The CSAE Blog

It seems like a lot of goodbyes have accumulated in the two weeks since the last e-mail. Harry Dean Stanton (watch Repo Man), Bobby “The Brain” Heenan, and the Screaming Eagle of Soul, Charles Bradley (listen to Ain’t it a Sin) all died. Kumar Sangakkara retired from first-class cricket, and I’m (temporarily) leaving DFID. But, unlike the others, I’ll be back, and in the meantime I will be continuing to send these links out every week, since the good people in the admin department are letting me hold on to this machine until I return. So, with a minimum of fuss, on to the links.

1. Last week, I talked a bit about Stefan Dercon’s habit of blockbuster presentations at the DFID Economics Conference. This year his presentation covered, among other things, the importance of the mental models we have for determining our action. The role of human aspirations in our decisions is increasingly the subject of research in international development, and this excellent paper by Emma Riley demonstrates why: kids who watched a movie about someone like them overcoming difficulty and making something of themselves did better in school – an effect that was strongest for those in the worst schools and at the worst starting position. David Evans also discusses the paper here.
2. So, Emma’s study involved showing kids movies, which sounds a lot more fun than the average research project. But there’s a place for more prosaic research that confirms what we already guessed – like this VoxDev write-up of research by Davids Atkin and Donaldson on trade costs in Africa, demonstrating that the costs of moving goods around within Africa are around five times greater than those in the US. While this remains the case, any country not on the coast will struggle to reap the gains of globalisation.
3. “No one can understand the economic consequences of large migrations without careful economic research on the ripple effects—which are subtle, invisible, delayed. When politicians brush this aside they are being duplicitous, or at least disingenuous.” When Michael Clemens writes about migration, everyone should listen – because amidst the duplicity and disingenuity, integrity and clarity and rigour become ever more important.
4. My normal reaction to anything Alex Tabarrok says is to look for the reset button, and hope when he starts up, the empathy module will have installed. But in this case I’m simply admiring: his response to David Roodman’s replication of one of his papers is superb, and shows real integrity.
5. Branko in unusually personal form: about growing up in Yugoslavia and the absence of anything resembling his past in the official histories of the end of Communism.
6. This week in absolutely stunning headlines: The media is really, really bad at dealing with probabilities, and this makes for bad coverage of an uncertain world.
7. And lastly, the NBA season is nearly upon us, so thank god LeBron James and Gregg Poppovich are there to talk some sense.

Right, I’ve got to pack my stuff and leave the building, but the links will be back next week. Have a great weekend, everyone!

R

Hi all,

Sorry this one is so late (and verbose)! I’ve been at DFID’s economics conference for the last few days, and have just dealt with the annual nightmare journey back home. As a result, I’ve had very little time to really keep my usual eagle eye on the rumblings of the internet, so this week’s links are a bit more sparse and tired than they usually are. But your loss was my gain: lots of phenomenal speakers, new ideas and a lot of argument that we’ll take back to our jobs.

It was also Stefan Dercon’s last appearance there as DFID’s Chief Economist. Over the years he’s given some absolute blockbuster talks, incorporating Asterix, lions and peacocks, and minor Asian fish. But as was noted in an appreciation given by Nick Lea, his deputy, the real measure of his influence is that DFID’s take on virtually every substantive topic we covered in this conference and those of recent years have been fundamentally shaped by his thinking and influence on the corps of economists which he leads; and collectively they represent the vast majority of what we do. He’s been totally inspirational, and we’ve been lucky to have him.

1. We’re also really lucky to have appointed Rachel Glennerster as our new Chief Economist (from January). She opened the conference, and one of Rachel’s points was that the experimental revolution has created a channel through which research is effectively being translated into policy and doing a tremendous amount of good in the world. But should this evidence of scaling up really be the measure of their worth? In an article which Rachel would probably agree with, Alejandro Ganiman suggests that the contribution to what we know about development that RCTs have achieved has been far greater than scale-up estimates would suggest.
2. We also had noted contrarian Lant Pritchett at the conference, and Lant likes to blow things up. His own aversion to the kinds of questions that RCTs ask is well documented, and he indulged in it in his keynote address (a barn-burner, complete with tears over the genius of Bill Russell, balloons, sacred cows being taken to the slaughterhouse and a reassessment of Allen Iverson). One of his concerns is that especially as we start working in harder and harder environments, research effort will be devoted to smaller questions that feel easier to answer, not the really big ones that will determine the ultimate success or failure of development in these places. He must be glad for people like Daron Acemoglu, here talking about Colombia as an example of how not to build a state, even if he probably doesn’t agree with all his conclusions.
3. It was kind of amazing to have three such brilliant and different thinkers giving their ‘state of the discipline’ addresses to us. But not everyone is going to be so lucky – and for the rest of us, there is a new economics core curriculum available online and free. New Yorker review here.
4. Tim Harford would have been the icing on the cake, but sadly no dice this year. He talks about disaster preparedness here, but from the perspective of individual biases. Again, his ability to explain so much of the discipline so clearly amazes me.

And that’s all from me today. I’m off on leave next week so no links again until the end of September. That might actually be the last links e-mail for a while: I’m taking a short career break to study again (apparently, I don’t feel like I spend enough time reading research). I’m planning to keep these links going while I’m on my break, but it might require a bit of negotiation to keep this laptop, and hence my contact book!

Have a great weekend, everyone!

R

Hi all,

This week’s links are a bit short as I’m off work and spending the day (Friday) at Lord’s to watch the England-West Indies test, a match beautifully poised for an exciting result which is now, inevitably, looking like it will be spent sitting in the rain and hoping for fifteen minutes of play. Oh joy. Anyway, before giving my raincoat a workout, here are the links, with apologies for any morning-brain-syndrome in evidence.

1. The Economist rehabilitates the Ponzi scheme. The idea of a Ponzi scheme is that you promise investors an exceedingly high return, and pay them by constantly inducing new entrants to the scheme, paying existing investors with money raised from the new ones. It works only as long as there is a stream of new entrants: as soon as it dries up it falls apart. It has the reputation of being a particularly unscrupulous scam, but the Economist makes the point that this is basically how pensions work; and to some extent the London housing market. This doesn’t make them a complete scam (well, London housing might be): they might have found a context in which Ponzi schemes work – when new entrants are always possible. Of course, an aging population and a desire to hermetically seal the country from them might undermine that case…
2. Long-time readers will know that my favourite paper of the last few years was Nick Bloom’s Firming Up Inequality. In it, he points out that most of the observed increase in inequality in the US comes between firms, rather than within them, which I have long thought was driven by outsourcing and specialisation – consider that while Wall Street firms employed cleaners directly in the 1950s, they now contract cleaning out to firm of cleaners with much lower profitability. Neil Irwin at the NYT takes this example to investigate inequality and mobility in the workforce by comparing a cleaner from Apple today with one from Kodak in the 1980s. The latter is now one of their Executives, while the former has virtually no chance of achieving the same. A fantastic read.
3. So, it appears that Chris Blattman is writing a book. And that someone should tell him about The Old Reader.
4. Lee makes the case for low-bar education interventions: in contexts where virtually no-one learns, we should be happy with any interventions that work, even if they have a low ceiling on what they achieve. That’s how the development sector treats poverty, so why is it so resistant to the idea for education?
5. One of my friends insists that I have more in common with Tyler Cowen than I am willing to admit, a charge I absolutely dispute. The only thing worse would be if he insisted I had much in common with Tyler’s co-blogger, Alex Tabarrok, which is why I reacted with fear and horror when he released a teaching video using my favourite example for explaining the Balassa-Samuelson effect, haircuts. It’s really good though.
6. Right, time for me to cut this short, as the cricket (or, more accurately, the rain delays) are calling. But before I go, The Ringer has an appreciation of MTV Unplugged. Virtually every member of my generation with a functioning eardrum has heard Kurt Cobain howling the last lines of Where Did You Sleep Last Night?, so we have a lot to thank Unplugged for.

Have a great weekend, everyone!

R

Hi all,

Well, that was an eventful week of cricket, wasn’t it? Shortly after the West Indies finished their glorious chase against England (a triumph of Hope over expectation, as Vic Marks noted), Bangladesh gave Australia a huge – and hilarious – kick in the pants over in Dhaka. I was late to the office that morning, giggling uncontrollably as the wickets fell in procession, thinking about the delicious irony that Australia virtually excluded Bangladesh from their test cricket schedule because they weren’t competitive enough, only to run into the best all-rounder in cricket since Jacques Kallis. Combined with the welcome news that the greatest boxer of his generation was, in fact, good enough to soundly thrash a man who had never boxed before, it’s been a pretty good week for sport (here is the tale told in Emoji, the most appropriate medium).

1. If only everything was so easy to separate into good news and bad news: is the news that the Supreme Court has nullified Kenya’s election result good or bad? One view expressed in this FT article is that “it has restored the integrity and credibility of the judiciary and taken our electoral democracy a notch higher”; another describes it as “a punch in the solar plexus” for an economy already on the ropes. Clearly, it’s great that the Supreme Court has the independence to issue such a verdict, but then we’re left with the conclusion that the first go round was compromised or they got it wrong. Neither one should make you happy.
2. Brilliant VoxDev write-up of Dan Rogger’s work on developing country civil services. It’s structure closely mirrors the excellent talk he gave at DFID a couple of months ago, and if you missed it I strongly recommend that you catch up. Particularly useful for those of us who regularly engage with developing country bureaucrats and bureaucracies.
3. Related: last week, I linked to some research on how giving evidence to Danish politicians doesn’t necessarily improve their decisions. Adnan Khan and co report on related (DFID-funded) research which sets out the limits to how civil servants use evidence, starting with their deeply inadequate ability to read even simple summaries of it and the non-existent interest of the political class in getting it right.
4. Nice write up of research that investigates how training can reduce the ‘occupational segregation’ that drives so much of the gender pay gap (put simply, women don’t enter the most productive fields and as a result earn less – often due to forms of discrimination much more pernicious and harder to pin down than outright favouritism of males). A big chunk of this is down to aspirations, as previous work by Markus Goldstein also alludes to: women don’t enter typically ‘male’ jobs unless they have a male role model or mentor to encourage them. Related: Tyler Cowen comments on how little feminist economics is used by the mainstream, finding (implicitly) merit in the argument that the discipline is structurally biased against women (my own view is that like most of the rest of economics, it contains equal proportions sensible ideas and Beetlejuice-level crazy). And a huge reading list on gender and economics.
5. Last week, I said competition matters. This week, a new paper attempting to find out how much you need for it to work.
6. So, recently I’ve been thinking about our tendency to let the most attention-grabbing characteristic of a place dominate the way we think about them, even to the point of absurdity. The point was reinforced when I read this fascinating Al-Jazeera piece on the music of Somalia – I remember feeling briefly surprised that there was Somalian music, which is an absurd reaction.
7. LitHub on some of the most beautiful bookstores in the world. One of my favourites, Daunt in Marylebone, is on the list, but nothing beats Livraria Lello.

Hope you had a great weekend, everyone!

R

Hi all,

So, it is possible to make lemonade after all. With the NBA season fast approaching and my heart rate correspondingly beginning to creep up, Cleveland and Boston pulled off a monster trade that should shine a light in darkness everywhere: even when your luck bottoms out, and a man capable of this tells you he wants out, you can come up smelling like roses. And on that inspirational message, I’ll get on to all the depressing economics of the week.

1. There was a lot of cool trade stuff published this week, including this two–parter by William Norhaus. It’s ostensibly about (against) Trump’s view of global trade, but it’s worth reading by all for a clear and wide-ranging exposition of the economic orthodoxy on trade. Whether or not you agree with it, it’s important to understand it. One line leapt out at me: “In a well-functioning society, the status of a fact is decided by evidence and experiment.” I’m not sure whether I can think of a society that meets that test, honestly – not even mini-societies like our own bureaucracy here.  Another point to make: of course trade affects the composition of jobs. Trade is a means through which we can specialise more. Specialisation means doing less of some things and more of others. Policy makers and economists need to be straight and open about this. More on how people adjust to that here.
2. Speaking of well-functioning societies, lots of people think Scandinavia comes closer than most to fitting the bill, but it’s not quite that simple: this paper finds that among Danish politicians, the provision of more evidence makes decision-making worse, not better, as it simply strengthens the existing prior beliefs they hold. It’s always nice to be presented with evidence suggesting your entire raison d’etre could be a chimera.
3. Maya Forstater probably has much experience of people well-versed in ignoring inconvenient evidence. She seems to be the lone voice pointing out that there isn’t some magical tax that is suddenly going to quintuple the revenue raised by developing countries. This week she points out that transfer pricing isn’t the multi-billion dollar prize that many believe it to be.
4. This is totally incredible: a video demonstrating the endowment effect. In it, a reporter stands next to the kiosk selling lottery tickets and asks everyone there if she can buy the ticket they just bought – for more than they paid for it. Almost everyone says no, despite the fact that they could turn around and buy more tickets in a matter of seconds. Even if they edited the hell out of this, it’s still incredible.
5. Geek out on discount rates: a VoxEU article about the impact of using demographically-adjusted discount rates on rates of time preference. This is something DFID has grappled with a bit in the past, too. Recommended, if only to introduce you to the basics. Also demography related: Lagos cannot stop growing.
6. Competition matters (a huge amount of economics could be distilled into those two words).
7. Lastly, one for the birdwatchers: an analysis of the economic value of birds. I don’t doubt the validity of any of this, but it’s depressing to me that so much of what should have inherent value now needs to be translated into impacts on the economy. And if that doesn’t depress you, check out this timeline of the far future – you can always anchor whatever you’re doing now against the last entry: earth dies.

Have a great long weekend, everyone!

R

Hi all,

I’ve had to link to this brilliant piece by Tim Harford, about the effects of terrorism, far too often. Terrorists seek an over-reaction, and the best thing that we can do is refuse them that. So instead, I’m going to talk about the Day-Night test, and Alistair Cook’s inevitable quintuple century (assuming England don’t declare, it certainly doesn’t look like the Windies have a chance of getting him out); about this brilliant long article by Rob Smyth about Patrick Patterson’s finest moment, and about this terribly sad article about his life since then. And about the idiocy of the man who got arrested after accidentally firing a gun while taking a selfie. In a strip club. And, of course, I’ll talk far too much about economics.

1. One of the things about new technologies and innovation is that their contribution to the world is often under-counted: because many innovations operate by rendering old technologies obsolete, their effect on overall GDP (and inflation, since indices will be slow to respond) isn’t representative of their real world effect. Phillippe Aghion and friends have made a valiant attempt at measuring this effect, for the US at least, and have good news and bad news. The good news is that roughly half a percentage point of ‘actual growth’ is missed out by the statistics each year. The bad news is that this number seems pretty constant over time, and so Robert Gordon’s thesis that we’re entering a productivity slowdown isn’t affected by it.
2. Of course, another effect of technological change is that it makes it easier for us to dodge work (I say, as I check Instagram and read tweets that make me despair of humanity). Tim Harford has a good piece here about how we work and the value of working. A passage I particularly liked: “Work that matters is often difficult. It can be absorbing in mid-flow and satisfying in retrospect, but it is intimidating and headache-inducing and full of false starts.”
3. I’m a big fan of Chris Woodruff’s work that shows that perceived gender productivity gaps in Bangladesh seem to arise from men and women overestimating men. This nifty paper provides some (admittedly fairly weak, and slightly esoteric) evidence that it also arises from people underestimating women. The paper looks at betting odds on female jockeys over a large dataset and finds that on average, women win slightly more races than the betting markets predict (0.3%, to be precise), and that this is exacerbated where female participation is less common. Please excuse me if I don’t rush down to Paddy Power and start a new lifetime gambling strategy.
4. Noah Smith’s piece on specialisation and international trade suggests that countries that produce more different kinds of things (typically those with greater economic complexity) wind up doing better out of trade, based on research by Ricardo Hausmann and co. I take a slightly different reading. Specialisation doesn’t mean you produce few things. It means you produce lots of those things that take advantage of your endowments and skills, and your produce virtually nothing of those things that don’t. So a country that exports lots of goods and has high economic complexity hasn’t necessarily foregone specialisation – it’s just specialised in skills and processes, rather than goods.
5. I found this fascinating: Prashant Bharadwaj and Saumitra Jha on the effects of the partition of India. Hard to summarise, but much to learn.
6. This has nothing to do with economics, but it concerns another dear love of mine, noodles (they sit alongside birdwatching, cricket and LeBron James in my affections). A man in Chongqing has bought noodles for every patron of a shop where someone returned an engagement ring he misplaced. The article makes the terrible error of focusing on his act of goodwill and not on the noodles – what kind were they? How spicy?
7. Lastly, the two best things I’ve read all week: the absolutely hilarious proceedings of the jury selection for Martin Shkreli (“He disrespected the Wu-Tang Clan”), and a definitive typology of the ways in which Samuel L. Jackson uses his favourite word – you know the one, it’s four syllables of incestuous obscenity. It’s most definitely not safe for work, which is all sorts of awkward, because I just read it at work, and then watched a tutorial from him about how to use the word.

Have a great weekend, everyone!

R

Hi all,

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

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

Have a great weekend, everyone!

R

Hi all,

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

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

Have a great weekend, everyone!

R