The CSAE Blog

Hi all,

There’s an oft-quoted line in the classic 1995 mystery/heist/Benicio Del Toro mumbling movie The Usual Suspect: “The greatest trick the devil ever pulled was convincing the world he didn’t exist.” I was thinking about that today. With Brexit lurking around the corner like Keyser Soze, it’s marked primarily by the many guises it’s worn since 52 percent of the population voted for… something, not quite defined. We’ve gone from “of course we won’t leave the single market” to “we’ll do a trade deal over a cup of coffee” to “no deal is going to be wonderful” (if you’re Boris Johnson) or “we’ll survive” (if you’re Oliver Dowden) to this, if you’re me. How did that happen with so little fanfare? One of the most damaging things about 2020 for the UK has been the way Covid so dominated the public attention that it completely distracted us from the Brexit negotiations. Would a clearer, less fatigued public mind have put more pressure on the Government to achieve a deal? Perhaps not: I’ve been predicting no deal since 2016, but my goodness if it comes to pass we’ll be wondering about it in a few years’ time. One of my friends exports goods to the UK, and he’s describing a state of absolute panic among the people moving his goods in the UK. Fun and games for 2021.

1. Ok, so the intro was about as much fun as a smack in the face with a roll of quarters, but I’ll make it up to you. This interview with Michael Clemens is absolutely brilliant, and I cannot recommend it enough. In fact, if you’re short of time, just open it and ignore the rest of the links. Michael is given a proper grilling here, but answers every questions with such clarity, exposing logical and moral fallacies in the arguments around immigration while also drawing on a huge range of evidence to explain why so many stated positions about migration are drawn from faulty logical foundations and how they can be tested (and disproved) by evidence. What I liked most about the interview, though, was how Michael was able to discuss not just the fine details of US migration law, but also their genesis (as he puts it, it is of the “here’s a number I pulled from where the sun don’t shine” school of policymaking) and how different kinds of policies might offer a partial improvement – and what problems they won’t resolve. He ends on a note that is a little pessimistic and a little optimistic, quoting the classicist Jeremy McInerney: “Wisdom only comes through suffering”, which may turn out to be our verdict on Brexit, too. Bonus: a VoxEU write-up on the importance of migrants as key workers in Europe. Spoiler: it’s huge.
2. Andrew Gelman and Aki Vehtari have a new paper out summarising what they think the most important statistical ideas of the last 50 years have been. It’s readable, fun and a super introduction to ideas that you should probably understand better than you do – I certainly should.
3. It’s a great week when we get new content from both Michael and Dietz Vollrath, so take advantage of it. Dietz digs into the decline in TFP in the US, commonly thought to be a phenomenon of the last decade or two. It isn’t. TFP jumps around, and has periods both above and below trend since the 1960s, but if you took the trend from then and used it to guess productivity today, you’d be about right. It gets really interesting when he starts discussing what these findings mean for his explanations of US economic performance. Worth reading in full, including his suggestion that the brilliance of Innervisions may have led some people to the milk and honey land, where all men feel they’re truly free at last. Stevie Wonder caused the slowdown, everyone (which also explains how bad some of the later albums were).
4. Hugo Slim at BSG has written an excellent blog at ODI arguing for a complete restructuring of global humanitarian operations, based around platforms built on local partnerships and delivery structures. It’s excellent, and makes the point that vaccine rollout platforms offer an opportunity to move outside the established, and sclerotic, humanitarian delivery models we’ve been reliant on to date, and can be used for future priorities, including social protection. In a similar vein my colleagues Jeremy Kondynyk and Patrick Saez argue for reform to the system here.
5. Josh Angrist, David Autor and Amanda Pallais have a write-up of their new paper out about the use of financial aid to support college students; what makes it cool is not just that it’s every bit as careful and well-done as you’d expect from them, but they conclude with a proper discussion of the cost-benefit ratio of the intervention. They – correctly – argue that scholarships in the context they measure them are largely transfers, and this has profound implications for how cost effective the intervention is; it would look even better if they explicitly weighted the worst off students more highly. I love teaching CBA because there’s a lot more economics in the conceptualisation of it than there is the summing up of numbers, as they recognise.
6. If you’re like me, you lost a few hours to reading the Lancet write-up of the early Astra-Zeneca results (they make me more, not less, optimistic about the vaccine) and the FDA summary of the Pfizer vaccine data. But if you want a summary of the former, this Science piece is good; even better is Karleigh Rogers on the difficulties of getting people to complete their vaccination course, and how to overcome them (she missed a trick not citing Anna Karing, though).
7. And lastly, I know some of you argue that economics is divorced from the real issues that matter to people. Some of us have heard you: Stephanie Karol, for example has a new paper out modelling how households make decisions when cats are present: obviously, the finding is that cats rule the household. And another paper sets out – with examples – how to teach economics using K-Pop; as much as Blackpink might offer something here, nothing summarises the economics of conspicuous consumption like Aaye Laariye (and – even better, it turns out that Sheheryar Banuri’s sister Wajiha Navqi has an – amazing – Coke Studios song out this season!). And on that happy note…

Have a great weekend, everyone!

R

Hi all,

2020 jumped the shark today, when we CGD Europe had our work Christmas do over Zoom; brilliantly organised and fun as it was it drove home exactly how over this year I am. I’ve avoided pubs and restaurants for the duration of the pandemic, ditto cafés, yoga studios and the like, knowing that I have vulnerable people in my extended circle, and it’s been mainly a great year – but there’s something irreplicable about the social bonds built through physical proximity and collective action, whether that action is an escape room, axe-throwing, mini-golf, or having just enough drinks to say that 10% more than you’d normally reveal about yourself at work. I wonder if we – or I – will look back at this experience and be glad we went through it, because we built something better out of it, the way I imagine people in the UK felt with the creation of the welfare state after 1945. Then I read stories like this and am reminded that no – for the most part, things will be as they were before, but a bit worse. Hoellebecq was right, as annoying as it is to admit.

1. After that little dose of sunshine, maybe I should lead with some happy stories? Well, every year the Federal Reserve in the US publishes a report, ‘The Beige Book’, which consists of little more than stories and anecdotes about the economy, and this year Planet Money trawled through it to find the happy economic stories of the year (transcript). Even the happy ones have a little hint of sadness to them, though, like the firm that started a bus service to bring workers in to work… because it’s normal workforce couldn’t come in because they lacked childcare options. And staying on the theme, these aren’t ‘just’ stories. Stories can have real economic power, the idea that Robert Shiller has been pursuing with his recent research. Again, PM have the scoop (transcript).
2. Staying on things that make me happy, the Development Impact job market paper series is still on-going, and this week’s have been typically excellent. I really liked two papers that looked at the effect of crime – one on the incomes earned by workers, and the other on gender inequality (finding that violent crime reduces women’s bargaining power). I love spotting the connections between otherwise unrelated papers; and the first one has links – in a completely different context – to the Chicago Uber paper which found that women were more likely than men to avoid high crime areas, and thus their higher Uber fares.
3. I’m on record as a vocal detractor of all but the best systematic reviews in economics, being unconvinced by the quality assurance that goes into paper inclusion or the pedigree of the authors of them (with exceptions, such as most of the surveys published in the Annual Review). In a blow to my priors, though, VoxDev have launched what promises to be a superb series of ‘VoxDevLits’ – literature surveys compiled by the outstanding economists in each field, and – crucially – regularly updated to include new studies as the dimensions of our knowledge expand. The first, on enterprise training has an absolute who’s who of economists who know this field intimately, and led by David McKenzie and Chris Woodruff. The full note is great, as is the summary.
4. I really love this piece by Diane Coyle, who makes a point about public investment I don’t think is made often enough: that it is a form of intergenerational redistribution, or as she puts it “Investment is also an essential form of compensation to younger people, who have been one of the hardest-hit groups in the economic downturn. Many who had the bad luck to enter the job market during this crisis may find their career and lifetime earnings prospects damaged as a result.” I don’t know what Building Back Better actually means in any concrete sense yet, but I suspect Diane would have a very good programme for it.
5. An interesting piece by Homi Kharas and co-authors on which countries should get ODA – they use measures of ‘need’ and ‘capability’ and suggest that it makes a strong case for more investment in middle income countries. It’s an interesting idea, but reading it made me think that it must be extremely sensitive to the precise metrics used – a point that Marcus Manuel demonstrates on the ODI blog.
6. It’s incredibly hard to prove what many suspect, that the distribution of road infrastructure in most of Africa is hopelessly poor, and driven by other concerns than welfare maximisation of the population, but this cool piece on VoxEU has a novel approach: they find that autocratic leaders build roads that lead from the interior to the coast much more than those that connect parts of the country to each other. It’s not a total slam dunk, but a really interesting piece of research.
7. I can be quite old-fashioned, and perhaps default into thinking that our cultural touchstones today are – for the most part – rather less talented and interesting than those of previous years: more Messis than Maradonas, more John Legend than Marvin Gaye. Two pieces really dug my priors in this week: first, this LitHub article about the emergence of the NBA as a spectacle reminded me that the traditional celebrity singer of the national anthem at the All-Star Game wasn’t always Fergie being totally embarrassing, but Marvin in a suit and shades being far cooler than any human being has a right to be. And the Ringer take the occasion of Dolly Parton saving humanity to run this appreciation of her, and the tl;dr is that she is just incredibly cool, and independent-minded in a way that would put her in a field of her own in today’s pop landscape. PS – really watch the Marvin video – it’s absolutely incredible.

Have a great weekend, everyone!

R

Hi all,

Well that was a week, wasn’t it? The Spending Review confirmed what was feared for the ODA budget, and then on the same day Diego Maradona (see the last link) and James Wolfensohn (link 2) died. Just when 2020 was looking like it was going to try and rescue itself from the massive suck-fest it seemed so happy being, gaslighting humanity by giving us the news the Dolly Parton might have saved humanity (again – the first time was when she released the album Jolene) and that DeAndre Hopkins catch, it turned the tables again to reveal it’s true evil nature. If 2020 was a TV character it would be Tony Soprano – violent, abusive, but occasionally just likable enough to make you let your guard down again. When 2020 says ‘we had coffee’, this is what they mean.

1. So… shall we start with the obvious? I’ve always disliked the idea that the amount of good we do on development can be reduced to the amount of aid we spend in a given year, but cutting the aid budget in the middle of a global pandemic that is likely to cause the first increase in global extreme poverty in decades is… not so great. Not when the IMF’s head is penning op-eds desperately arguing to maintain a focus on the poor, if we want this crisis to ever truly end. And certainly not when you consider the quality of some of the other spending this year. That said, I’m going to break a rule and repeat a link. If we’re going to cut, cut the worst of it. I also liked this take by Mark Miller, and in particular his twitter thread. But more than anything else, I’d point out that there is everything still to fight for. Cuts can protect what UK aid does best, but require real defence, real fight. If you care about getting this right, cut your losses on the fights that have already been lost and fight the ones that remain. Until they’re lost, they’re worth fighting, and require people who believe in it, and have the knowledge to make the case for keeping the best of our work.
2. James Wolfensohn, whom Justin Sandefur described as the only good President the World Bank has had, passed away. Via Dan Honig, here is a truly amazing interview he gave as part of an oral history of the World Bank. As Dan said: you can learn more here about how the Bank works than from any other source available.
3. Do you find ‘left’ and ‘right’ restrictive intellectual categories? That there is a complexity to your thought that reducing it to a single region on a single axis won’t capture? Pranab Bardhan (whose work on sharecropping in India had such an impact on me when I was a student) has a lovely piece setting the ideological diversity of the academe on a more complex scale than left/right, and in the process gives you a starter for ten on so many intellectual debates that you can wormhole down at your leisure.  
4. Two super pieces on VoxDev this week – first Suresh de Mel and co-authors on an experiment that finds that rolling out free digital savings accounts to a cohort of poor people in Sri Lanka achieved… not much at all. Digital solutions are nice, but only once we’ve worked out the fundamental behavioural constraints to the problems we face. And another piece that finds that outsourcing of work from a parent firm leads to an increasing concentration of economic rents in the contracting firm – a finding that chimes very much with one of my favourite papers, Nick Bloom’s Firming Up Inequality.
5. Two more pieces on the recent US election. First, a really sad look at the shockingly high number of Americans who report being close to no other person, and how strongly these marginalised people broke for Trump – one possibility for why polls underestimate his support so consistently. And a piece which looks at the ethnic breakdown of Trump’s support, attributing his increased popularity with some ethnic minorities in part to reversion to the mean, to the rural/urban split even within ethnic groups, and Trump’s ability to tap into the specific concerns of some minority groups.
6. Because of course, Branko has written something about The Makioka Sisters, once again proving that he is a walking venn diagram, connecting unrelated topics in the mind of a single polymath again and again.
7. So I didn’t say much about Diego in the intro, because I was saving the best for the last. I don’t really watch football anymore, but I idolised Maradona. In fact, my son’s first name was very close to being Diego, before it was nixed by my (half-Argentine, no less!) wife. I am just old enough to remember watching him play at his absolute apex – for Napoli and for Argentina. It was the clearest expression of genius I’ve ever seen: he was simply that much better than everyone else I have ever seen play the same sport. And it wasn’t despite his imperfections, they were very much part of him; his genius is inseparable from the mindset that led him to do so many crazy things. We could have thousands of links here, but I’ll try and be restrained: the FT on how Maradona is the perfect metaphor for monetary policy; but he wasn’t a metaphor for life – he was far more important than that, as L’Equipe understood. It comes across on the commentary of that goal, particularly the howl of “Siempre Maradona! Genio, genio, genio!”; and in his legendary Live is Life warm-up. I’m so sad he’s gone, but happy to spend hours watching this to celebrate him.

Have a great weekend, everyone!

R

Hi all,

I have extremely exciting news: I managed four hours of uninterrupted sleep last night. It’s true,  more exciting have happened in the world this week: there’s an election heist in progress somewhere, it seems, undertaken with all the panache of the Sticky Bandits; another vaccine company has seen fit to boost its share price with an announcement of efficacy before showing us the data; and a man in Australia is competing with the aforementioned election bandit for the title of the world’s most selfish man. But the world is made up both of things that are too big to move by yourself and small challenges to meet one-by-one. And in both cases, I really think they bend towards improvement, in the long run, as Lee might say. And if my little sleep-depriver is beginning to see it fit not to test how much wailing it takes to wake up a man who sleeps with his hearing aids in a jar next to him, then I’m going to enjoy that one while it lasts…

1. I really did promise not to turn the links into the CGD Weekly, but my colleagues don’t make it easy. First Matt Juden and Ian Mitchell dig into the cost effectiveness of climate spending here, and spoiler alert, the answer is ‘no sod knows’, which is kind of disappointing. There’s a trend towards good analysis of cost-effectiveness right  now, and this gap needs to be filled, quickly. It would help, too if donors were honest about what they’re really spending on climate change – but my colleagues Atousa Tahmasebi and Euan Ritchie seem to have caught out a few being … shall we say, economical with the truth? This is excellent stuff, the kind of thing you only learn if you have the inclination and wherewithal to get into the weeds with the data. And lastly, in the spirit of shameless self-promotion: with rumours gathering pace that the ODA budget is going to be slashed in the coming few days, I’ve written a note on how to do these cuts without losing the best of what UK aid can achieve. The blog is here for the short-of-time, but I really recommend the full note. It names names, and there will be plenty to disagree with, but cuts are awful. And there needs to be a robust debate about what loses out, if they come.
2. I’m a big fan of the idea of ‘pre-morteming’, that is starting a new project by listing all the ways it might go wrong; like Tim Harford I think it can work very well, but sadly I also agree that there’s rather a lot of completely stupid policy that would have been pursued even with a laundry list of ways they might fail.
3. Planet Money’s newsletter takes aim at the absolutely insane number of civil servants that are personal appointees of the President in the US. I am always baffled by how the system is meant to work when it’s loaded with partisans with every change of administration. Compare and contrast with this thread on how things should work in the UK, by Calum Miller.
4. Normally I’d link to a paper I want to talk about here, but I can’t seem to find a version of it online – so instead we’ll have to make do with the tweetstorm of what looks to be a fascinating paper using data from Uber drivers to investigate the gender pay gap. There is no formal difference in the pay rates by gender between men and women Uber drivers, but this paper finds significant differences in their earnings – much of which are driven by women doing less driving in more dangerous (and therefore higher-price) localities. This is really important: lots of people argue that pay gaps deriving from different preferences by gender aren’t a problem, they’re a reflection of what people want to do. But preferences don’t come from nowhere – they’re reflections of the society they emerge in, and if women feel less safe in certain places or ways, it can fundamentally reshape their preferences in really damaging ways. It reminds me of Girija Borker’s awesome paper on how street harassment changes the educational choices of young women in India. Also on gender: a crazy study in Nature that is stretching thin data so far it’s like they’re doing the Bake Off window pane test on it.
5. This week on Development Impact, the brilliant job market papers series continued (the Borker paper I link to above was once one of them, too). Read them all, but my favourite of the week was Thomas Gautier’s on how refugee settlement patterns can affect their integration in the host community. He has the perhaps counter-intuitive finding that more refugees in a locality leads to more integration, not less. But read all of them – this is the most fun series in development blogging out there.
6. Are you thinking about breaking the Covid rules for a small gathering – or a big one if you celebrate Thanksgiving? Let my favourite science writer, Maggie Koerth tell you why this is a terrifyingly bad idea. The graphics are like an epidemiologist’s horror movie.
7. And lastly, it’s not just a virus that has learnt to kick humanities ass. I’m here to tell you that all of nature is after us. In the sea, the Orcas have risen up against us, and they are coming for your boat (if you have one, and if you do, please pay more tax). Are you a farmer? Well, it turns out that crops are learning how to hide from us. Evolution: it’s all fun and games until the fauna starts to rise up in rebellion.

Have a great weekend, everyone!

R

Hi all,

I’ve struggled with the disjunction between my personal 2020 (quite possibly the best year since 1994 saw the release of – deep breath – American Recordings, Superunknown, Live Through This, F.U.E.L., Grace, Hard to Earn, Unplugged in New York, Welcome to Sky Valley, Let Love In, Jar of Flies and Troublegum, thereby providing the backbone to the soundtrack of my teens and 20s, via older siblings much cooler than I) and the dumpster fire of a year that it’s mainly been for the world at large. But it’s finally looking up: toxic political influences are starting recede from the scene, much like an overflowing sewer ebbing back into the drain from whence the muck arose; a vaccine seems to have been developed (and it might be more effective than we think!), with more likely to follow – migrants for the win, though I’d like the bar for migrants not to be demonised to one day fall below ‘end a global pandemic’; and AC/DC are releasing a new album, despite the fact that one member lost his hearing, another died and a third was done for hiring a hitman to kill someone. If the Peak-End rule isn’t rubbish, we may even wind up looking back at this year fondly.

1. Since I’ve opened the links with some glad tidings, let them continue: it is that magical time of year when the brilliant folk at Development Impact give their blog over to econ job market candidates. Some of my favourite papers have been featured in this series, and this year has gotten off to a banging start. I absolutely love this field experiment by Muhammad Yasir Khan, who demonstrates that making the organisational mission more salient induces bureaucrats to work harder, work smarter and achieve greater positive impacts in the communities in which they are stationed. I’m simultaneously pleased that he’s proven something I’ve long suspected, and jealous of how cool his paper’s set up is. I also really like Emma Riley’s post, which demonstrates that giving women loans in a separate account enables them to use the money to invest in their own businesses more effectively. It has a very clear and easily implemented policy implication, too. All of the posts are worth reading (this one on contract design helping farmers enter new markets by relaxing multiple constraints simultaneously is great, too, as is this one on liquidity constraints and time cost). The series is continuing, and a joy.
2. It’s not exactly an unusual prediction, but Raj Chetty is going to win the Nobel for economics; the only question is when, and for what (think about how wild that sentence is, and the fact that it’s barely an exaggeration). He’s done some awesome causal work, but I think it’s the rigour and creativity he and his team at Opportunity Insights bring to descriptive economics that will win it for him/them. Planet Money cover their latest innovation – a faster, more granular way of tracking changes in employment and consumer spending (transcript). In the middle of the podcast, one of the hosts just blurts out “Raj, I love you, please call me.” As you do, he’s nerding out. Don’t judge him.
3. Dominic Cummings has apparently just resigned – so a good time to link to this excellent thread from January (via Sarah O’Connor) suggesting that his ambitions to ‘remake the state’ were doomed. It reminds me of a point I make when teaching about life as a policy economist: policy is hard to change, and this is a feature, not a bug. If it was easy to change policy, or indeed the apparatus of government, there would never be enough stability to actually achieve anything.
4.  Last week I talked a bit about the polling and how it wasn’t either as bad as it seemed, or useless. Three more entries: Nate Silver on the polls being about as wrong as they usually are, Tim Harford on the difficulties underlying the polls; and Jessica Hullman on what the alternative to using poll-based forecasting is. As she says: “What would happen if there were no professional forecasts?… A deep stillness as we all truly acknowledge the uncertainty of the situation does not strike me as the most likely scenario”. Indeed.
5. This week in people are the worst: male loan officers in Chile are – if they carry pre-existing biases – much, much less likely to grant them loans than they will to otherwise identical applications from men.
6. I hugely recommend this EconTalk with Steven Levitt, not just because he absolutely lays the smack down on the University of Chicago Econ department, but because he talks a lot of sense. In particular, I like the section where he complains that companies and people constantly approach him about learning the ‘tricks’ of behavioural economics and he feels compelled to advise them that there’s a lot more mileage in just getting a bit better at the basics of regular economics.
7. One of the best things about becoming a new parent is getting excited about sharing your favourite things from childhood with your kids; you have a brief period where you can imagine they’ll love the same things before reality intervenes and you realise their favourite song is going to be Let it Go, not Let it Be; my son is still at that lucky age where I can play him all my favourite childhood songs and read him my favourite books without him being able to register enough displeasure to induce me to stop, so he’s been listening to Letter B, Put the Duckie Down, and Brown Sugar (spot the odd one out, but apparently it was my favourite song as a toddler). I hope they don’t cancel Roald Dahl before he’s old enough to read him, though – despite the fact that as LitHub puts it “Roald Dahl was despicable and looked like Mr. Burns. Mixed with an Egghead.” What are the best books to read to a child mere weeks old? Does it matter that I am reading him extracts from Causality by Judea Pearl? Recommendations please!

Have a great weekend, everyone!

R

Hi all,

Some weeks the intro just writes itself. I’m sure virtually every reader of the links has learnt a great deal about the micro-political economy of the United States in the last week; I’ve got friends in Hong Kong texting me with back-of-the-envelope calculations of the number of votes remaining in Maricopa County, and despite not knowing if London is in an English county (is it in Middlesex? I always leave the county line blank when making online purchases), I now know which US county Las Vegas and Pittsburgh each belong to. I’ve never even been to the US. One friend pointed out a strange feature about the experience of watching this election unfold: though we experience an ebb-and-flow of fortunes over time as one candidate or another gains in the latest batch of votes to be counted, in a very real sense, the election result itself has not evolved at all since Tuesday when the ballots closed. The votes being counted have already been cast: the result is unchanging. All that changes is our own perspective or position in relation to this unchanging result. Of course, if you want to go full universe brain, this is pretty much exactly how space-time works (click here if you want the Marvel explanation).

1. Once again, the polls have taken a battering in the press as a result of the “early” election results; and once again, the truth seems a little more complicated than that. In defence of the polls, the results in almost every state have more or less fallen within the margin of error of the polling averages; what’s more, they are mainly moving towards the central estimate as more vote counts are released. On the other hand, the actual results definitely demonstrate a systematic bias from the expected results based on polls. Andrew Gelman describes the failings of the polls here (a more technical look at the results, with his R code is here) and with more interesting graphs here. It’s important to distinguish between the polls and the forecasts, which are modelled estimates of the electoral result based on polls. It’s kind of OK for the polls not to be great as long as we know how they’re flawed so we can correct for them in the forecasts. Nate Silver took a lot of flak for some odd adjustments he made to the 538 model, but in retrospect it looks like they helped mitigate the polling errors and brought their model closer to the result. I was asked this week is if the polls are good enough to be useful ahead of time anymore, if they so often seem to miss. My take is that they still are valuable – but perhaps this is ceasing to be true.
2. It wasn’t only the Presidency up for grabs, of course – one of the more eye-opening results was that Oregon voted to legalise basically every class A street drug. This is going to be fascinating, and I foresee a slew of difference-in-difference papers in a few years’ time. Bunny Colvin would be proud – Hamsterdam in America.
3. I can see a theme on state capacity emerging over the links. Tim Harford assesses the case for both the zero-Covid and the lockdown sceptics take on coronavirus strategy and instead argues that the most essential component of public policy in response to the pandemic is just to get the absolute basics right. Make sure standard services work; make sure contact tracing if effective; and make sure basic public health is effective. “Just stop bungling the basics. It is not much of a slogan. But it might just be a solution.” Quite.
4. And still on the theme of state effectiveness, Planet Money had a good show on the origins of the Mafia in Sicily (transcript) – born of extremely weak state capacity, the Mafia emerges once a domestic product that is both valuable and easy to steal emerges, in this case those glorious Sicilian lemons. With the state incapable of protecting producers who need to make large up front investments in lemon production, credible contracts with the Mafia become preferable to dealing with the tax-funded services being so poorly applied, like policing. And related: a nice write up in VoxDev of research that shows how organised crime can hamper economic development, this time in El Salvador.
5. Two good things on firms: first, an IZA paper by Charles Ackah and co-authors on why female entrepreneurs export less than their male counterparts in Ghana; and a study by David McKenzie and Diego Ubfal on the optimal pricing for business training (spoiler: it’s not free).
6. Two nice pieces on Amartya Sen: first his sometime co-author Jean Dreze on his vast intellectual legacy, a foreword to the new book How to Read Amartya Sen. It’s striking that Sen has written so much that some of his seminal contributions (I always remember his papers on Arrow’s Impossibility Theorem as particularly mind-expanding) don’t even make it into a book about how to read his work! And secondly, Branko using his On Economic Inequality as a launchpad for his own musings on the philosophical underpinnings to understanding inequality.
7. I’m going to sign off the links now: I know most of you will be skim-reading between pressing ctrl-R to find out the latest from Clark County or Alleghany. But if it’s distractions you need, I got you: via Anna Karing, this adorable thread on how baby animals are weighed (porcupettes for the win!). If cute animals don’t do you, I have a backup – the sober Halloween tradition in Taiwan, where people dress up as mildly awkward day-to-day events. Larry David would be the king of this.

Have a great weekend, everyone!

R

Hi all,

I’m feeling very old today. Not just because my son has developed a brilliant system for keeping me on my toes: letting me get just enough sleep to need more but not so much that I feel rested. No, the realisation that the creep of time has, like the ocean eroding the White Cliffs of Dover, been doing rather more than I ever notice on a day-to-day basis came twice in quick succession this week. First, the news that Diego Maradona turned sixty this week (celebrated in the Guardian with this list of his six greatest goals for Napoli) brought home that the first footballer I ever genuinely idolised now qualifies for a bus pass. I remember watching (on one of those TVs that was about two feet deep and had a 10 inch screen) some of these exact goals on TV. Even worse was the WhatsApp I got from a friend today, informing me that today is the 20^th birthday of OutKast’s Stankonia, an album I remember having the force of something genuinely new and exciting. I’ve been nostalgia-binging on the album today and only now realise that Dre was many times more apologetic to Ms. Jackson than I had thought – my own version of millions to trillions today.

1. Just to rub salt in the wound, Tim Harford points out that these landmarks mean that I’m inching towards peak misery, which is apparently achieved at age 47.2 (don’t worry – I’ve got almost a decade till I start cheering up again). There are, in fact, two effects happening: one is the near inevitable mid-life dip in happiness, which is not just observed across countries but across species (apparently even Chimps have mid-life crises), and the other is specific to humans – the empirical observation that each successive generation is less happy and in more pain than the previous one. We can thank Anne Case, Angus Deaton and Arthur Stone for that cheerful research finding, one Tim summarises thus: “What Case, Deaton and Stone are finding is not a mid‑life problem but a swelling wave of suffering rolling through the generations.” And lest this entry to the links results in mass depression, click on this please.
2. Away from the navel gazing, I think there might be some kind of election next week? I’m not sure. It’s not like millions of people have been waiting for this since November 9th 2016. The result on that day was put down, by some, to the influence of social media in generating coverage and support for Donald Trump. Thomas Fujiwara and co-authors try to put numbers on that here, and discover that twitter is, if anything, associated with a negative effect on Trump’s vote share, with more heavily-twittering states less likely to support him, an effect driven not by Trump’s own tweeting, but by the negative backlash it engenders. This finding runs directly counter to my own intuition, that the platform has been a boon to him by keeping him in the news, and providing a way to signal his alignment to specific groups in the country, but this may be down to what precisely their measuring (or, I’m wrong). Also: Andrew Gelman on why betting markets and forecasts have such different views on the 2020 election.
3. One of the most baffling aspects of American politics to outsiders is the discourse around healthcare – there seems to be a widely held belief that systems based on public provision are death traps, contrary to almost all of the evidence. I’ve always wondered why so many Americans seem to think the UK healthcare system is basically The Running Man in a hospital, with death squads lined up to try and take you out from the moment you cross the threshold. It turns out that a lot of this misinformation stems from a campaign led by private insurers to systematically spread misinformation about systems that are not dominated by private healthcare insurance providers. Planet Money have the story and it’s deeply depressing (transcript). Occupying an enormous place of shame in this whole story is How to Lie with Statistics, the cult book on statistical bad practice whose author went on to work for the tobacco industry to undermine the case against smoking.
4. I really liked this piece by Martin Ravallion about the idea of ending poverty – its politics and the progress towards it. It reminded me of this regularly updated wall of shame maintained by Owen Barder, a history of people claiming that we are the first generation to have an end to poverty in sight.
5. Duncan Green summarises research into which countries have been successful in making a real dent in inequality, and how. Related: a summary of research into effects of minimum wages on employment in developing country settings. The tl;dr is that the effects vary quite widely, but the trade off between wages and employment levels seem to be sharpest when minimum wages appear to have the greatest potential to support the poorest.
6. Pam Jakiela and Owen Ozier have the research that proves I should appreciate my big sister more: children (in developing countries) with an older sister do much better in terms of early childhood development – an outcome that would likely be strengthened with greater investments in these older sisters. I still don’t forgive her for ruining 9/10 movie twists for me, though.
7. Lastly, it’s Halloween, and if horror is your thing, this is the single most horrifying thing I’ve ever read: a man in New York was waiting for the bus when a sinkhole opened up underneath him, plunging him into a several-foot deep pit filled with a seething swarm of rats. So deep in rats was he, he could not even scream for fear that they would crawl down his throat. It took hours for him to be rescued. I would need several lifetimes of therapy to recover from the trauma. If that’s too grim for you, then try LitHub’s ranking of the top 50 screen Draculas – excellent choices, though the top two should be reversed. I’d forgotten how Gary Oldman’s portrayal was basically Klaus from the Umbrella Academy crossed with a sapeur. And if Halloween just doesn’t do it for you at all, this is brilliant: the creators of some of the best TV shows of the last 20 years suggest what their Coronavirus episode would look like. If only Leslie Knope was leading us…

Have a great weekend, everyone!

R

Hi all,

2020 has been a brute, right? Although personally it’s been an extremely exciting (new job, new home, new baby, new coding language), and I’m one of the lucky ones who rather likes getting locked in with my family, it’s fair to say that for the world at large, this year has been a dog’s dinner. I joined Twitter in February, mainly for the memes, but 2020 has been the year of doomscrolling: you get up in the morning and watch the world burn, one tweet at a time. If it’s not the slow breakdown of an overwhelmed healthcare system, it’s confirmation that the learning effects of coronavirus have been truly devastating. So when you find something that cheers you up, share it. For me, it’s Marcus Rashford’s twitter feed. If you need a bit of optimism, read it: even if it doesn’t quite sit right with me that the private sector is having to provide social protection in place of the government – more than a whiff of Victorian social policy here – it’s  is stunning to me that the most admirable public figure in Britain right now is football player, not a group generally know for their good taste or altruism. And if football cheers you up, it’s Pele’s 80^th birthday, and 15 minutes of his greatest moments is quite a thing to see.

1. I wanted to open the links with something cheerful because the rest of the way is pretty gloomy. A couple of weeks ago, I linked to Sarah O’Connor’s optimistic piece suggesting that the pandemic might force a remaking of the economy, with a move towards better provision of childcare and other support to make it easier for women to enter and stay in the labour force. Well, if it’s going to happen, now would be a good time to start, as Planet Money point out: in the US, at least, women’s labour force participation has dipped to its lowest level since 1988 (transcript). And while we all love to dream of V-shaped recoveries, there is a lot of evidence that once women leave the labour force it’s especially difficult for them to get back in. This is such an obvious source of inefficiency that the fact that its persistence is almost – almost – shocking.
2. The sheer breadth and depth of the knowledge of economics Michael Kremer displays in this interview with Tyler Cowen is deeply intimidating. He moves from talking fluently about RCTs to discussing theories of growth and technological change to peer effects… it’s quite amazing. Highly recommended.
3. One of my favourite, geeky, recurring segments of the links is the occasional series ‘This Week in Rainfall Instruments for Everything’, but it’s beginning to look like I’ll have to retire it. After a couple of decades of economists heroically and shamelessly ignoring violations of the exclusion restriction provided by every other paper that uses rainfall as a instrument in a growth regression, Jonathan Mellon has finally put the rainfall IV out of its misery. He identifies 137 separate violations of the exclusion restriction (it has instrumented for everything from income to cycling), which is a surprisingly small number given how many rainfall papers I’ve seen. Even better, not only is the title of this paper a pun, so is every sub-heading, from Throwing Caution to the Wind, through Results of the Rain Check to The Tip of the Iceberg? That’s real commitment to the bit. More excellent geekery, with fewer puns: Ryan Cooper and David McKenzie on dealing with oddly shaped clusters.
4. Apparently, 360 feedback isn’t just an excuse to anonymously tell your boss that they make your teeth itch: it also improves productivity and worker retention, as this cool experiment by Jing Cai and Shing-Yi Wang in China shows. I’m more surprised by the productivity result – the occasional vent definitely works to keep people from exploding and storming off.
5. There’s a section in this Tim Harford piece which suggests that we generally overestimate our ability to explain things, think we understand the world better than we do. We think we know how a zipper works, but asked to explain and draw a diagram, quickly realise the limits of our knowledge. He also suggests that asking questions that expose this lack of knowledge helps moderate the views people hold. I’m a little dubious – I often ask for details and examples when I disagree with someone and its typically required that I duck thrown stationery than we reach a reasonable détente.
6. For those of us working on economic development, credible estimates of the job creation effect of foreign direct investment are the holy grail. This paper by Gerhard Toews and  Pierre-Louis Vezina is the equivalent of the dusty clay cup in Last Crusade.
7. My sister has a superpower. Within the first fifteen minutes of any movie, she can identify both if there will be a plot twist, and what it is. It’s uncanny. This is someone who never recognises an actor (to the extent that I once convinced her that Peter Falk was Robert De Niro), sleeps through about 30% of anything she watches, and yet within seconds of standing in front of the Sixth Sense, said “that guy’s dead, you know?” I thank my lucky stars I didn’t watch The Good Place with her. Anyway – The Ringer have a great list of the best twists in movie and TV history. Number 1 won’t surprise anyone – at least there’s no twist there – but the rest is great fun.

Have a great weekend, everyone!

R

Hi all,

What was I saying about the King staying the King? In basketball, 35 is old; not just old, but pants pulled up to your chest, suspenders, and shaking-your-fist-at-a-cloud old. To not just be good, but at the pinnacle of your profession at that age is remarkable. It’s quite different in economics. Most of the time, it isn’t apparent that a paper will be important until several years after its publication – it might be interesting, and several people might recognise that it captures a brilliant idea but to really influence the discipline – or even the world – takes years. This year’s Nobel went to Paul Milgrom and James Wilson for work that in auction theory that took years to fully realise its – now outsize- influence. More than most years, I saw a lot of dissent about this award. Some saw it as an award for economics-as-a-friend-of-business (including some of the same people who criticised last year’s award as being about outsiders patronising the poor – you can’t please some people). Others complained that it wasn’t a ‘big picture’ Nobel. I think they’re all wrong. Milgrom and Wilson’s work is about social value, and some of its greatest applications have been in public procurement – an area of economics with the worst sexiness-to-importance ratio, with huge importance to social welfare and none of the cache. It’s well worth reading this excellent (though a little technical) appreciation of their work to get a better sense of this.

1. I’m going to talk a bit about inequality this week, but I want to start with an unusual example: the importation of caste discrimination to the US via Silicon Valley. The import of Indian workers into silicon valley has brought a lot of excellent stuff:  brilliant people, new ideas, mutually beneficial business and personal connections for those who moved and those at home, as well as their co-workers. With a little lag, it also appears to have brought caste discrimination, as Planet Money cover (transcript). Discrimination according to caste is by no means universal in India (indeed, Mulk Raj Anand wrote brilliant novels excoriating the caste system in the 1930s – Untouchable, and Coolie), but it’s widespread enough to have been imported along with the new ideas. It also poses a real challenge to US (and the UK) since caste is not explicitly named in most legal protections. Fascinating, if depressing listening.
2. While I’m depressing you all, a few more good pieces on inequality, prompted by the deeply uneven impact of the Covid pandemic. First, an excellent FT long read on how the existing regional inequities in the UK have been exacerbated – by the virus, the policy response and by media coverage endlessly ignore the variation and complexities within ‘the North’ as it’s inevitably reduced to. Planet Money look at inequality in the US, identifying four dimensions across which Covid has deepened it (transcript). It’s good that people are thinking about this now, because the lessons from history about the impact of pandemics on inequality are largely grim.
3. In happier news: I saw Kate Orkin present this paper about how skills certificates can improve labour market outcomes a couple of years ago, and this write up in VoxDev is fantastic – a really clear explanation of how much the certificates helped, why and how they worked and for whom. They also calculate and report the cost-benefit ratio for the programme. Beyond this, like David McKenzie, I was hugely impressed by this detailed guide to actually designing and implementing this programme. It’s really brilliant – too often, papers report that an intervention improved some outcome, but the details of how the intervention was practically organised amount to less than a page of vague text in an otherwise impenetrable paper. The team are planning to do more of these implementation guides. If you have comments about how they can be improved, or which parts are most useful, get in touch with Kate (e-mail at the link).
4. For the wonks: I’ve recently started to switch my data analysis from Stata to R, mainly because I find producing nice figures vastly easier, but whichever side of the R/Stata debate you’re on (and I know Matt is currently burning my contact details right now) this guide from the Development Impact team is going to make your life much easier. Also from the same group: how to rescue your difference-in-difference design when the parallel trends assumption is that little bit too heroic.
5. Justin Sandefur’s face must be on at least a few dartboards at the World Bank, but my goodness do he and his co-authors do them a favour here. They scrape data on Bank operations to make it possible to actually track the Bank’s progress towards its pledges to support developing countries through the inevitable Covid shock. It’s not looking good, despite the promises being less ambitious than they originally thought. And as this thread points out, the US is not offering any support to raise that ambition closer to where it’s needed.
6. So, remember how some people had a knee-jerk anti-globalisation response to the onset of the pandemic? Well, not only is closing borders a really costly, ineffective way of slowing the spread of the disease, it’s also a bad way to pursue economic resilience: it turns out that more globally connected firms have been more resilient to the economic damage of the pandemic. I’m not sure who this should surprise, but it feels important to provide evidence for.
7. When I was kid, quicksand was a killer – in virtually every action movie I saw, someone fell into a pit and waved their arms about like a maniac. Quicksand has disappeared from our screens, and Slate investigate. They find that in the 1960s, fully 3% of all films released included a quicksand-peril scene; this has been declining precipitously ever since (much like the strategy much beloved of bad guys of tying a hero to an incredibly slow and inefficient killing machine). I love the idea of the journalist pitching this piece at the weekly editorial meeting. “Boss, remember quicksand? I want to write a 10,000 word piece about how it’s sunk into [eyebrows raise]… the quicksand.”

Have a great weekend, everyone!

R

Hi all,

Week 2 of attempting to be a functional member of the workforce on no sleep and while covered with baby vomit is in the bag, and once again, it has been a learning experience. It is truly remarkable how quickly my standards in fashion have plummeted. I’ve never exactly been one of the League Fits guys but the speed from which my minimum standard for a t-shirt went from ‘clean, fits me and is comfortable’ to ‘nearby and less than 70% covered by baby bodily fluids’ has been shocking. I’m all for cool Zoom backgrounds, but what I really need is a fake foreground – a digital equivalent to one of those t-shirts that have a suit printed on the front. The upside (apart from, you know, the baby) is that for once I’m awake for those sporting events I’d previously had to record and go internet-dark to catch up on. If only the Ashes were on in Australia right now. It would be a new experience to stay up and watch England embarrass themselves in real time, rather than waking up to the completed humiliation. At least we have the Finals – though perhaps not for long, as the LeBron might wrap it all up tonight… and push himself even further out into the otherwise empty space in the top right of this graph), which should be made into a piece of abstract art entitled ‘Dominance’.

1. Why do people make mistakes? Over the last five or so years, this has become the question I find most interesting. It’s not enough to say we’re human, or even to accept that mistakes are inevitable, because responding to and catching mistakes means knowing why they arise. The reasons are many. “Inattention, distraction, lack of interest, poor preparation, genuine stupidity, timidity, braggadocio, emotional imbalance, ideological, racial, social or chauvinistic prejudices, and aggressive or prevaricatory instincts” is a good starting point, the one this piece takes off from, and builds on. Many of these ring true, and close to home. Knowing the various sources of mistakes aren’t enough to protect you from them. You need to build systems that help, the problem being that most of those systems are deeply uncomfortable. No-one enjoys peer review when they’re the ones going through it.
2. One way to be less wrong, less often is to mix your methods. If you spend your whole life looking at problems the same way, you’re going to develop some pretty deep blind spots (even if you can see with great clarity where you do see). One of the many good things about the Gender Innovation Lab at the World Bank is that they draw on a range of disciplines for their research and policy work. Markus Goldstein has a great two part conversation with his colleague Rachael Pierotti discussing the when, how, why and strengths and weaknesses of qualitative research. Part one here, part two here.
3. Another way to be less wrong (over time) is to argue and engage with critical thinkers who disagree with you. Project Syndicate put out two good pieces this week, arguing opposite sides of the same coin: Dani Rodrik arguing that stakeholder capitalism may not go far enough and needs to be more democratic. He argues that Friedman’s law that a business has only one responsibility, to maximise the returns of its shareholders, is damagingly wrong because they themselves set rules of the game they play, and tilt them in their own favour. Meanwhile, Raghu Rajan takes the opposite stand, arguing that stakeholder capitalism can please nobody, and that Friedman’s diktat masks a deeper truth: since shareholders claim the residual after all other claims have been paid, their benefits can only be maximised after other stakeholders have been satisfied. I think they’re both wrong – I cannot for the life of me see a version of stakeholder capitalism that doesn’t wind up with insiders and outsiders, vested interests that lead to some being excluded and some social costs being ignored. Meanwhile, to pretend that the residual claimants of a firms returns are not incentivised to distort the actions of the firm, its relations with its clients, workers and supply chains, and the laws in which they operate isn’t so much one-eyed as blind. If the answer isn’t more democracy, or leaving firms to find their own virtue, what is? Filling the holes in taxation policy and compliance would go a long way, to start.
4. I really liked this piece by Sarah O’Connor on how the pandemic has exposed massive deficits in the childcare infrastructure in our economy. Much like Harvey Dent, she argues that the night is darkest just before the dawn, and things may get better from here. On Twitter Abi Adams makes the reasonable counterpoint that history is filled with putative rock bottoms that we’ve managed to keep digging below, ignoring the obvious and failing to improve policy in the face of overwhelming evidence that it is wrong.
5. Low-skilled migrants are important not just because they do jobs that others won’t, but because through the magic that is the labour market, they set off a chain reaction that changes the size, distribution and character of the jobs everyone else in the economy is doing, and their time use. This is underappreciated because it’s so hard to model or measure, but this VoxEU article suggests it leads to a large underestimate of the fiscal contribution low-skilled workers make to the state.  
6. And while we’re on fiscal matters, I haven’t dug into this yet, but it looks amazing: Morten Jerven, Thilo Albers and Marvin Suesse have put together a huge new database of taxation and domestic revenue generation in Africa, stretching back to 1890. Morten says that taking the long view of the data upturns many of the standard takes on African state capacity.  
7. Lastly, have you felt stuck in a rut recently? Worried about your future in the post-Covid economy? Never fear, the Department for Education have put together this scarily brilliant quiz that will pin down your optimal occupation in ten minutes flat. Even more brilliantly, they do it without asking your age, educational qualifications, work experience or skills. It takes this kind of genius to suggest to every economist I know who has completed the survey that they should retrain as a professional boxer. What was I saying about making mistakes earlier? We should ask Mr. Williamson about it – he seems to be the expert.

Have a great weekend, everyone!

R