What do you do in weather like this? Today is a day for lying in the park, under a shady tree, with a good book (or links round-up) and a cold glass of something crisp and refreshing (pandemic allowing, of course).Of course best of all would be sitting in the stands of Old Trafford, watching Pakistan work their magic, weaving a spell around the England batsmen with the latest of their conveyor belt of brilliant and exciting quicks and leg-spinners. I can’t remember a single Pakistan test team that didn’t have at least one thrilling bowler; this one seems to have at least three. What a team. Totally incompatible with productivity in work, but some sacrifices have to be made. The return of sports has made this summer so much better; life has that little bit less savour without cricket or Giannis politely explaining his bad intentions to a referee.
- If you read just one thing this week, let it be this absolutely superb interview of Amartya Sen by Angus Deaton and Tim Besley. Sen’s life as an economist has been just extraordinary. His peers, sparring partners and collaborators are a who’s who of foundational figures in the discipline: supervised by Joan Robinson (with whom he had some profound disagreements), encounters with Maurice Dobbs, AE Pigou, Piero Sraffa… all brilliant thinkers, many of whom have been sadly forgotten. What is really striking about the interview, and Sen’s recollections of a life of economic arguments is how involved he and his peers were with the intellectual and philosophical foundations of economics as a discipline, something which has largely disappeared from economic discourse. He cites the (sadly departed) Tony Atkinson as the author of the last really interesting piece on welfare theory, one which bemoans its disappearance from economics. These aren’t idle discussions to have while we’re working out how to change the world; they are the basis on which we change it. Neglecting what development is, and means, and what progress is, and how to think about welfare makes the discipline that much weaker.
- Most economists of my vintage (and earlier) owe an intellectual debt to both Sen and Deaton, which doesn’t mean you need to keep agreeing with them today. There’s been a lot of pearl-clutching on Twitter at Deaton’s latest paper criticising the practice of using RCTs in economics. I recommend reading the whole thing. There are sections I very much disagree with – especially on ethics and ‘big vs. small’ (as Rachel G once said to me, “there is nothing small about problems like maternal healthcare or education”). But other parts are important: section 2 on statistical inference is a must-read. Randomisation does not absolve you from good statistical practice. Similarly, the section on external validity is also very good; identification is not a substitute for a theory of causality that generates an understanding of why and how things work – a causal framework. Good studies that use RCTs pay attention to these things. In a sense, the real fight he wants to have is not downgrading RCTs, but upgrading other kinds of careful research. Being an RCT is not a headstart to quality, just a different starting point.
- Speaking of which, I really, really liked this study by Bachas, Gadenne and Jensen on indirect (consumption) taxes in developing countries. It’s very good. It makes a careful and convincing case for the use of consumption taxes as part of a progressive and effective taxation regime in countries with large informal sectors – so long as richer people prefer to shop in the formal sector rather than buy equivalent goods in the informal sector (i.e. that Engels curves are downward sloping).
- This was excellent too: Euan Ritchie runs the CDI with a million different permutations and shows that the findings are pretty consistent – and not an artefact of the weights selected. And while I’m linking to CGD stuff – I rather liked this paper Stefan and I wrote about the impending merger: borrowing some more woodland animals from Isaiah Berlin’s brilliant essay about Tolstoy.
- “The truth is paywalled, but the lies are free”. I liked this essay, which starts from this insight, but I was disappointed that it didn’t really go deep into the economics of this statement. The truth is paywalled because it’s a public good that it is inappropriate for the state to be sole funder of. The benefits of the truth being common currency are widely shared, which means those that take the effort to find it and report it find it do not benefit (expect intrinsically) from it unless it’s restricted in supply and they get paid for its use. On the other hand, the lies are private goods: the investment in generating them is repaid by their role in advancing an agenda that benefits their progenitor, which increases with their circulation. It thus makes sense to produce it at a cost and then circulate it as widely as possible, for free, to maximise take-up. The political economy of bullsh*t is important, and I’m not convinced anyone has nailed it yet.
- Raghu Rajan takes the contrarian view that we should not be spending like crazy to keep the economy afloat. I’m not sure I agree with his welfare analysis in its entirety, but it makes serious arguments that should be taken seriously.
- Finally, via Huw, it has finally happened: Taylor Swift has become an economics meme. Apparently, she has been studying a fairly advanced economics course and has taken to coordinating her outfits with the most recent textbook she’s read (yes, yes I know this is a thing). And if that doesn’t make you happy, try Curbside Larry – the greatest advert for a public library in history.
Have a great weekend, everyone!