It’s getting very Christmassy now, isn’t it? I find my inner
becoming less inner and more outer with each passing day. Though as an
economist I should enjoy the spiritual aspects of a frenzy of consumer
activity, illiquid asset exchange and (if you’re lucky) some redistribution of
the wealth acquired over the last year, it’s amazing how quickly it dissipates
when I have to fight my way through rioting customers of John Lewis to find the
‘perfect’ novelty corkscrew. In all seriousness, though, this season is a
good time to remember that the choices we make – especially our consumption
choices – can nevertheless have substantial welfare implications. And if you
don’t believe me, Michael Schur, the genius behind The Good Place may yet
convince you, describing how
Peter Singer helped him become less of a forking shirtbag.
- Christmas can be a difficult; elections can be
Tim Harford is here to tell you how
to get through the silly season without mortally offending relatives
and strangers (unless they really deserve it) or exhausting yourself
fact-checking every bit of mendacious rubbish you read in the news.
do polls report voting behaviour or shape it? Worth reading just for
Nate Silver’s cameo at the end.
- This might be my
favourite Job Market Paper so far: Asad Liaqat reports on an amazing
experiment which looks at how providing information on voter preferences
can affect the policy choices of politicians. It is fascinating: at
baseline, these politicians know almost nothing about their constituents,
which may not surprise you. Giving them information finds a larger
effect on elected officials (unsurprisingly), but also that information
on the preferences of female voters moves preferences more. The
mechanism is apparently that politicians think they know more about what
men want than women, and so are more responsive to information about
women. In a sense, being aware of your own ignorance is the first step
to correcting it, and the ignorance we acknowledge is selective. Another
cool JMP (by Antonella Bancalari) looks at how a public health
programme in Peru actually increased mortality rates, apparently because
implementation was usually abandoned before complete.
is important (this opinion is both so true as to be trivial and
worryingly underrated). And in celebration of macro, Dietz Vollrath has stuck
his head above the parapet to investigate the
Kaldor facts; a series of ‘stylised facts’ about the economy that
Nicholas Kaldor first observed in 1957. What’s stunning about them is
that they have largely remained true over the interceding 60 years.
Yes macroeconomics is hard, and our evidence on it is less causally
robust; but much is consistent and remains important despite being
which we are, we are, as Rumpole might say, quoting one of my
- Imagine being having written a book so compelling that
Branko Milanovic compares it to Maradona’s football; Francis
Fukuyama has achieved it. “It is like Maradona lulling his
opponents to sleep just in order to strike a more improbable goal.”
- Christopher Pissarides joins
the techno-optimistic bandwagon. Well, I say he climbs on the
bandwagon, but his argument is basically that it’s not technology that we
should worry about but frictions in labour market adjustment. So in a
sense, he built the bandwagon, won a Nobel prize for it and then
arrivistes like me clambered on board.
- Here’s some basic economics: pandering to the lowest
common denominator is often a winning strategy. Tumblr
took the high road and banned p*rnography; while a dip in demand
probably won’t surprise you, the fact that visits declined by 20% and
usage by 50% might do.
- Life is a simplified metaphor for cricket. I think we can all
agree on this. In case the Good Place and Peter Singer wasn’t enough
philosophy for you, Anthony McGowan wrote a piece in The Nightwatchman
the main schools of classical philosophy would resolve the Walking problem:
do you do the right thing, even if it comes at a personal, or team-wide
cost? [Of course, the correct answer here is to take the sandpaper out of
your pocket and focus on the real issues]. And just in case you’re one
of the few readers who isn’t here for the cricket chat, here’s Alan Taylor
remembering the year they gave James Kelman’s How
Late it Was, How Late the Booker – and the cost to his career.
Kelman should win the Nobel for literature, and never will, the fools.
Have a great weekend, everyone! Next week will be the last
links for the year, and will include a brief round-up of my favourite ones of
Remind me never to make cricket predictions. No sooner had I
finished predicting the collapse of the England cricket team in New Zealand
than they proceeded to fold like origami – if origami came in the form of
spineless amoeba. Clearly, this was a causal relationship, and I spoke the
collapse into life (just in case this is true, I’m hereby predicting an
anonymous millionaire choosing to make a large lump sum transfer to my bank account
by the end of the day). Anyway, with Tom Latham unbeaten on a century, I’m not
going to tempt any further fate. Straight into the links:
- If it’s true that the best economics comes from the
hardest times, we should be in for a bonanza of economic thinking soon. Barely a day goes by
that I don’t faintly bruise my forehead facepalming at the latest bout of
economic insanity proposed by some politician somewhere in the world. Kaushik
Basu is surely right that what will come next for economists is almost
certainly a better understanding of how our economic interactions are
shaped by norms and values – an interrogation of the assumptions in
the woodwork of our models. This is what Sam Bowles, George Akerlof and
others have been recently investigating and I am
increasingly convinced of their importance.
- There is a fantastic quote from Thomas Schelling in this
piece by Tim Harford on why we should all play games: “One thing a
person cannot do, no matter how rigorous his analysis or heroic his
imagination, is to draw up a list of things that would never occur to
him.” I’m a big believer in letting your mind and attention wander:
part of understanding the world can only come from being in it, and being
surprised by it.
- Every year, my friend Paul texts me to ask when the
Development Impact crew will start their Job Market Papers series. Well, it’s kicked off,
and from the first few entries, it’s going to be another fun season.
Bloem looks at the massive negative effects of the Dodd-Frank Act
on conflict in the DRC (that’s negative as in more conflict, not the
good kind of negative). He starts with a great first line, pointing out
the reader is most likely using a conflict mineral to read it. And another
post (by Julian Dyer) looks at the impact
of crime and insecurity on agricultural productivity.
- Vox have a
really good write-up on the latest paper on GiveDirectly’s basic
income experiments in Kenya. This paper, by Ted Miguel and co-authors, finds large
general equilibrium effects from their transfers. It appears that the
demand stimulus creates a supply response and essentially creates a rising
tide. I haven’t read the underlying paper yet, but these are really
- I like to argue with people. (Note: This will not be
news to anyone whose ever expressed an opinion in my presence). With
Thanksgiving in the US yesterday, both Vox
ran pieces this week on how to argue better; I have to say I find 538s
more convincing. But if you don’t agree, that’s ok: we can argue it
- CGD look at the manifestos for the forthcoming
elections are discuss what
they mean for international development.
- Finally, are you a cat person? If you are, there are
few things I can recommend more than this
excerpt from Bohumil Hrabal’s book about his cats. Hrabal was a
genius; who else could turn a single run-on sentence by a boasting
drunkard in the pub into a novel (Dancing
Lessons for the Advanced in Age), or an extended attempt to hide his
short stature into a history of his country (I
Served the King of England). His skill for plausible exaggeration is
on full show here. If you don’t like cats, maybe you like rap? A man of
similar talents, Rakim,
has a new book out; it doesn’t take too much squinting to see the
links between I
Ain’t No Joke and Dancing Lessons…
Have a great weekend, everyone!
It may seem like nothing ever changes: the seasons still
follow one another with grim inevitability (in England, Winter follows Autumn,
and then Winter comes back to annoy us after a mere insinuation of Spring or
Summer); LeBron James continues
fools and the Gods of Cricket find ever-more inventive ways of crushing
dreams (England look good now, but I await the inevitable Trent Boult double
century, followed by Ben Stokes getting out hit wicket, tying his shoelaces).
Occasionally, though change shocks us into uncharacteristic action. Specifically,
climate change can shock us to act out of character: I know many people who
joined the climate protests whose previous heights of rebellion were to send
back a lukewarm tea in a café. And now, that venerable institution, the Oxford
English Dictionary has revealed its word of the year:
‘climate crisis’. Yes, that’s the word of the year. The end of days is
upon us, verily.
this is awkward.
What do you do when a senior World Bank Official goes off on one, calling
you a Marxist (“committed or uncommitted”, as he puts it) because you run
a piece of analysis and post your code for transparency’s sake? Well, if
your Justin Sandefur you clap back, and point out that whatever name
you call him, the analysis is still up there, and still not proven wrong.
- What do you remember from 13 July, 1994? If you’re anything like
me, you remember Roberto
Baggio running circles around Hristo Stoichov’s Bulgaria to send Italy
into the final of the most boring World Cup ever, towards a mouth-watering
confrontation with Romario.
Silvio Berlusconi guessed that would occupy most other football-crazed
minds (which covers about 88% of the Italian population), and used the day
to sneak out the news that he would, by emergency decree, absolve hundreds
of Italian politicians from corruption allegations. Can you keep a
straight face while saying “I’m sure it was just a coincidence?” If not, then this
paper is for you – Milena Djourelova and Ruben Durante show that the
political news cycle is carefully choreographed to bury bad news, surely
shocking news to anyone in the civil service.
- This is great: a David
McKenzie twitter thread reviewing the migration and trade chapters of
the new Banerjee-Duflo book; he considers a dissonance in how they handle
the two topics. And on the subject of migration, this is fantastic:
Planet Money look at how a
small town in the US has turned itself into a refugee hub and is
reaping the benefits (transcript).
And on the benefits of migration (how often have I written these words
here over the years?), this
VoxEU piece sets out some of the benefits of returning migrants on
growth in their country of origin.
- Daron Acemoglu and co. have produced a model of the
data economy to illustrate the myriad ways it can generate
My go to analogy for Facebook and the like has for a while now been that
of the Eiderdown
farm, but they’ve extended the analogy: they point out that by
providing free services, Facebook is in effect paying for our data, but
also that they can use data collected from users to infer knowledge about
- Two good pieces about urban mobility, though very different.
Hausmann discusses why it shouldn’t be surprising that a small metro
price rise has generate such a large backlash in Chile. And then this
VoxDev piece looks at the genesis of long journey times in India,
finding that it’s not traffic but ‘uncongested travel times’ that is the biggest
contributor time spent in traffic. Something to think about while I sit on
the X90, cursing my way through the journey to London.
- Vijaya Ramachandran has done a survey of tech
entrepreneurs in Nigeria, and reports
some of the results here; they’re interesting and worth reading in
more detail. I particularly like how she unpacks their responses on the
perennial problem of credit. Read it carefully and it sounds like a
banking system working well (even if that means not funding many
firms) than one doing its job badly. As I never get tired of telling
people here: fix the problems, don’t try and force yourself through them.
- Star Wars and economics collide in a supernova of
Ringer run a surprisingly economically literate analysis of monetary
economics in The Mandalorian and the broader Star Wars universe. They
consider what might be behind the multiplicity of currencies the
Mandalorian operates in (surprisingly, they omit to consider currency
hedging as an important part of the Bounty Hunter’s economic toolbox);
they look at exchange rate volatility and relate it to incessant conflict;
and finally, they ask if the failure to establish a single currency and
unify trading standards was cause, not consequence of the Rebellion’s fall
and the rise of the New Republic. Can you tell how much fun I had with
Have a great weekend, everyone!
Every once in a while, you can actually see the economy
evolve before your very eyes. I’m going to Porto next week for a short break
(long hours working on my data have taken a toll), and have just received an
email from the airline asking me to participate in an auction for an upgrade. I
would like to announce this clearly for all companies who might be reading: GET
YOUR FILTHY MITTS OFF MY CONSUMER SURPLUS. I’m so annoyed I’m not even going to
bid zero. I’m not going to help them construct their demand curve. While part
of me admires this attempt to maximise their revenues, is it surprising that so
many are dissatisfied with the economy when companies weaponise personalisation
- Arthur Cecil Pigou was, by reputation, a somewhat odd
in the days when he was the only Professor of Economics at Cambridge, he
used to rock up to meetings with an axe, on his way to climbing
expeditions. He was a genius though, arguing for paid maternity leave
roughly a century before it became a thing; and he came up with an idea
for taxing negative externalities that is both intuitive and difficult
to teach (I know: I was teaching it last week). Planet Money have a
very fun show on him (transcript),
including the way Canada has tried to adopt a tax on carbon, pairing it
with a flat payment to citizens, which winds up being rather progressive,
since the rich consume much more carbon…
- A very
wise man gives a 90 second interview about a very good book. Matt
wants more. Don’t @ me, mainly because I’m not on Twitter.
- Diane Coyle looks at productivity
and its discontents, arguing that the dematerialisation of the economy
(basically, the fact that we make, buy and sell less actual stuff and more
ideas, services and information) has fundamentally undermined our
traditional measures of productivity. Robert Solow once observed that the
technological revolution is observed everywhere except in the productivity
statistics. Diane is suggesting the problem is with the statistics and
not the technology.
- When Michael Clemens talks about migration, just pull
up a chair and listen. This
blog (with Jimmy Graham) is typically excellent and will be a learning
experience for most of us. I particularly liked the heading: “the effect
of aid on migration is complex – because so are migrants’ motives”. No-one
who has been receiving these links for more than a few weeks shouldn’t
need a primer on why human movement is such a force for good, but it’s
always nice to find a new angle: Planet Money discuss the
social mobility of the children of migrants and why it is so
- Erica Field and co show that using
digital payments to women to give them greater control over their
resources increases the labour force participation of the most constrained
women significantly in the long term. And on the subject of control, this
piece by Aleitheia Donald and Markus Goldstein finds that surveys
can uncover disagreements between spouses as to who has decision-making
responsibility in the household – and these disagreements are predictive
of negative outcomes for women. Meanwhile, Charles Kenny bemoans
the lack of women in senior positions in think tanks.
- One for the contracting geeks (and if you’re an
economist but not a contracting geek, shame): Oliver
Hart and David Frydlinger on the role of stated norms and principles in overcoming
- I normally end the links on a note of pop culture
marginalia, but this week it’s something different: one of my
friends, Paul, helps run an amazing football club in Glasgow dedicated to
helping refugees, asylum seekers and minorities of all stripes find a
sense of community there. The BBC gives a small taste of how
amazing United Glasgow is, and if you live nearby and have some
spare kit going, they
are looking for donations.
No links next week: I’ll be knee-deep in Port and Francescinhas.
Have a great weekend, everyone!
Winter is coming. More accurately, winter has arrived, taken
off its shoes and declared its intention to crash on our couch until further
notice, much like John Belushi. I’m
sitting in the DPhils office at BSG, looking out the window onto an incredibly
grey and depressing day, made worse by Sri
Lanka’s third consecutive capitulation to the Aussies. On the plus side,
the Challenges of Government Conference is running here at the same time, and
the benefit of the pitiful weather is that it discourages attendees from
straying too far from the coffee point during the breaks. Honestly, if it
wasn’t for the
NBA season, there would be no reason not to hibernate from mid October
- Twitter seems like an extremely risky pastime to me. Every once in a while,
people seem to let slip with a spectacularly ill-considered opinion that
more be brought up to mock them. Even by the standards of the
twidiocracy, though, this tweet
by Larry Summers in the middle of his critique of Gabriel Zucman and
Emmanuel Saez’s new work on the tax system in the US was ill-considered
noticed, too). The economics underlying this debate are fascinating
though: Zucman and Saez argue that the American tax system is regressive,
and in doing so make a number of methodological choices that depart from
the norm in tax policy analysis; in particular, many economists from
across the ideological spectrum have focused on the exclusion of tax-based
transfers to poor people in their assessment of the progressivity of the
tax system. The NPR
write-up of the debate is very good; I can see both why it seems
strange to exclude tax refunds from the analysis, but also that Zucman is
surely correct to point out that the rich also benefit from Government
transfers, ones that are probably much less transparent. (In Twitter’s
defence, it does facilitate the
occasional zinger, too. Round 1 to Zucman, surely.)
- Zucman and Saez are at the centre of another, closely
related debate: whether the US should implement a wealth tax, an
idea associated in particular with Elizabeth Warren and Bernie Sanders. Tw
pieces in Project Syndicate discuss the ins and outs of the idea, one by Jean
Pisany-Ferry and the other by
Michael Spence, who points out “The fact is that incremental wealth
gains… above $1 billion… have little to do with consumption and lifestyle.
They are signals of success and status.” This seems about right to me,
though with the caveat that the closest I’ve come to being a billionaire
Zimbabwean dollars. And Branko Milanovic discusses the
extent and effect of inequality in Chile, in light of the recent unrest.
- Lee Crawfurd, Susannah Hares and co. take
a critical look at the construction of the World Bank’s new metric for
educational quality, Learning Adjusted Years of Schooling (LAYS). Their concern isn’t the
unfortunate acronym (do we really want to talk about how many LAYS our
kids got in secondary school?), but rather that the metric will need to
subjected to quite a lot of scrutiny over quite a long time to ensure it
keeps improving. While that is certainly true, it’s important not to
forget that it is still a big improvement from where we started. It’s
a huge thing that we have a metric that provides us with information about
both schooling time and learning achieved, imperfect though it may still
be. Related: the crew also take a look at the literature on low-cost
private schooling, updating a review DFID funded a few years back with
- Is this the greatest
example of Principal-Agent Theory in practice ever? A man in China (the
Principal) hired a hitman (the Agent) to kill a business competitor; and
being a rational young man, the hitman promptly turned around and
sub-contracted the job – a possibility only because the Principal was
unable to effectively monitor the effort exerted by his hitman of choice.
So far, so classic, but it gets better. The subcontracted hitman in
turn decides to farm out the dirty work to yet another subcontractor; but
even he decided that the effort of killing a man was too great, and
subcontracted the work out yet again. This goes on, seriously. Eventually,
the fifth subcontractee decided to collaborate with the intended victim,
collect payment and then inform the police. There has to be a way for
me to incorporate this into teaching this term.
- People are the worst, part 12,393,393,191 of a
checking fraudulent claims about migrants and minorities hardens attitudes
against them. In other words, once primed to think negatively about
migrants, learning that in actual fact they are not out to steal your job
and mug you in a dark alleyway does not at all reduce negative attitudes
towards them. People: mindlessly bigoted since walking upright.
- It used to be a running joke among some of my friends
that I would begin answering any question with some variant of the line
“It’s actually a little more complicated than that” (I swear this was
before Ben Goldacre published a
book with that title). Tim Harford goes
on a magnificent rant against virtually every politician in the UK,
accusing them of seeing simplicity where complexity lies and selling
clarity when a fog is the reality. Can we make him Emperor?
- Lastly, in the latest example of Japan being far cooler
than any of the rest of us, it turns out that there is a tradition
there on Halloween whereby people
dress up as the most horrifyingly mundane thing they can think of.
There is a real art to capturing the horrors of everyday life, and
these people have absolutely nailed it.
Have a great weekend, everyone!
That sound you can hear faintly in the background is faraway
crowds mispronouncing the word ‘defence’ at great volume and repeatedly. That
is correct: the NBA season has started again, and while Zion
Williamson has injured himself (it turns out being built like a container
ship and jumping
like Super Mario is bad for the knees), the rest of it has been gripping. LeBron
may finally be slowing from his Thanos-like peak! Markelle
Fultz has remembered how to play basketball! Luka
Doncic is still an extraterrestrial wearing a chubby Slovenian teenager
suit! And my productivity is about to make like Wile E.
- Having said all that, I’m never too busy for economics.
There’s still a Nobel hangover on the econoweb (and a literal
hangover if, like me, you celebrated with a little too much wine), but
rather than link to all of it – there’s too much good writing to do
justice to – let me mention two pieces. Firstly, Abhijeet Banerjee and
Esther Duflo have apparently celebrated by uploading another paper to
follow up on their much earlier work on microfinance that identifies
the small group for whom microfinance does turn out to be very effective
for. They call them ‘Gung Ho Entrepreneurs’, and they do very well
indeed when they get access to credit; whether we can tell who they are
early on, though, is the real kicker. And David Evans has done one of his
summaries dedicated entirely to the output of Michael Kremer, who was
his DPhil supervisor. Like supervisor, like student: David is a marvel,
one of the best and most concise communicators of ideas I have ever had
the privilege to meet.
- This requires a bit of attention and patience, but has
outsize rewards. Brad Larsen at Stanford summarises an extremely
cool new paper which looks at how often potentially viable trading
negotiations (i.e. those where the buyer and seller have a shared price on
which they can agree to mutual benefit) fail. He has some amazing
data, and the finding is also kind of amazing; between a fifth and
quarter of potentially beneficial negotiations fail. This should
make us much less sanguine about… well, everything.
- When a paper digs into how humans interact with one
another, you can bet there will be at least one result that proves that
humans are the worst.
Case 1,204,291,91: a
recent analysis of tipping behaviour on Uber finds that men are more
likely to tip female drivers… and that this effect is almost entirely
explained by heavy tipping of young women with almost zero effect on older
women. Men: transparently one-track minds since recorded history begins.
For Uber drivers looking to get their own back: work in the small hours.
Tips are highest between 3:00 and 5:00am; presumably to make up for the
- It’s always reassuring when Tim Harford likes ideas I
ascribe to. Here he discusses how
to think about worst case scenarios and sings the praises of
- By the way, speaking of people being the worst: this
fantastic piece by Berk Ozler looks at how hopelessly biased samples
in early medical studies (almost exclusively conducted on white males)
have led to (some) systematically worse health outcomes for minorities,
and how algorithmic diagnosis can – sometimes – help rectify these
- CGD continue to bang the drum for sensible migration
policy, for which we can only applaud them. A first piece sets out
how the new EU Commissioners for migration can use
legal pathways to achieve their policy objectives; and another looks
at how regularised
migration can be a development tool for Nigeria. Both push the Global
Skills Partnership idea, which I’ve pitched more than once, too. Are we
getting any closer to it having a moment?
- Lastly, may I quietly and calmly point out that THE
LAST TRAILER FOR STAR WARS: RISE OF SKYWALKER IS OUT AND IT I’M VERY
SCARED THAT SOMETHING BAD IS GOING TO HAPPEN TO C-3PO. Sorry. I’m not
sure what came over me. It is going to be a long wait for this movie.
While we’re waiting, we can check out these ultra-creepy
author photographs from LitHub. While no-one should be surprised that
Angela Carter’s makes her look like a ghost, what is up with Patricia
Highsmith and HP Lovecraft? Why does she look like she’s planning my
murder? Why is Lovecraft eating his own face? And is it time for Star
Have a great weekend, everyone!
I write this sitting in the kitchen sink. Actually, that’s
not remotely true, I actually write this sitting on the bus to Oxford at
ridiculously early o’clock, though the odds are I’ll actually wind up sending
this e-mail out sometime this afternoon. These rare occasions I motivate myself
to get up extremely early to travel to work remind me how lucky I am. There’s
an entirely different economy moving in the early hours of the morning,
travelling from deepest north London (where I live) to the bus terminus in
Victoria. More people on the buses were coming home from work than going to it,
or for the person next to me on the underground, going between jobs. Never let
me complain about my workload again.
- It’s not going to surprise anyone what I lead off with
today. The Banerjee-Duflo-Kremer Nobel is a massive win for development
economics. I first studied development economics in the mid-1990s when
I was a young economics-obsessed teenager at school (I’m older, but not
much different). Back then it was considered an esoteric choice; it’s not
anymore. This Nobel and the one for Angus Deaton a few years ago has
put understanding, measuring and impacting on poverty and human
immiseration (as well as progress out of both) at the heart of what
economics is about, not an esoteric side-issue. The Nobel’s formal
justification is worth reading, but I particularly liked the pieces on
Marginal Revolution about Banerjee
(“He was always willing to help those less advanced [in his econ class
at Harvard]. Furthermore, that was literally everyone else.”),
and Tabarrok’s discussion of Michael
Kremer’s work, as well as
this Planet Money conversation with him (transcript).
Someone said to me yesterday that the idea that doing RCTs somehow limits
one’s vision of economics is most elegantly disproven by reading Michael’s
CV. My colleague Tom sent me a nice explainer of his O-Ring Theory, which
made me dig out the original paper, here.
My favourite coverage on Esther Duflo, though, was her
own comments on the award: what this (should) mean for women in a
male-dominated field, and explicitly recognising the hundreds of
researchers they have worked with or inspired.
- On that note – the Royal Economic Society is doing a
campaign to increase diversity in economics in the UK, which still
showcases disproportionately few female and ethnic minority voices. This
piece by Arun Advani, Rachel Griffith and Sarah Smith points out that
this isn’t simply an equity consideration (though, of course, it would be
fine if it was), since background does seem to affect the policy advice
offered, which means that a monocultural discipline provides less
diversity of thought and advice (hilariously, this means that
economists aren’t disagreeing enough, which anyone who has been to an econ
seminar since the dawn of time will be surprised by). More of the
piece, though, focuses on the pipeline of potential economists: access to
A-Level econ courses (where I first studied development) is incredibly
uneven, and economists are apparently projecting an ‘unappealing’ image to
young women, of ‘boring men in suits’. Though the Barney
in me wants to defend the suit as an excellent sartorial choice, the
bigger problem is boring. Economics isn’t boring, especially when you have
- So, boring men in suits doing equations – if this is
still the dominant picture of what a great economist does, we’re doing
something very very wrong. Great economists look at whatever they see
in the world that they think we need to understand better. That can take
you all sorts of places. If you’re Steven Levitt (John Bates Clark
award winner), it might mean studying cheating in exams, or playing
poker with Tim Harford. If you’re Robert Shiller, Nobel Laureate, it’s
understand narratives – stories with emotions, morals, world views –
and what their role is in determining peoples’ expectations and decisions.
I don’t know if either Levitt or Shiller wear suits (they are, admittedly
both men), and I know there’s a lot of data work and coding going on
under the hood, but hey – they never showed Indiana Jones dusting
off thousands of pointless rocks, did they? Just cut to the Holy
- Natalie Bau and Adrien Matray summarise
their new paper in VoxDev, a very cool look at how foreign
investment stimulates economic development, focusing in on its roll in
reallocating capital towards the most productive firms.
- This one definitely tends towards the geeky, but there
is now a
stata command to directly query the World Bank’s povcalnet data, using
any poverty line you like – though I haven’t seen yet if this will
also allow us to use the median income data. Somewhere, I can hear Nick
Lea laughing – he worked out how to do this in Excel years ago.
- I’m going to have to cut the links slightly short today
as I’m teaching this morning and buried in Stata for the rest of the day
(I’m not wearing a suit, though). But there is no way I could let you
go without sharing these glorious
images of Kim Jong Un on a white horse; what is it with oddball
dictators and horses? Nothing will ever rival the Vladimir
Putin barechested horse riding, though. It looked like an advert
for a cologne called Machismo. And speaking of Machismo, here’s Zion
Williamson, a man who would make Achilles quiver in fear, dunking your soul out
of your body.
Have a great weekend, everyone!
We live in interesting times. The news is full of
extraordinary events: the Extinction
Rebellion going on pretty much directly outside this building. Virat Kohli
the law of averages. Politics are… shall we just say eventful, and move on?
And of course, reliable as rain, violent bigots are doing daft, violent things,
be it in Germany
or in Manchester.
I’m a little tired of linking to this same
Tim Harford piece, but the message bears repeating: terrorism aims to
inspire both terror and an overreaction. Give them neither.
- Want to go down a rabbit hole with me? The people outside the
door aren’t protesting for nothing: the cost of climate change could be
rather large indeed, as Planet
Money note (transcript).
But walking past the protestors, I’ve heard a few odd chants and read a
few signs that blame the climate crisis on economics. It’s not just
the protestors – Jared Bernstein in Vox has gotten
in on the act, too – and he’s an economist. This conflation of ‘the
economy’ and ‘economics’ drives me nuts, as I’ve pointed out before.
Economists have done a huge amount of work which aims to work out how to
fix imbalances in the economy that are driving unsustainable emissions –
but there seems to be little appetite to implement them. It’s like
blaming doctors for a disease outbreak caused by people refusing to get
vaccinated. I’ve mentioned carbon pricing before; Tim Harford gives
another example in this
typically excellent piece about Martin Weitzman, who changed the
way we think about discount rates and sharpened the tools that
economists can use to analyse and propose solutions for how the economy
drives emissions (oddly, apart from one by a colleague, over email, very
few retrospectives of his career mention this work). The problem is not
that economics has got this wrong, but that the political will to make
difficult choices and listen to good analysis has been lacking. Roger
Farmer argues that to solve this, we need more economics, not less.
- Speaking of ‘more economics’, David Evans and
Almedina Music weave their magic to produce one-sentence summaries
of every paper presented at a recent conference on Development
- The Economist has had a few excellent pieces on
development recently; I particularly liked this one about
the cottage industry in support for ‘entrepreneurship’ that has
mushroomed out of the development sector. The summary is spot on: much
has been tried, but relatively little works. A telling sentence: “most
African success stories involve a lucky break”. To borrow a metaphor from
Stevan Lee: in toxic ponds, most tadpoles die. This has very little to
do with the tadpoles and very much to do with the pond.
- This week in updating my priors: David McKenzie’s new paper, summarised
on Twitter here, finds that schemes to promote self-employment in
developing countries do seem to have a small effect on out-migration. I’m
going to have to think about this one for a while. Given the returns to
migration, is this a net welfare gain? If we simply go by revealed
preference it seems to suggest that small improvements in domestic
circumstances are enough to put people off large possible improvements
elsewhere. Or perhaps it shifts their perceptions of their longer term
prospects (rightly or wrongly)? As ever, the over-riding question of
migration for me is not ‘why do people move?’, but ‘why do so few?’
- I watched The Big Short recently, and loved it
(especially for the use of When The Levee Breaks
when the financial crisis finally starts to unfold). It’s difficult to
make complex economics so gripping, and so comprehensible. In VoxEU, this
piece isn’t quite in the Michael Lewis class of clarity, but is a
really interesting look at the
psychology of asset pricing, distinguishing between ‘bubbles’ and
‘manias’. It’s almost spooky how accurate Hyman Minsky’s model is when
applied to 2008.
- A long
interview with Amartya Sen. For development economists of a
particular vintage (my vintage), reading Sen was a formative experience,
no matter how far from that starting point you’ve moved. What always drew
me to him was the range of his study and perspectives, not any particular
one of them. That has remained.
- In eleven days, the NBA season kicks off, and after
trying to stay calm about it for the last couple of weeks, I’m losing
control. Have you seen the videos of Zion’s
first pre-season matches? The man is basically a bull crossed with
a frog, wearing Nikes. How does someone that big jump so high? He
reminds me of Shawn
Kemp, a man who was medically proven to have springs instead of muscle
in his calves. And that’s not even what I’m most excited about. Ben
Simmons took a three – and
made it! I’m simultaneously happy for him and sad that he’s
t-shirt obsolete. But best of all is this: Markelle
Fultz might actually be able to play basketball again. He was filthy in
college, and if he gets anywhere near that level again, this season is
going to be a lot of fun…
Have a great weekend, everyone!
Today, I have been thinking about shifting goalposts. The
computers I’m working with today (yes, plural: I’m doing some mind-numbing data
work that requires two screens) are light years away from the machines I used
as a teenager, but my emotional responses to them have hardly budged. Rather
than celebrating the fact that I can look at two websites at once, I find
myself barely suppressing a sense of fury at the sluggish pace at which they
work, and my suspicion that a malevolent gremlin is operating them with the
sole purpose of driving my blood pressure up and my vocabulary to the gutter.
Are our expectations forever doomed to stay one step ahead of our capabilities?
Perhaps the paralysed man who today is walking a few feet using a mind-controlled exoskeleton
(try convincing teenaged Ranil of that in the mid-90s) will one day be reduced
to sputtering rage by his Pacific
Rim suit taking too long to charge up its weapons? Humans: never satisfied.
- That said, dissatisfaction is important, even in the
face of progress.
We should be pissed off when things aren’t improving quickly enough, or
where will the motivation to change them come from? Fortunately, the
world is quite good at providing us with reasons to be furious: our
exhibit this week is the
AEA’s report on the diversity and inclusion in the economics profession.
It is grim. I really recommend you take a moment to look at the
original report: there is a lot in there that should make us feel
uncomfortable, not least the responses from those who felt that there
wasn’t any problem at all – going so far as to label it a ‘politically
correct waste of time’. (Exclusive footage of this respondent here).
For those who prefer their information in tweet-sized bites, Ben Casselman
op-ed in the NYT focuses on the experience of black women
specifically. Surely we can do better than this.
- This week in updating my priors: A VoxEU piece focuses
on the limitations of home-building (via regulatory change at least) as a
way to combat inequality. One of my go-to responses on inequality has
always been ‘build more’ – it simultaneously reduces the value of the
wealth that the rich hold and can transmit to their children, and reduces
the cost of moving to higher productivity areas. But apparently, it
doesn’t work quite so well in practice, with local markets being
rather segmented and investment tending to focus in the already-rich areas
– though it is possible that this is a US-specific result. Also giving me
something to think about: Erica Field and Rohini Pande mount a
of microcredit. It’s not that it will suddenly unlock growth in
developing countries, but it can at least be delivered better and with
better results than those that have been observed to date; though whether
this should dramatically change our position on it is still open to
- Dan Honig knows more about how organisations can
torpedo their own best intentions than most; this
piece suggests that by relinquishing control (especially in the
messiest places to work, where the temptation to exert a closer grip is
often greatest) they can achieve better results. Much in the vein of his
(excellent) book, it’s the kind of message big donors need to take
- Depending on what newspaper you read, you may well have
diametrically opposed views of the same factual events. Why is it that
people can look at the same facts and come out with such completely
different views? It’s not just the editorialising that’s to blame: our
own brains play tricks on us, with a number of biases affecting how we
interpret new information. FiveThirtyEight
investigate and focus on the poisonous effect that partisan
affiliation can have on our ability to interpret the world.
- This was one of my favourite things this week: The Economist ran an
essay competition asking for submissions on the topic of what economic or
political change is needed to effectively combat climate change. One
of the entrants to this competition was an artificial intelligence,
an algorithm that was trained to write essays. They published both the
algorithm and how it was judged by their panel of assessors. It’s creepily
rather good, if a bit odd stylistically. After all, who on earth likes
rhetorical questions that much?
- As my working calendar reveals, I am much
more of an Arnie than an Elon; or rather an Arnie in the body of an
- My earliest memories of watching sports are of Magic Johnson’s
Showtime Lakers and Diego Maradona.
There’s more in common between them than you might think – both were
absolute geniuses who had their fair share of off-court troubles, and
turned out as absolute failures on the managerial side of things. This long
read about Maradona is brilliant: it absolutely captures the sense of
chaos you had watching him play, the sense that none of this should really
be happening. It’s also chock-full of barely-believable stories, the
ones that are actually true almost more ridiculous than the myths. And he
really is a mythical figure: there were articles
recently celebrating the 30th anniversary of his warm-up
before a game against Bayern. What a genius.
Have a great weekend, everyone!
Yesterday, a friend sent me an e-mail full of Stata code;
this isn’t how we normally communicate, she was trying to help me format some
tables better. But in a perfect encapsulation of my attitude towards Stata, my
e-mail programme offered me the following prompt: “This message appears to be
in Slovak. Would you like to translate it?”. I tried. It wasn’t any more
comprehensible. After a morning of data entry and wrestling with Stata, with no
cricket on (thanks to a
ground being entirely submerged in Karachi), and a month until I can start
spamming all of you with videos of Zion Williamson dunking
on NBA players, that’s as much of an intro as you’re going to get this week…
- This is a complete disaster. According
to Planet Money, I am a millennial: “millennials are young adults who
are now between the ages of roughly 22 to 38”, they say. [We go live to
my reaction]. But it’s
not all bad: apparently, millennials aren’t quite the reprobates their
elders would have them be. Rather, they entered the economy and job
market in a very particular moment, one which penalised them substantially
relative to previous generations. One sign of this is that (contrary
to popular belief) they are much less likely to switch jobs early in their
career – a sure sign of less than dynamic economy, which normally involves
a lot of churn as people move between jobs and find regular new
- While we’re engaging in some revisionism driven by
data, consider the
case for China as a green giant. Stephen Roach argues that the pace with which China
is increasing renewable energy consumption, switching to more eco-friendly
transport options and moving out of heavy industry is unprecedented once
you account for its level of development. While it’s clear that we need
even more, this is a very different trajectory to those of the previous
generation of advanced economies, and provides a model for the rest of
the world rather than a scapegoat.
- It’s kind of thrilling to read a genuinely radical
idea, even if it doesn’t have a snowball’s chance in hell of being
any time soon. Martin
Ravallion and Michael Lokshin have one here: what if you could sell
your right to enter the labour market to the highest (international)
bidder? Imagine you’re a sixteen year old, but have plans to be in full
time education until you finish a DPhil – let’s say around 8 years if
we’re really optimistic. You can sell your place in the labour market for
those years to someone from outside the country and use the proceeds to
fund your education. Alternatively, you could retire early and do the
same. They even discuss how it could be implemented in practice – though I
will eat my hat if any Government in the world goes with this scheme in
the next decade or two.
Alone, the new book by Branko Milanovic has just been released. I
haven’t got a copy myself, but it’s surely self-recommending. He
summarises what he considers to be the four central themes of the book here.
Branko is one of my favourite economists to read. Even if you wind up
disagreeing with everything he says, you will always learn something on
John. It turns out that money can buy you happiness (love remains
to be proven). Previous studies showed that lottery winners do not
wind up happier than non-winners, but it turns out that the canonical
study had a sample of just 22 winners! Kelsey Piper at Vox points out
that when studies were run on larger samples, winners
did indeed appear happier. You know what else makes you happier?
Power calculations. And bigger samples. Sheesh.
- Income inequality in the US (using the Gini
now higher than at any point since data started tracking it.
- Finally, The Joker opens next Friday. I’ve already gone
on more than one massive geek-out over this, but the point bears
repeating. Batman has the best villains: funny, anarchic, monstrous (and mumbly),
and just plain weird.
And apropos of that last link, The Ringer write a loving
celebration of Danny De Vito, though they manage to get through the
whole thing without mentioning Rod Lurie’s unforgettable description
Have a great weekend, everyone!