Links round-up

Hi all,

I meant to get the links back up and running last week, but a catastrophic power cut (catastrophic because it cut both the wifi and the kettle, it was like the end of days here) put paid to that idea. On the plus side: last week, the links would have basically been one prolonged squeal of pain, roughly translatable as ‘EFFEFFESSENGLANDCANSOMEONEPLEASELEARNHOWTOBOWLABL**DYYORKER?!’, but I’ve gotten over the anguish now, so I’ll instead be miserable over the fact that I couldn’t get tickets to see Joel Embiid play against Boston last night in London. On the other hand, the time I put aside last week to finding all my favourite links of the year got swallowed up in electrician stuff so I’m afraid the planned best-of-the-year round-up had to be shelved. Sorry (for what it’s worth, the sentence of the year was from Michael Clemens: “Like killing a fly with a sledgehammer: you’re going to do more damage than good.”) Anyway, to the week’s links.

  1. Some of you might have noticed Stefan setting off a Twitter maelstrom over the last couple of days. A brief summary of one of his presentations (which will probably be familiar to many at DFID) on the big visions of if and how externals can ‘do’ development in poor countries prompted a Twitter firestorm over how male the list is, and an alternative list of great work by women on development by Alice Evans. I should point out that this isn’t Stefan’s list of what matters in development (the pointed commentary on the various viewpoints makes that clear, as does the absence of anything on the main concerns of his own career, including agriculture and insurance) – it’s an attempt to critically summarise what the big ‘zeitgeist-y’ takes on development have been. I agree with Alice that this makes it a very unbalanced list in terms of gender and ethnic composition, and economics really needs to get a handle on who wins influence and how; and what we can do about the biases and blind spots this causes. I note Heather Sarsons is on the job market at the moment. I hope she’s snapped up by a top school; her papers are really clever takes on this problem.
  2. In related news, it certainly seems that women are held to higher standards when it comes to publishing and in peer review. Research by Erin Hengel uses readability scores to argue that women are forced by peer review to improve more and faster over their career in order to clear the bar for publication; it also appears that peer review of their work takes longer than it does for men. This great long read from the Economist covers a lot of good research on how women fare in economics, and both Heather and Erin are cited (as is our new Chief Economist, Rachel Glennerster). It bothers me, though, that the default lens for thinking about bias is still Gary Becker’s – assuming that it reflects a well-thought out preference, which competition should be able to eradicate. Markets tend not to work that well, and people tend not to be that self-reflective.
  3. On the subject of people, do you like personality quizzes? I know a bunch of people who are addicted to them, while I’ve been dubious ever since the Myers-Brigg put me down as an introvert with a rationality deficit. Maggie Koerth-Baker from 538 seems to have found one that actually has a scientific backing. The secret? It doesn’t try to over-identify what people are like.
  4. Anyone who’s worked with me long enough will know that I love Our World in Data; so forgive me for having a massive geekout over this: Planet Money had Max Roser and Hannah Ritchie from the project on to discuss what the world’s headlines would look like if they were only written every 50 years (transcript). Good news gets a much higher billing, but so does the potentially catastrophic: an unprecedented reduction in global poverty alongside a terrifying increase in carbon dioxide emissions. It’s all about growth. (Also: Cardiff Garcia is now a Planet Money presenter. This has led to a dramatic increase in my standard of living, as I have the opportunity to say ‘Cardiff Garcia’ on a substantially more regular basis).
  5. If there was an award for most thankless but persistent calling of ‘bullshit’ this year, there would be no competition. Maya Forstater wins for her one-woman war on fake facts in the illicit financial flows literature.
  6. I’ve said this before, but it’s always true. Every new paper by Nick Bloom should be welcomed with dancing on the streets. This one looks at the large firm wage premium and suggests it’s disappearing on the back of outsourcing – an important companion piece to his Firming Up Inequality paper.
  7. And lastly, I’m really not sure if I should be watching this critically for stereotypes or just freaking out at how cool it’s going to be. The Black Panther trailer looks pretty, pretty good. (oh yeah, and the soundtrack will be written by Kendrick Lamar). Maybe 2018 won’t suck?

Have a great weekend, everyone!

R

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Links round-up

Hi all,

Andy Dufresne lied to us. Hope is a terrible thing. It’s hope that gets you excited when England have twin centurions and six wickets in hand at 350-odd. It’s hope that’s kindled when a new fast bowler knocks off two Aussie top-order batsmen without any hassle. And yet, every time it offers you its helping hand, it yanks you in to deliver a pro-wrestling style kick to the belly. Needless to say, I was less than impressed by England’s collapse, Craig Overton’s side strain and the inevitable soul-crushing Steve Smith innings I awoke to follow on Friday morning. Here to add to your weekly quota of disappointment is this week’s links.

  1. Fair warning: this one can be distressing to read. I had an enlightening conversation recently about how simplistic the coverage of the #metoo movement has been, and how much diversity in women’s experiences has been glossed over. This brilliant article by Claire Malone looks into one aspect of this diversity, pointing out how appallingly different the experience of poor, blue/pink-collar workers (often immigrants) who experience sexual harassment or assault has been. It’s a great piece of writing, considering social biases, the role of trade unions and precarity at work and if there’s hope for the future.
  2. A great interview with Anne Case starts with words I’ve often used: “what I love about economics is…”. Everyone should read this, especially the section on why women have a harder time in economics than men, focusing in part on the aggressive seminar questioning culture of the discipline (someone recently  pointed out – correctly – that I buy into this, with my love of econ-arguments online). One thing I find remarkable (and great): a lot of the research they cite is by students or very young economists – Heather Sarsons is a PhD student and Alice Wu was, astonishingly, an undergraduate when she wrote her paper on Econ Job Market Rumours forum. Related: how to undo the gender bias in seminar questioning.
  3. Christie Aschwanden considers the ‘weird sample’ problem in social psychology, and a hugely ambitious idea to overcome it (and with it, some of what has caused the crisis of (non-) replicability in the field). A weird sample happens when your study examines a group that is somehow very unlike the global population you’re trying to understand. For example, if you’re trying to understand self-control and your participant pool is MIT postgrad students, you have a weird sample. One way of solving this: pre-registering your trial and through this process recruiting people in very different places to run the same experiment, increasing both the size and diversity of the sample.
  4. Branko on what the future of the global income distribution might look like, and what that means for politics. I’m disappointed that this doesn’t consider the implication of the considerably less elephantine elephant graph he produced recently.
  5. I could probably have filled this week’s links with nothing but 538 links, actually – another excellent piece looks at the benefits and costs of increased community resilience to terrorism. Amelia Thomson-DeVeaux points out that while the attitude of carrying on regardless does reduce the impact of (and thus return to) acts of terrorism, they also tend to be accompanied by a closing in of the community, and increased mistrust of outsiders.
  6. A very good VoxDev piece on what South Korea’s much-vaunted industrial policy actually consisted of.
  7. Despite what some would have you believe, the robots are not going to take all our jobs, as evidenced by this attempt to write literature (I’m tempted to invoke the econometricians’ maxim: garbage in, garbage out). The unicorns, on the other hand

Hope you had a great weekend, everyone! No links till the new year now – at which point I’ll try to round up my favourite pieces of 2017.

R

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Female condoms – a technology for women with low bargaining power?

Condoms are the only well-established technology that protect against sexually transmitted infections (STIs). Yet in 2015 alone, an estimated 3.3 billion risky sex acts took place without condoms in Sub-Saharan Africa, leading to 910,000 new HIV infections (UNAIDS, 2016a). Women disproportionally bear the costs associated with risky sex: they are more vulnerable to HIV infection, and carry the burden of unwanted pregnancy (UNAIDS, 2016b). Yet despite women standing to benefit most from condom use, the decision to use a condom is joint, and both sexual partners must agree. Thus women with low bargaining power may struggle to convince their male partners to use condoms.

In my job market paper, co-authored with Rachel Cassidy (IFS) and Marije Groot-Bruinderink and Wendy Janssens (AIGHD), we show that low female bargaining power appears to be a significant driver of low use of male condoms, and that female condoms can offer a partial solution.  Using an RCT in Mozambique, we find that women with low bargaining power and those who are having unprotected sex are able to convince their partners to use female condoms, which men find more pleasurable and less stigmatizing than male condoms. This implies that despite the higher unit cost of female condoms, providing them for free may be a cost-effective policy.

Female condoms as a second-best solution?
Female condoms are slightly less effective in preventing STIs and more expensive to produce than male condoms (Dowdy et al., 2006; Trussell et al., 2011), but are more pleasurable and less stigmatizing, especially to men (Wanyenze et al. 2011; Koster et al. 2015). From a policy perspective, their introduction is justified if it helps women having unprotected sex convince their partners to use this second-best alternative. On the other hand, introducing female condoms could backfire if couples substitute male condoms for female condoms, increasing the overall riskiness of sex.


An RCT focusing on women’s bargaining constraints
We conduct a field experiment in the slums of Maputo, where the female HIV prevalence rate is estimated at 30%, to examine how household bargaining affects use of protection. Specifically, we exploit the scale-up of a condom program implemented by Pathfinder, which seeks to increase condom use by offering female condoms alongside male condoms. Participating women, out of which 85% are in a stable relationship, attend a series of group sessions that provide information about contraceptives, comparable to standard sex education programs in health centers and schools in locations with high HIV prevalence. Female condoms are added to the set of products carried by local health workers (which already includes male condoms) that participants can access freely and discreetly at the end of each session. The intervention thus alleviates information, access, and price constraints for both male and female condoms, allowing us to study how bargaining affects condom use. We use a phased-in randomized control trial (RCT) to compare women who attended the condom training to women who were randomized to wait an additional six months before beginning the course.

A model of intra-household bargaining and technology adoption
To help us think about who might adopt each type of condom and why, and indeed whether the frequency of sex might increase when condoms are offered, we introduce a model of the household where partners jointly choose whether and how they have sex. The model predicts three effects when female condoms are introduced. First, on the intensive margin, some women with low bargaining power who were previously having unprotected sex are now able to convince their partners to adopt female condoms (but not male condoms), increasing condom coverage. Second, some women with intermediate bargaining power who were previously using male condoms also substitute into using female condoms, decreasing average condom effectiveness. Third, on the extensive margin, some couples who were not previously having sex, because neither the utility from unprotected sex nor the utility from sex protected by condoms was greater than both partners’ outside options, now have sex with female condoms. The relative magnitudes of each of these margins of response are important to determine empirically, in order to establish total effects on HIV transmission and welfare.

High-frequency data on sexual behavior
In addition to baseline and endline data, we also collect weekly sexual diary data. This allows us to not only understand condom adoption, but also to understand the bargaining process and study impacts at the level of sex acts. The diaries are also instrumental in mitigating recall bias and misreporting, which we further address by recording the number of condoms that participants take with them after each session. To measure household bargaining power of the women who are in a stable relationship, we collect information about assets brought by the woman to the relationship, and also enumerate two different survey modules covering decision-making and power dynamics in the relationship (Donald et al., 2017).

Participants adopt female condoms, don’t substitute male condoms, and have more sex
The results show a large impact of treatment on female condom use: an increase of 18.4 percentage points in the proportion of women who have ever used female condoms (compared to 9% in the control group) and an increase of 7.7 percentage points in the proportion of those currently using female condoms (compared to 2% in the control group). Importantly, we see no significant evidence of substitution away from male condoms. Moreover, the diary data show that treatment leads to an increase of 9.1 percentage points in the probability that an individual and her partner have sex each week (19% of the endline mean in the control group). We do not observe an impact on the number of partners.

Women with low bargaining power adopt female condoms most strongly
As predicted by the model, among women in a stable relationship, adoption of female condoms is driven by women with lower baseline bargaining power; see Figure 2. Moreover, women who were having unprotected sex at baseline show particularly strong female condom adoption and drive the higher probability of having sex in the treatment group. Adoption is also greatest among women who are not in a stable relationship at baseline and women who are HIV-positive, suggesting increased coverage of the sex acts with the highest risk of HIV transmission.

Free provision of female condoms can be cost-effective
Using an epidemiological model, we conduct simulations of the scale-up of our full intervention to the whole of Southern Mozambique. We also simulate free distribution of female condoms, assuming that information provision comes through existing sex education programs. The simulations take into account the increase in condom coverage, but also the decrease in average condom effectiveness compared to pure use of male condoms, and the observed increase in the number of sex acts. We estimate that while scaling up the full intervention at its current cost is not cost-effective, free provision of female condoms is cost-effective, given the observed lack of substitution away from male condoms and the cost of antiretroviral therapy.

Overall, the paper demonstrates how policy design should take into account asymmetry in the costs and benefits of technology adoption across household members. In particular, we highlight how low female bargaining power may lead to under-adoption of technologies that improve household welfare, in cases where women have a stronger preference for adoption or face higher costs of non-adoption. In such cases, the first-best policy may be to target male preferences, through information and social norm campaigns to increase welfare-improving investments and adoption (see for example Stopnitzky (2017)). If such campaigns cannot resolve under-adoption, this paper suggests that providing versions of the technology that are more acceptable to men, or bundling technologies with goods for which men have a high demand, may offer a second-best solution. The trade-off between changing norms and adapting technologies to fit with preferences of the dominant partner, both in the short and long term, remain important topics for future research.

This article was originally published in the World Bank Development Impact blog on 4 December 2017 and is reproduced here with both their permission and that of the author.

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Links round-up

Hi all,

I know I’ve said this before without being right, but I feel sure we have reached the end of days: apparently Rough Guide have listed Newcastle as the number one destination in the world in 2018. I’m aware that mocking this decision is going to invite some domestic strife, but I have a friend who’s just putting the finishing touches on a move to Fiji and I think he’s probably not regretting his decision. I’m going to be in Newcastle over Christmas and probably now need to buy some sort of disguise. In addition to about ten layers. Luckily, if we’re frozen in, there’ll be crushingly inevitable defeat in the Ashes to keep us warm.

  1. Jokes aside, I actually really like Newcastle, after extended exposure shifted my prior beliefs. I have much stronger, more hardened priors about the value of training programmes for employment and firm success – namely that there doesn’t seem to be any, at least in developing countries. That said, this Markus Goldstein piece has me questioning this. His team at the Gender Innovation Lab have found that if designed to make them accessible for girls and implemented before they make really long lasting decisions like marriage and child-bearing, the effects can be substantially larger. He also makes the oft-neglected point that men and boys are an important constituency to engage to make sure effects for women are positive. As one of my bosses once put it: men are the most obvious constraint to gender equality.
  2. A couple more good gender links: first, Planet Money’s Stacey Vanek-Smith teams up with Cardiff Garcia (still the best name ever) to investigate the evolution of sexual harassment training videos in the US, pointing out that the early, incredibly unsubtle ones made a point that modern ones neglect: that men use positions of power to get away with this crap (transcript). Secondly, Karlijn Morsink (full disclosure: an old friend) has her job market paper on the Development Impact blog, one she presented at DFID recently. The premise is really interesting and intuitive: that unless you consider the power dynamics that determine decision making, you can’t select what technology can best support women’s final outcomes. She illustrates this with data on use of male and female condoms.
  3. Grudge theory: Tim Harford coins a phrase for using nudges to further a malign intent. What he gets at is that most ‘benign’ nudges work by taking loosely held opinions and moving them relative to some decision threshold, so only people who really care take the trouble to move back to the original position. What some of the more malign examples do is different: they take a loosely held opinion and make it salient (either before or after moving it slightly) – so after the nudge, it becomes a strongly held opinion. You don’t have to look hard to find that effect in other contexts, either.
  4. A very nice new paper by Angrist and co-authors uses an experimental design implemented on Uber drivers to suggest that the famous ‘reference dependence’ theory of Camerer, Thaler and others might be illusory (the theory suggested that cab drivers work up until they meet a target daily income and no more, which Angrist finds no evidence of). He does, however, find support for a certain kind of loss aversion, so Thaler probably shouldn’t throw the Nobel in the bin just yet.
  5. Nick is going to love this: a paper on the asymmetric effects of real exchange rate movements, suggesting that currency appreciations have a worse effect on exporters than depreciations can help them. The novelty of this paper is that it accounts for the skewed distribution of firm productivity in estimating these effects – hugely relevant for developing countries.
  6. Brilliant article by Christie Aschwanden, 538’s amazing science writer, on how the inherent uncertainty of scientific results can and has been weaponised against it by vested interests. The basic plan was discovered by Big Tobacco: emphasise the doubt and ask for better research – there will never be anything completely free of uncertainty.
  7. And finally, because it’s Friday and we deserve it: Tom Cruise running. Every single time.

Hope you had a great weekend, everyone!

R

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Links round-up

Hi all,

This week has been the stuff of nightmares: scroll down to link number 7 and you’ll find the story of a lady who went to the bathroom and was attacked by a python… in her own house. Link number 2 is even scarier: a breakdown of the Alwyn Young paper on instrumental variables I mentioned last week. And that isn’t even getting into the fact that we apparently live in one of Philip K. Dick’s creations, in which the most powerful political figure in the world shares content that even the people who originated it describe as ‘hate speech’. On a scale of one to what the actual eff are you doing, that one scores pretty highly. That’s not even the scariest thing that happened this week: imagine how Dame Lillard felt when this happened to him. It’s like playing basketball against an X-Man.

  1. Job market season is so much fun (well, for everyone except those on the job market), particularly because the Development Impact blog does so well in picking up good summaries of the most interesting papers. I really liked this write up of Stefano Caria’s research with Girum Abebe and Estebean Ortiz-Ospina. He shows that the cost of applying for jobs creates conditions in which poor workers with high ability are especially disadvantaged, and that this leads to firms winding up with a lower-ability workforce than is available. There’s a lot going on here (more than I realised the first time I saw it presented) and lessons could generalise to a number of contexts.
  2. For those of you who lacked the time to work through Alwyn Young’s paper, Marc Bellemare summarises. I’m not a strong enough econometrician to fully assess how valid the conclusions are, but they are startling: between a third and half of all 2SLS estimates covered are falsely declared significant. That said, I was explaining the logic behind the empirical methods economists use to a historian friend last night and pointed out that we know there are no watertight results: luck plays a role, and the quality of the concepts you’re using (and what you can measure), the data and the techniques are all imperfect. At some level, even policymakers who don’t think in detail about econometric choices get this, which is why we like results which have been proven from lots of different angles, or which accord conceptually with lots of literatures. Every paper is fallible but what the discipline knows is much greater than what any of its members can prove.
  3. Being more optimistic for a moment: Elon Musk succeeded in creating renewable storage at an unprecedented scale and pace in South Australia. This is pretty amazing.
  4. Also, I hadn’t realised that Pandas are now off the endangered list (which makes me feel better about skipping the chance to see them on a recent trip to Chengdu – it was them or a visit to the wholesale spice market, and the chillies win every time). I also hadn’t realised that this success was basically entirely due to one enormously horny bear named Pan Pan.
  5. Planet Money are so cool. When they discovered Paul Manafort was charged with money laundering they did what seemed obvious to them: asked an expert money launderer if he was any good at it (transcript).
  6. In one of those ‘economists shocked by events that all other humans expect’ moments, a new paper (yes it’s political science, but why spoil a good joke?) shows that politicians sometimes make enormous blunders. Using multiple sources to try and find those instances where politicians either miscalculated based on known information or had too little information, Daniel Treisman finds that many autocratic regimes become more democratic due to blunder, not design.
  7. Lastly, just to leave you with the worst nightmares possible for the weekend: snakes are everywhere, and Samuel L. Jackson isn’t.

Have a great weekend, everyone!

R

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Links round-up

Hi all,

Normally, this week’s links would open with the Ashes (and before I abandon the issue, my most vivid-ever Ashes moments in Australia: Mitchell Johnson at the absolute peak of his powers, and Glenn McGrath’s ‘old man’ celebration). This week, though I’ve had something other than cricket on my mind: a colleague pointed out that for all of my talk about gender and the difficulties women face in economics, from a quick scan (3 editions), I linked to women in only 7 out of 28 overall links. So, what’s going on? I’m pretty confident in ruling out conscious bias, but that still leaves a few unpalatable possibilities. It could be that I’ve got an unconscious bias and link to women too little for how often they appear in my reading. Or it could be that I select ‘male’ subjects and so the gender balance is rigged against women. Or perhaps women write disproportionately little in economics, basketball and cricket, and the selection that makes it here is a fair reflection of what’s out there. Am I missing a possibility? And ideas how to work out which one it is?

  1. Despite that navel-gazing, I’m still starting with coverage of an argument between two men: Branko Milanovic slaps “Degrowth theory” in the face, hard. And Jason Hickel responds, before getting the smack laid down on him again. Branko says the only way we could halt growth now without condemning a substantial chunk of the world to permanent poverty and deprivation is to dramatically reduce GDP per capita in the West: a hard, fast and aggressive nominal decline. Hickel suggests that this wouldn’t be much of an issue, because Costa Ricans are poorer than Americans and metrics show they’re just as happy. Talk about cherry picking. Look at the Our World in Data page on Happiness and Life Satisfaction: there is an incredibly strong correlation between GDP per capita and happiness. Suggesting that countries can shrink and avoid a change in happiness (without even getting into reference-dependent preferences) seems a stretch. It’s important to want to change the world, but a strong grip on reality might help.
  2. The Development Impact job market paper series is running again this year, and it starts with a couple of crackers: one on taxation in the DRC and its effects on political participation and one looking at whether simply reminding parents of the value of attending school can improve their children’s outcomes.
  3. I loved this: Oliver Roeder links God, the normal distribution, Central Limit Theorem and Laplace’s Demon in a glorious article inspired by a trashy US game show.
  4. Claudia Sahm argues Claudia Goldin’s claim that ‘time demands’ can explain much of the gender pay gap is economically incoherent. She says time demands are endogenous, meaning that they are part of the system and can be changed. I buy this, but only partly: there are jobs where an individual client relationship matters; and this often means insanely long hours (and extremely high pay). The solution might be in changing the client-provider relationship, but it’s certainly not simple. Related, another amazing job market paper using Google Maps, mobile phone apps and a survey to show that women go to worse colleges in order to have a safer route to school in India. I’ve not got beyond the abstract yet, but what a headline finding.
  5. So, research into bureaucracy is getting better and better, and touching on increasingly interesting topics. Lee Crawfurd dons his David Evans mask and offers an excellent round-up of the latest research presented at the recent World Bank symposium.
  6. Two goodbyes to end. First, and more happily, Mugabe’s exit prompted this piece in the Guardian, suggesting that a bunch of other illiberal leaders’ days are numbered because… well, it’s virtually impossible to work out why the author thinks this. One comment: anyone with a cursory knowledge of history should recognise the need to see how this shakes out before the celebrations become too wholehearted. Cutting off the head does not necessarily make this a much more tractable polity to steer towards good outcomes.
  7. And lastly, Malcolm Young died last week; if you had fun in the 1980s or early 1990s, the odds were he provided at least part of the soundtrack. Angus might have been the icon, and Bon might have the live fast, die young obituary, but Malcolm wrote this. And this. And this. And (maybe my favourite) this. The good news is wherever he winds up, he’ll find something to like.

Have a great weekend everyone!

R

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Links round-up

Hi all,

I’m trying very hard not to get my hopes up: Sri Lanka have managed to reduce India to 74/5. Back in the day, I’d be rubbing my hands with glee in anticipation of the last five wickets falling to our bug-eyed genius, but recent experience has taught me that Pujara and Jadeja will put on a quintuple-century stand and we’re going to be crushed underfoot like a dried-out locust. Either that or it’s going to rain for the next four days. On the plus side, however, my adopted son Joel Embiid  has this week both atomised the self-respect of the Clippers and dominated the Lakers so completely that Lonzo Ball is probably in hiding. He’s playing so well I literally googled ‘Whose soul did Joel Embiid eat for breakfast today?’ yesterday. Anyway, enough inanity.

  1. A while ago, Sarah O’Connor wrote a great piece in the FT, with the title The Best Economist is the one with Dirty Shoes, arguing that economists who get out into the real world learn things that the theories of their discipline cannot teach them. Angrist and co-authors have a really nice paper exploring a similar idea in the intellectual terrain economists travel. They show that economists increasingly cite the work of other disciplines in their papers; and that this intellectual curiosity is mutual. They also show that empirical work is becoming more influential within the discipline (and with others), a sign that economists are looking outwards, and getting their shoes dirtier. This can only be good for the discipline, so long as we learn from what others do, rather than sally forth and ‘do economics’ to them, as they sometimes complain.
  2. Claudia Goldin’s recent NYT piece on the economics of the gender pay gap is brilliant: she’s not afraid of exploring the complexity of its genesis, and of the solutions, and isn’t shy of acknowledging where there are trade-offs. It does no-one any favours to pretend that it is just discrimination and nothing more: real solutions require we think more deeply.
  3. I’ve never been much of a fan of instrumental variables. I’m not enough of an econometrician to formalise my doubts enough, but they’re either complex and lack transparency (so interpreting the coefficients is very difficult) or they seem to capture much more (or less) than is purported (is there anything rainfall doesn’t instrument for?). Alwyn Young, whose genome sequence presumably spells out ‘attention to detail’ takes a hatchet to them here, though from a very different perspective. Related, a good read on replicability and good scientific practice in economics. The David Evans summary would be: we’re getting better but far from fixed, and haven’t got the incentives right yet.
  4. The ODI Fellowship applications are open until 1 December. As an ex-Fellow, I’m biased, but I think the scheme is brilliant, and unlike any other exposure to policymaking in developing countries that a development person will ever otherwise have.
  5. Everyone in DFID should already have internalised this, but here’s our Deputy Chief Economist Nick Lea making the case for tradable-based growth. Not all tradables are equal, of course, and non-tradables can matter too – but the underlying logic here is strong and important.
  6. This totally fits all my priors: Jennifer Aliz-Garcia, Sarah Walker an Anne Bartlett on the economic benefits of refugee camps. Confirmation bias aside, though – I do wonder about the validity of calibrating night lights and consumption from a period prior to the advent of the camps and using this to guesstimate consumption effects of the camps – could the relationship have changed due to impact of the camps? Related: Planet Money go to South Sudan and explore the effect of the civil war on the financial asset most of those in the camps used: cows (transcript).
  7. Finally, and by far the most important article of the week: The Ringer ranks the fifty best superhero movies ever, and confirms that everyone must bow down before Heath Ledger.

Have a great weekend, everyone!

R

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Links round-up

Hi all,

So, it’s been a fairly eventful week, so I’ve been more or less glued to the news. This has had the welcome effect of helping me notice all sorts of fantastic stories (like the woman who responded to a politician’s sexist joke by running against him – and winning, and the guy who forced a plane to make an emergency landing because of his infidelity), but at the cost of bringing so much to my attention that this week’s links could easily be thirty bullets long. I’ll try and spare you that particular form of torture, but I make no promises: of all the failings that I’ve been accused of in the past, brevity is notably absent.

  1. This is basically my perfect paper: an RCT about using cricket to investigate the effects of collaboration and competition on discrimination. Matt Lowe randomly assigned Indian men into mixed-caste or same-caste cricket teams, and then randomly assigned opponents and finds that collaborative cross-caste contact increases cross-caste friendship and reduces caste-favouritism when allocating rewards. What’s more, this has effects on efficiency and leads to better teammate selection in future matches. I was having a conversation recently about how seemingly trivial topics can generate important findings – this could potentially be one (or I’m just massively over-weighting the importance of these results because cricket is obviously more important than life itself).
  2. Another Matt, Collin, here considers some of the implications of machine learning for replication and research transparency.
  3. This didn’t get much coverage that I saw, but is really worrying: Zitto Kabwe, a Tanzanian politician and former chair of the Public Accounts Committee was arrested for presenting economic analysis that questioned the Bank of Tanzania’s growth figures. I have no idea if Zitto’s analysis is right (I haven’t seen it), but it’s pretty terrifying if questioning official statistics can get you arrested – when I lived in Tz, it would have made me a criminal on a near daily basis. Justin Sandefur goes into the details of Zitto’s analysis, here. As an aside, Chris Adam points out the importance of keeping an eye on domestic credit to the private sector, one of my go-to indicators on the economic health of a country, in a quote Justin includes.
  4. Gabriel Zucman makes the case for a world financial registry in the Grauniad. He’s one of the best researchers on inequality out there, and well worth reading.
  5. I really liked this: Martin Williams (at the Blavatnik School of Government) summarises his research into why so many public sector projects in Ghana remain unfinished. He shows that corruption is probably not the main reason: firms tend to do more of the work than they’re paid for, not less. Rather, he points the blame at the changeable nature of political decisions – as the political alliances underlying a project unravel, the money allocated to it runs the risk of be siphoned away to start a project with better political backing, but which may itself be subject to the same effect in the future. The paper is underpinned by an amazing data set, too.
  6. David Evans reads 147 development papers and summarises them in one sentence each. It seems like a magic trick, but he does this kind of thing regularly. It’s incredible – click, read, comment and thank him. It’s an extraordinary public good. Related: he examines the geographic coverage of these papers here.
  7. Lastly, two food links: First an amazing Reuters investigation into North Korea’s food markets (some of the food designed out of necessity looks amazing!); and second, an economist teaches about international trade using goulash. And with that, I’m going to have lunch.

Have a great weekend, everyone!

R

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The technological foundations of income inequality: a demand side perspective

Guest Author: Andreas Chai, Griffith University
contact: a.chai@griffith.edu.au

How has technological progress impacted income inequality? The usual answer is that technological progress fosters greater income inequality via changes on the supply side. Technological progress will drive up inequality because of robots stealing jobs, accelerating the rise of the service economy, stimulating global migration. One may be sorely tempted to conclude that rising income inequality is an inevitable outcome of ongoing technological progress.

Yet technological progress also has a lesser known and more positive impact on household living standards. In developing countries, the diffusion and adoption of new technologies has without doubt lowered the cost of everyday household tasks, such as cooking food, gathering firewood, and household chores, particularly in the rural areas of developing countries.

A famous case is the impact of mobile phones in Africa, which had a large impact on everything from banking, getting goods to market, and improving the efficiency of local markets. The problem here is that these effects are much harder to observe due to a lack of data on the characteristics of goods consumed and how they impact everyday life.

Moreover, in terms of how to accurately gauge household welfare levels, a better measure of household living standards beyond income is how much households consume. This approach recognizes that households may have other sources of wealth not captured by income and that income is only as valuable as the amount of goods and services that can be purchased with it. Here a study by Roger Fouquet and Peter Pearson underlines how technological progress has driven immense improvements in the quality of goods consumed over time, thereby effectively raising the purchasing power of households.

In a recent paper, headed by Maneka Jayasinghe (Griffith University), we examined how the adoption of technologies can have direct implications for measuring poverty via the equivalence scales used in calculating the income distribution (draft version available here). When measuring income inequality, equivalence scales are used to effectively deflate the observed income/welfare levels of larger households by making assumptions about the per capita costs of having more people living in the same household. These equivalence scales effectively make assumptions about the degree to which households achieve economies of scale in the sense that large households face lower per capita living costs than smaller households.

An easy way to examine the impact of technology on household economies of scale is via the consumption of electricity. The use of new technologies such as mobile phones, white goods and entertainment goods generally involve consuming more electricity. Moreover, there has been a tremendous growth in the number of households who have access to electricity in the developing world. In Sri Lanka, for example, access to electricity has risen from 29% to 85% between 1990 and 2010.  By enabling households to use a wider range of goods, this will have an important impact on the living standards and the distribution of poverty.

Using electricity consumption as a proxy for the extent to which households adopt technologies, we found that households that used more electricity realized greater economies of scale. The more electricity a household consumed, the lower their per capita living costs (proxied by per capita expenditure on food). The estimates suggest a 10% increase in electricity consumption generated a 6.92% decline in these living costs. Though relatively small, when equivalence scales are adjusted to take this effect into account, the overall number of households falling below the poverty line declined by over 60% nationally in Sri Lanka.

Here it is interesting to note that the changes in income inequality were uneven. For starters, small households benefit less from economies of scale in consumption than large households. So large households tend to make greater gains in welfare relative to small households. Moreover, households in urban areas, where electricity access is better, tended to be among those who made the greatest gains in estimated welfare. Finally, estimated income inequality grew when considering the differences between these households and their rural counterparts who have less access to electricity.

In terms of policy implications, these results highlight the need for poverty alleviation programs to enhance household access to technologies and electricity. In addition, more research is needed to understand precisely which electrified goods contribute to economies of scale and the extent to which income inequality & poverty estimates in other regions exhibit the same pattern.

In the long run, a deeper issue that scholars and policymakers need to face is whether the widespread use of ‘base neutral’ equivalence scales is sensible.  This involves the assumption that the economies of scale realized by households is independent of their income. It seems intuitive that differences in household income will generate differences in the extent to which households are both able to and willing to economize on per capita costs. Think of the range of goods and services rich households can afford to buy relative to low-income households.  The interesting thing here is whether rich households actually do realize greater economies of scale even if they have the greater potential to do so.

Moreover, given that technologies change over time, this suggests that economies of scale realized by households will also evolve over time and thus so too should the equivalence scales used in estimating income inequality. This is particularly important when considering changes in income inequality over long periods of time, which has become a very hot topic. Considering that the characteristics of goods and services used by households has altered dramatically, long run comparisons of income inequality should be treated with great care.

On a more general level, it is a small part of a recent explosion of research on how equivalence scales can be devised using different techniques, including life satisfaction data, as well as intra household bargaining approaches. All of these add to more detailed and realistic understanding of household welfare and ultimately better inform us about the geographic and social distribution of poverty.

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Links round-up

Hi all,

This week I have mainly been breathless with excitement about this. Seriously, it’s been a serious disruption to my ability to think coherently about work, relate to other human beings, basically to do anything apart from freak out about the fact that there’s going to be another Star Wars film, Luke’s in it, and it’s going to be amazing ohmygod. The pendulum has swung pretty far from me worrying that the Force Awakens would be rubbish because the world is a terrible place and so were the last Lucas movies. Adaptive expectations in action.

  1. Let’s start with a rant. Having good intentions does not excuse you from using evidence properly. I’ve recently come across a couple of examples of either pandering to failures of cognition among policymakers or framing evidence in misleading ways that have particularly irritated me, because the culprits seem to think their good intentions allow them to bend the rules with impunity. Maya Forstater lays the smack down on the most recent Oxfam tax justice adverts for this reason, and spares them little ire: “… the Oxfam campaign… links an estimate of $100 billion lost to tax avoidance with eight million deaths. Is this meaningful? No.” Ouch. Even if tax justice is an obviously good thing, this is not acceptable: fudging the numbers this way will only lead to money being reallocated from other good things, not from the “killing baby seals” fund such campaigners apparently believe will finance their proposals.
  2. Speaking of evidence, Duncan Green’s blog ran a piece by two of DFID’s brightest boffins on a programme looking at how evidence is actually used in the wild. I’ve seen some of the underlying research presented by Macartan Humphreys, and it’s really interesting. Definitely something to keep an eye on. Related: Matt has resurfaced at Aid Thoughts channelling his inner Gawande discussing how policymakers’ cognitive biases might affect the ways in which evidence is used, and how to improve this, an area close to my heart (and, indeed, research).
  3. While we’re talking biases, it’s unlikely that anyone has managed to miss the absolute avalanche of popular media pieces about Richard Thaler’s Nobel win, but this Planet Money show deserves a link, as no-one quite brings the subject to life as they do. As they put it, it’s like a nerd superhero origin story.” (Transcript).
  4. Two really good pieces from Development Impact this week. First, David McKenzie on new research he’s done with Anna Luisa Paffhausen on firm death. I actually think he substantially undersells the importance of this work. Firm death is an indicator that an economy is working: the right kind of firm death (i.e. that not caused by exogenous household shocks) is an indicator that competition is working, and there is some form of productivity enhancing reallocation going on – at least, unless firm survival is due to political connections. In a separate post, Markus Goldstein summarises research into worker effort, as measured by Fitbits (one of the co-authors is Pieter Serneels, who is also at DFID part time).
  5. Charles Kenny doubles down on Lant’s piece I linked to last week – bemoaning not only arbitrary poverty lines, but also arbitrary income classifications for countries. It ends with some very useful tips for how to think about poverty and income statistics, avoiding common pitfalls.
  6. Apparently, the grammar pedants are doomed to failure – on balance, probably a good thing, because they’re insufferable. On the other hand, it means I can’t resist ending the links like this;

Have a great weekend, everyone!

R

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