in horror; and the stack of writeable CDs I found while moving house are now basically useless. Dammit.

Have a great weekend, everyone!

R

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Dust and Death: Evidence from the West African Harmattan

Environmental events can have profound health-related, social, and economic impacts. These have the potential to be particularly salient in poorer countries, where individuals have fewer strategies available for coping or adapting to shocks. A new paper by Adhvaryu et al (2016), ‘Dust and Death: Evidence from the West African Harmattan’, finds perilous effects of natural seasonal dust pollution on infant and child survival across West Africa. The study also surfaces new evidence on how parents respond to environmental events, and how the impact of these events has changed over time.

The dry season in West Africa is marked by the harmattan phenomenon, in which strong trade winds pick up vast amounts of fine particulate matter from the Sahara and deposit it across the region. Previous studies in public health have suggested that the occurrence of the harmattan may be linked to meningococcal meningitis outbreaks, but the broader impacts of this environmental phenomenon on child survival and wellbeing have not been studied

Harmattan._Dust._Dakar.SenegalMorning dust obscures the urban view in Dakar, Senegal – By EquipeTKNal (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

Adhvaryu et al. use a methodology that combines geospatial measures of dust exposure for twelve countries in West Africa with detailed birth histories from the nationally representative Demographic and Health Surveys. Their baseline approach compares children from the same village exposed to different levels of dust in utero by virtue of when they were born, while also netting out variation in mortality that might be due to timing of birth, country-level trends in mortality, or varying seasonal patterns in typical mortality across the countries in their sample. Even narrower comparisons of children born to the same mother but exposed to different levels of in utero dust give similar results.

Adhvaryu et al. show that, while there are deleterious consequences of in utero dust exposure, economic adaptation has led to lessening impacts. In particular, they find evidence that parents provide health investments for children exposed to dust after birth that may mitigate the mortality effects of exposure and the morbidity outcomes for survivors. Second, they show that the lethality of dust has diminished over time. This is not because of reductions in the amount of dust to which African children are exposed, since dust exposure shows no trend over time. Rather, the declining impact of dust exposure on child survival is concentrated in countries where economic development has improved and general health conditions have strengthened. While not conclusive, this last piece of evidence implies that economic growth—and in particular, growth in health spending—may render countries more able to mitigate large-scale environmental shocks.

 

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Fetal Origins of Mental Health: Evidence from Africa

Authors: Achyuta Adhvaryu, James Fenske, Namrata Kala and Anant Nyshadham

Mental health disorders are estimated to make up 13% of the global disease burden (Collins et al., 2011). Poor countries experience the greatest losses, as the vast majority of mentally ill people in these countries go untreated: 76.3-85.4% of those with serious mental illnesses have not received treatment in the last 12 months (Demyttenaere et al., 2004). Additionally, mental illness tends to begin during the teen years or in early adulthood, affecting the most productive years of a person’s life (Kessler et al., 2007). It is thus important to understand the causes of mental illness, and early life conditions are a natural starting place for this research.

Our 2015 CSAE working paper examines the effects of in utero temperature shocks on mental health outcomes across 19 African countries. The results indicate that exposure to temperatures that exceed local historical means increases the incidence of depression and anxiety in adulthood. Specifically, a 10% increase in heat exposure increases depression indices by .05 to .07 standard deviations in the populations studied. These findings are significant not only because of their implications for health outcomes as global warming continues, but also due to the significant role that mental illnesses play in the global disease burden.

We combine gridded historical weather data from Africa with self-reported mental health data from a collection of nationally representative World Health Organization surveys that provide a record of symptoms of depression and anxiety within each population. These data also include the year of birth and geographic location of each respondent. Using this information, the respondents’ health outcomes are mapped against the geographic grid, and by comparing the year and location of temperature shocks to the location of respondents when they were born, the study tests for a relationship between temperature shocks in utero and depressive mental illnesses in adulthood.

As noted above, a significant relationship exists between higher in utero temperature exposure and increased incidence of mental illness in adulthood. The effects of in utero exposure to temperature shocks are most apparent in the incidence of mild and moderate depression, rather than severe or extreme depression. Troublingly, the increased reports of depressive symptoms do not coincide with increased rates of treatment. Additionally, the effect of temperature shocks is just as strong in recent years as in past years, indicating no evidence of adaptation.

Global warming is expected to lead to more temperature shocks in Africa (IPCC, 2013). As the effects of global warming lead to higher rates of in utero exposure to high temperatures in years to come, our results suggest that that rates of depressive mental illness will continue to rise. It is vital that developing countries in Africa increase mental healthcare options and the accessibility of those options, especially for poor populations. These results are similar to those of other studies that have predicted adverse consequences of global warming for health in poor countries, although these studies have focused primarily on physical rather than mental health.

2530914336_8fffd34a5a_oPregnant woman at UNICEF-supported health center in Sam Ouandja refugee camp- Credits: Pierre Holtz for UNICEF | www.hdptcar.net

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