Financial Literacy and Parenting in South Africa

By Janina Steinert – University of Oxford.

Living in poverty is not only a shortfall of money but also a daily struggle for securing food and basic needs.  The “one dollar a day” analogy is delusive in that the dollar is not available every single day.  Saving and careful financial planning thus become essential tools for addressing income volatility and smoothing consumption over time. Accordingly, empirical evidence shows that the financial portfolios of the poor go beyond mere hand-to-mouth survival and unfold in complex systems of spending, saving, and borrowing (Collins et al. 2009).

Acknowledging the importance of healthy money management, previous interventions have focused on building financial literacy and promoting savings. Proponents have described these programmes as cost-effective and empowering (compared to cash transfer programmes) and as low-risk and sustainable (compared to microcredit programmes). Their prominence – both in development practice and research – is emphasised by 115 experimental and quasi-experimental impact evaluations of financial education programmes identified in a recent meta-analysis (Kaiser & Menkhoff 2016). However, synthesised evidence from this meta-analysis reveals that financial literacy programmes remain far less beneficial than they promise, and particularly so for low-income populations.

In our recent CSAE working paper we therefore set out to examine how the effectiveness of financial literacy programmes can be increased. For this, we draw on emerging evidence from a range of projects that integrate poverty alleviation strategies with psychosocial programme components. Examples are the Becoming a Man (BAM) programme for economically disadvantaged youth in Chicago that features both behavioural therapy and financial literacy training (Heller et al. 2017) or the Sustainable Transformation of Youth in Liberia (STYL) programme which offers behavioural therapy and unconditional cash grants (Blattman et al. 2017). Motivated by the success of these previous programmes, we test the effectiveness of a group-based parenting and financial literacy training for poor families in the Eastern Cape, South Africa’s most deprived province.

Our programme, named Sinovuyo Teen, is composed of 14 weekly sessions that are delivered by community social workers to small groups of around 15 adolescent-caregiver pairs. 12 of these sessions are built on evidence-based parenting principles, including modelling of positive behaviour, anger and stress management, promotion of praise and self-worth, as well as establishing rules and routines in a household. The economic part of the programme is covered in two sessions focused on budgeting and saving training as well as commitments for family saving goals.

Photo of group session in treatment village (Source: Sinovuyo Teen Project)

Figure 1: Group session in treatment village (Source: Sinovuyo Teen Project)

 

To evaluate the impact of the programme, we ran a field experiment with 552 families from 40 village clusters. 20 villages were randomly selected to receive the Sinovuyo Teen programme and the remaining 20 to receive a one-day hand washing intervention (serving as our control group). At 5-9 months post-intervention, we find that participants from the treatment group have significantly changed their financial behaviours: They save more and borrow less, particularly so from moneylenders. We also observe significant decreases in financial distress, improved resilience to income shocks, and better access to a range of basic necessities, including education, medical care, and clothing.

Graph showing standardised intent-to-treat effect sizes at post-test (adult report)

Figure 2. Standardised intent-to-treat effect sizes at post-test (adult report)

 

Our results compare favourably to previous financial literacy programmes. We draw on qualitative evidence from in-depth interviews with programme participants to understand how the programme’s success might be explained. The data reveals four possible channels of programme effects: First, budgeting and saving training has likely increased financial self-efficacy and consequently helped to materialise pre-existing saving intentions. Second, commitments to saving goals and adoption of new rules and routines have likely helped prioritise essential expenses over others and reduce impulsive decision making. Third, promotion of praise, positive communication, and self-esteem can counter procrastination and hopelessness and thus motivate future aspirations in terms of investments in education and family business. Fourth, endorsed financial behaviours have likely been reinforced through peer pressure both in group-based sessions and in participants’ homes.

Based on our findings we contend that “hybrid” programme curricula that embed financial literacy training into wider psychosocial interventions are likely more successful than stand-alone financial literacy training.

References

Blattman, C., Jamison, J. C., & Sheridan, M. (2017). Reducing Crime and Violence: Exper-imental Evidence from Cognitive Behavioral Therapy in Liberia. The American Econom-ic Review, 107(4), 1165–1206.

Collins, D., Morduch, J., Rutherford, S., & Ruthven, O. (2009). Portfolios of the poor: how the world’s poor live on $2 a day. Princeton: Princeton University Press.

Heller, S. B., Shah, A. K., Guryan, J., Ludwig, J., Mullainathan, S., & Pollack, H. A. (2017). Thinking, Fast and Slow? Some Field Experiments to Reduce Crime and Dropout in Chi-cago. The Quarterly Journal of Economics, 132(1), 1–54.

Kaiser, T. & Menkhoff, L. (2016). Does Financial Education Impact Financial Behavior, and if So, When? DIW Discussion Papers 1562.

Steinert, J.I., Cluver, L.D., Meinck, F., Doubt, J., Vollmer, S. (2017). Household Economic Strengthening through Saving and Budgeting: Evidence from a Field Experiment in South Africa. CSAE Working Paper WPS/2017-11.

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Links round-up

Hi all,

I feel like I should be doing something more productive with my time, given the apparent imminence of a nuclear showdown, but I still find myself reading random econogeekery and statistics, watching cricket and searching the term ‘Shawn Kemp dunks Alton Lister’s face off’. I take this to be a sign that my life is well-lived. It’s important to start on an optimistic note, because…

  1. There’s an animated graph in this NYT piece on income inequality that has to be seen to be believed. It’s based on data from Emmanuel Saez, Gabriel Zucman and Thomas Piketty, and it shows how increases in income were distributed across the entire income spectrum in each year from 1980 to 2014 in the US. Long story short: in the 1980s, the poor and the middle classes saw their incomes rise more quickly than most of the rest of the population, a situation which has been entirely reversed over time – to the extent that the closer you are to the bottom of the income distribution, the closer your income gains are to zero. The message is much the same of Branko Milanovic’s famous elephant (now tortoise) graph, and the implications remain troubling.
  2. Speaking of inequality, this triggered a discussion with a colleague much more interesting than the original article, but I can only share the article, sadly. A café in Melbourne has instituted a ‘man tax’ in response to the gender pay gap there. The tax is economic madness (in that it does literally nothing about the underlying economic problem it’s aimed at), but is possibly far more astute politically, as my colleague pointed out. It’s a useful publicity stunt so long as people keep sharing the actually good research when the topic comes up. Related, and incredibly depressing: the timing of welfare payments relative to the exam cycle in the US has a material effect on the attainment of poor students. It made me think of Sir James Munby’s recent rant.
  3. Tim Harford consistently takes topics that others have wrung dry and finds new life in them, this time looking at the gig economy and the changing nature of work. Harford’s key points are firstly that a subset of workers will be potentially so empowered by the same forces that reduce the agency of the less-skilled that inequality may be sharpened; and that the machinery for organising much of our social protection (the firm/corporation) may become increasingly ill-suited to the task.
  4. The primary challenges of automation and robotics are likely to be institutional (how we respond to new phenomena and ways of organising work), and South Korea seem to be ahead of the curve. They’re considering a tax on income generated by robots.
  5. A new AEA paper has prompted me to suggest an alternative tagline for the movie Wall Street: “Investors – they get the price right, but only after being wrong for most of the time, and with sometimes catastrophic consequences.”
  6. I’m not sure how much I like this article, but it makes one point that really resonated with me: “It takes an astonishing amount of effort to get people to hear a thing… John Lilly’s rule was that he had to say a thing three times more often than he thought he should… [and] I suspect he’d agree that number’s still low.”
  7. And lastly, The Undefeated teamed up with Survey Monkey to rank the fifty greatest black athletes of all time, generating a substantial amount of data with which to speculate about our biases (the Undefeated’s take is here). It’s amazing how split people were on Serena Williams (objectively surely one of the greatest athletes ever). The skew towards US sports also left out some who would have featured in my own list, not least Sir Isaac Vivian Alexander

Have a great weekend, everyone!

R

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Links round-up

Hi all,

With the final test in full swing and nicely balanced, I’m not going to lie: I’m pretty distracted right now. It doesn’t help that I’m working from home, with the sun shining outside and the garden in full view (increasingly dominated by a courgette plant that began life occupying a small corner of one of the beds and now threatens to colonise not only the adjoining bed but also the garden next door – any tips on how to prevent him causing a small diplomatic incident?). But it’s not been all good this week: Jeanne Moreau died, saddening anyone brought up on the French New Wave. And as for anger…

  1. It’s been a while since I went on a full scale rant here, but this really set me off: this week’s events in Venezuela are completely shameful, the icing on the cake on years of sustained economic crimes against humanity. Ricardo Hausmann presents the case for the prosecution, and it is shocking: “Venezuela’s GDP in 2017 is 35% below 2013 levels, or 40% in per capita terms… Income poverty increased from 48% in 2014 to 82% in 2016… The same study found that 74% of Venezuelans involuntarily lost an average of 8.6 kilos … in weight. The Venezuelan Health Observatory reports a ten-fold increase in in-patient mortality and a 100-fold increase in the death of newborns in hospitals in 2016.” Let’s be totally clear here: the scale of this suffering can only be laid at the feet of those making policy. Every decision made has been a bad one, starting from the ones that had short-term payoffs. Doubling down on them is one of three things: criminal stupidity; venality and corruption; or evil.
  2. “Like killing a fly with a sledgehammer: you’re going to do more damage than good.” Keeping with things that have made me furious this week, this is how long-time Links round-up hero Michael Clemens has described the proposals tabled by Trump to limit legal migration. It is brilliant, not just for those interested in immigration – Clemens describes how the economy functions as a dynamic entity, in ways that can be difficult to grasp for those who haven’t studied it (and even for some of those who have, evidently). Related, Michael also blogs on a new paper he’s done looking at the relative importance of violence and conflict and economic conditions in stimulating outward migration (he finds them around equal, at least in the context he examines); and Vijaya Ramachandran has a short but very sweet post pointing out that despite all of the restrictions they face, Syrian refugees in Turkey have already invested more than $300 million in the economy there.
  3. Speaking of Trump, and continuing on the theme of ranting and anger: the National Review absolutely eviscerates the myth of President Dealmaker here: “He isn’t smart enough to do the job and isn’t man enough to own up to the fact. For all his gold-plated toilets, he is at heart that middling junior salesman watching Glengarry Glen Ross and thinking to himself: ‘that’s the man I want to be’”.
  4. Want good news? It will annoy the myriad China-pessimists I seem to meet these days, but it seems like China has quietly and competently begun to deal with its debt problems.
  5. Speaking of quiet competence, there’s the Bank of England. In a speech that should be required reading for anyone interested in trade and anyone who would like to understand how the theory of comparative advantage explains why we’re all so much better off today than we were 20 years ago, Deputy Governor Ben Broadbent discusses how importing as much as exporting explains why we get paid more to do stuff today; and also discusses the winners and losers of the process, and how to respond to them.
  6. I was really prepared to dislike this (the Guardian touching on economics always raises that spectre for me), but it’s actually very good. Viv Groskop discusses the gender pay gap and offers sound advice: “It seems we are all saddled with preconceptions about money and gender that will take years to unravel. In the meantime, why not risk being disliked? Ask for what you’re worth. Be prepared to demonstrate it.”
  7. Unlikely as it sounds, you know where you will get a very sound (background) discussion of economics? Trading Places. So good, in fact, there is actually a Congressional ruling known as the Eddie Murphy rule. Read this wonderful oral history of the movie, which makes the joke I would love to reproduce, but am reduced to linking to.

Have a great weekend, everyone!

R

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Links round-up

Hi all,

The last time I watched Toby Roland-Jones play cricket, he took a hat trick with the final ball of Middlesex’s County season to win them the Championship against Yorkshire. His partner was screaming her head off in support a few rows in front of me, and I blame her (rather than the prosecco, beer and associated libations) for my splitting headache the next day. Anyway, it seems like he has something of a golden arm, and is currently bowling with an economy of under 2 and a wicket-taking average of less than 5 in Test cricket (n=less than 1). Regression to the mean be damned.

  1. I’ve been trying to talk people out of technopessimism for ages, but I’m still getting regular invitations to discuss the prospects of robots rendering us all unemployed and miserable. I will eat my hat if we enter a period of widespread unemployment and lower living standards because we’ve gotten so productive that we no longer need to employ people to do tasks robots can do . Tim Harford is getting in on the act too: he points out that the introduction ATMs and weaving machines preceded increased employment of bank tellers and textile workers for the simple reason that the increased productivity allowed people to specialise more efficiently and the reduced costs increased demand. It’s logical, which I increasingly learn is not the same as ‘widely obvious’.
  2. I’m much less sceptical about the value of proper, strong economic analysis of humanitarian disasters and responses, but sentences like “Cost-benefit analysis or recent advances in behavioural economics can help make sense of suicide attacks triggered by emotions such as resentment, or of non-kin altruism by medical aid workers risking their lives to address the 2014 Ebola epidemics in West Africa” help make clear why other disciplines can regard economists as arrogant interlopers. Economists can make a contribution, surely, but to imply that these things are largely a mystery seems… pretty out-of-touch. I imagine the anthropologists are sharpening their pitchforks already.
  3. I found this really thought provoking, and difficult to summarise: Dietz Vollrath thinks about Malthus, again, and looks at the potential effects of the relationship between population density and agricultural productivity on incentives for development. It requires a little maths and patience but the implications are interesting. It might go nowhere, but is worth thinking about.
  4. David McKenzie on a nice study that, at a basic level, proves that competition really does work, and market size matters for firms. Those things sound obvious, but a lot of what development actors do seems to ignore them, with the result that we implement reforms or training in contexts where competitive pressures don’t result in rewards accruing to firms that improve, or where the size of the market is too small to take advantage of improvements.
  5. When John Sutton talks about how to reform institutions, listen.
  6. Gender links, hopeful and horrible. Hopeful: training can help overcome the biases women themselves may have against taking certain kinds of job. Horrible: the percentage of murdered women in the US who were killed by their partners. I’ve been trying to work out what to say about that, but my first reaction still seems the best: that’s pretty f**ked up, if you’ll pardon the language.
  7. There’s no way I’m going to leave it on that note, so let me share with you my favourite discoveries of the week: first, Zion Williamson, a 16 year old high-school kid made of 105kg of muscle and barely disguised contempt for humanity. It is deeply unfair that he is allowed to do these things to normal 16 year old children. There was a point in that video where Zion seemed to trample on a small piece of chalk. I watched it again and it turned out to be one of the opposing players. Seriously, he reminds me of this. And secondly, a man’s romantic gesture (n=200) backfires horribly.

Have a great weekend, everyone!

R

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Links round-up

Hi all,

Since the third test of the England – South Africa test has yet to start, and the NBA Summer League has already finished, I’m struggling for an interesting intro to this week’s links (this reflects my general struggle in conversation: how to interact with people when there’s no cricket or basketball to talk about, especially when economics is cordoned off for separate discussion). My normal strategy in a social situation would be to find the bar, but I think that might be against the Civil Service code. So straight into the links this week:

  1. It’s no secret that GDP doesn’t measure everything that matters for human well-being, and it’s also pretty well known that measuring productivity in an economy is incredibly difficult. Most economists more or less ignore both of these facts most of the time, but this excellent piece by Adair Turner has a go at working through the implications, or at least one set of them. He points out that many of the things that do most to improve human happiness these days don’t show up in GDP, but lots of zero-sum activities (like chasing criminals who don’t produce anything new but steal what has already been produced) do. He suggests that this is increasingly becoming the case in developed countries (an important qualification) and GDP and productivity could become irrelevant as indicators of well-being.
  2. Of course, we could always automate policing or defence, and since everyone seems to be bricking themselves at the prospect of being replaced by machines, maybe that’s coming? I don’t buy these visions of mass robot-induced indolence and neither do Acemoglu and Restrepo on VoxDev, who point out that not only have previous robot-terrors failed to come to fruition, there are good economic reasons to suggest that their influence on workers will be restrained. And secondly, another recent paper shows that once you examine automation risk at the task-level, the number of jobs genuinely at risk from the new wave of robots is much smaller than previously estimated. Related, this brilliant feature on 538 looks at how algorithms and AI processes that learn based on information mediated in some way by humans can be as biased as humans.
  3. The best thing about Michael Clemens’ research is that even though he has a clear opinion on the value of migration (and its moral worth), he never lets this cloud the objectivity of the research he presents on it. Clemens and Hunt look at the literature on the effects of refugees on ‘native’ employment and wages, and where the data shows no effect, they make that case; but in the study where they think the data really does show a small negative effect (refugees in France, in 1962) they make that case too. Over at CGD, Clemens also shows how promises to slash legal migration will be a lose-lose proposition for the US. Of course, Trump might not care, so long as he can relax the rules for long enough for his resorts to hire foreign workers – right in the middle of ‘Made in America’ week. Related: Vox on how the Gulf crisis is likely to have severe effects on its (numerous) migrant workers.
  4. I read this a few weeks ago, but it just popped up again on my RSS feed, and it deserves to be read by as many people as possible. Tim Harford goes nuts and gets angry at just about everyone in sight after Grenfell, pointing out what a complete shambles UK housing policy is.
  5. Psychology and economics have had a fruitful relationship ever since Amos Tversky and Daniel Kahneman politely pointed out that rational choice theory is a very bad description of human behaviour. It was (and remains) an easy discipline to listen to for economists, because it’s based in large part on individual choice and behaviours and economics typically models representative units (individuals or firms). Disciplines that place more weight on social constructs and the relationship between individuals and these groups are a harder sell, as Andrew Gelman starts to discuss here.
  6. Two things: I’m amazed the NHS was spending money on homeopathy in the first place (they’re stopping, thankfully). And I am really not amazed that the head of the British Homeopathic Institute is called Cristal. Related: apparently, surgery has a pretty powerful placebo effect.
  7. And finally, though I can’t go for the booze in my job, Nate Silver and co did so in the name of science and data journalism, looking for the perfect margarita using a k-means clustering algorithm. Even I’m not that much of a geek.

Have a great weekend, everyone!

R

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Links round-up

Hi all,

I love summer. It means barbecues and sunglasses; Summer League and Lonzo Ball throwing some absurd dimes; but most of all it means there’s Test cricket in England. Right now, Quinton de Kock is absolutely hammering the English bowling, someone’s just compared him to Lara on the Grauniad, and South Africa are 140-2. And we have four more days of ebbs, flows, cover drives and Jimmy Anderson being mouthy and annoying to look forward to. I love summer.

  1. With that uncharacteristically cheery start out of the way, shall we get our Grinch on? This tweet is extraordinary, and justifies the anger that the North of England feels about the way public decision making has left it behind. Spending per head on infrastructure, which reaches GBP2,600 per head in London, is just FIVE QUID A HEAD in the North East. It’s not just neglect at work here, but also the vagaries of economic decision making, as this excellent blog explains. If a region starts with higher income per head than others, then any growth-enhancing investments will maximise national returns (measured in average incomes) if it focuses on that region. This has implications for anyone who does CBAs. Income maximisation is not the same as utility maximisation, and the economists’ answer that people can and should move isn’t enough.
  2. While we’re being angry, though – has anyone seen Martin Wolf this angry before? He is not optimistic in the least.
  3. Not entirely unrelated: VoxDEV summarise research on the impact of greater openness to trade on domestic firms. What they find won’t surprise you: firms nearer the ‘best practice’ frontier for their industry thrive, while those further back tend to suffer. This is competition working, and it’s why producing tradables is such a good mechanism for increasing productivity – good firms expand and bad ones die. Two implications leap at me: first, that opening too much to trade when you have few firms producing tradables well is a problem; second, that closing off to trade increases the scope for bad firms with high costs and poor products to proliferate.
  4. This week in lacking self-awareness: In quick succession Vox ran an article on telling whether a chart was wilfully misleading you; and then ran a chart wilfully misleading readers about the size of a stock market dip by manipulating the time series shown.
  5. This one hurts. You know that famous study that Daniel Kahnemann cites about how parole judges get much meaner and deny parole to almost everyone right before lunch? I’ve used it to convince interview panel chairs to keep us well stocked with snacks during assessments. Well, it turns out it that the study has some pretty serious problems – not least the fact that the size of the effect is so enormous you’d expect that virtually all human activity basically ceases right before lunch and dinner. (Alright, it does for me, but that might be a local effect).
  6. Anyone ever tried to dismiss aid as ‘a transfer from poor people in rich countries to rich people in poor countries’ to you? Branko got annoyed at that one, so he demolished it. I imagine something like this happening while he was working on Stata for this.
  7. Okay, de Kock was just caught for 65, but to cheer us all up The Mighty Ducks are 25 today, and here’s a photo of Emilio Estevez being barely any taller than those kids.

Have a great weekend, everyone!

R

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Links round-up

Hi all,

There is a tidy narrative that gets trotted out whenever a major cricket nation appoints a new captain. The story is that the player thrives early on, enjoying the responsibility and the positive spillovers from their need to be ever-so-slightly more aware of the match situation, the state of the pitch and the relative strengths and weaknesses of their batting partners and opposing bowlers. Over time, the drudgery of captaincy begins to wear them down – they make a few bad decisions and get disproportionate criticism, or Kevin Pietersen calls them a bad word, and their batting average declines. I think there’s a simpler explanation: Captains are typically batsmen. They get appointed when they’re on a good run and benefit from the halo effect: because they’re scoring runs well, they must be a good captain. Over time, their batting regresses to the mean and the halo effect works in reverse. Can anyone better with Statsguru than I am check this out? Anyway, halo effect or no, Joe Root just scored 190 in his first innings as captain, I’m predicting South Africa will fold like an accordion.

  1. So I need to think about this one a bit more. People use the term ‘brain dump’ as a mild pejorative, but when your brain is like Dietrich Vollrath’s it more like a rain shower of gold (and you better hope you have a pocket in your stitched-up pants). Dietz looks at recent research which suggests that once one accounts for unobservable individual characteristics, there is no productivity difference between urban and rural areas. We need to be careful here: this does not mean that urban areas aren’t more productive, but that if you drop a random rural person into an urban context they don’t become magically more productive – the gap in productivity is explained by their education and ‘talent’. I feel like this is worth taking very seriously, but we need to exhaust the alternative explanations, first. There’s a lot of good research that suggests that there is something special about urban centres, too. So who to trust?
  2. A great long read from The Atlantic about how Chinese investors in American factories are getting on. We’ve had speakers at DFID who look at the culture clash between Chinese managers and owners and workers in Africa, too – there are real issues here relating to norms around work and worker behaviour. It’s interesting to note that the experience of Japanese-owned factories suggests that simply engaging with the workforce on more equal terms can increase productivity. It would be amazing to see if that effect is driven by actual improvements in production processes or simply through labour relations.
  3. I recently gave a presentation in which I suggested that so far, Trump’s bark has been worse than his bite on international trade. This VoxEU piece has a different take: Trump’s bark is his bite – his rhetoric may actually have caused some G20 members to alter their trade practices already. Also from VoxEU – data suggests that long term development might be less about being good at growing and more about being good at not collapsing.
  4. 538 asking the questions that matter: everyone knows that they will invite opprobrium by eating well-done steaks, but how many Americans really do order them rare?
  5. This reminded me a of Simon Singh’s lovely book Fermat’s Last Theorem. A profile of the mathematician June Huh, a star in the field who never really thought he had much talent and whose success seems to draw heavily on his willingness to jump between specialisations.
  6. Lastly, great news for American basketball fans: basketball magician Milos Teodosic is finally joining the NBA, and is likely to make a famous player near you look very silly indeed in the near future.

Have a great weekend, everyone!

R

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Hi all,

There are times when humiliation brings with it a gentle chuckle, like when I asked a colleague why his door was closed, and he asked me to read the sign on it (it said ‘Fire door. Keep shut.’, as I discovered as I read it out loud). And then there are time when it feels like someone has reached down your throat, torn out your soul and turned it into an scarf, like when Zimbabwe canter to the highest chase ever against you (in Galle, no less) winning with a hammered six in the 48th over. Meanwhile, our most accomplished cricketer is scoring centuries for fun at Surrey, sailing into retirement after a summer of six centuries in 11 innings. Please excuse me for a moment while I smack my head against the wall.

  1. “When the goat survived, this served as proof that the protection worked.” Last year, Raul Sanchez de la Sierra spoke to DFID about data collection. It was wildly entertaining – everything he had data on (witchcraft!) and every method he used (spies!) was totally unexpected, but as strange as the topics felt, there was something practical and important to learn from every example. I was reminded of this when reading this summary of his new paper with Nathan Nunn. The quote above comes from it, as does this: “The liberation of the village began one evening in 2012, when an elder of the village had a dream [which] … taught him how to use supernatural forces to bulletproof the young men in the village.” As crazy as it sounds, Raul and Nathan collected data on these spells and their effects on the rate at which young men defended their villages from militias. And it’s not nearly as esoteric as it sounds – their findings have potentially profound implications for how we understand individual and group decision making and what constitutes ‘optimal’. Brilliant.
  2. Censuses are hugely political, something we don’t really think about until  someone points it out. The Economist does so for Nigeria here, explaining why many parts of the country have made sport of overestimating how many people lived there. But that doesn’t mean that Nigeria’s population is overestimated: some recent aerial surveys suggested it might be underestimated. In short: no-one has a clue, and that’s unlikely to change any time soon.
  3. Recently, a friend unearthed an e-mail from about 10 years ago in which I asserted strongly that Jose Antonio Reyes was far better equipped to succeed in football than Cristiano Fancypants Ronaldo as I called him. Changing your mind is very often a sign that your thinking is improving, but it also comes attached with a social stigma that is hard to shake; and it’s hard to do given the biases we’re so prone to. So I loved this Planet Money episode dedicated to examples of people who have changed their minds about important things (transcript). We need to destigmatise this. Wrong and stubborn is the worst of all worlds.
  4. FiveThirtyEight continues to be the only media outlet that is able to combine data, proper analysis and human interest. This time it looks at healthcare in the ‘black belt’ of rural, poverty-stricken America.
  5. I’m from Hong Kong, and constantly annoyed when libertarians cite it as proof that ‘the smaller the state, the better’. This VoxEU analysis of Hong Kong’s actual economic model is brilliant – and makes the point that around 70 years of policy consistency is probably as important as any of the individual policies themselves.
  6. Get the popcorn: Lant Pritchett looks at the latest research on migration and the policy implications of it in this magisterial two-parter for CGD. The material is largely familiar, but I really urge you to read it. In the first part, he absolutely eviscerates Borjas’ paper finding severe negative effects on the wages of a small group of native workers (“the [sample size]… was two— … literally two people in the way that you and me, dear reader, make up two people”). In  the second part he considers how policy makers should respond. There is so much clear thinking and communication here. Just read it.
  7. I think everyone knows that popcorn reference above is to Michael Jackson’s Thriller video, right? For the uninitiated, Vox ranks the best reaction gifs ever – MJ wins (of course). Though a new contender has now emerged: noted egomaniac LaVar Ball, intent on stealing the limelight from his incredibly gifted son.

Have a great weekend, everyone!

R

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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

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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

 

 

 

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