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 is rewriting 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 Economics.
- 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 rendered this 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!