We live in interesting times. The news is full of
extraordinary events: the Extinction
Rebellion going on pretty much directly outside this building. Virat Kohli
the law of averages. Politics are… shall we just say eventful, and move on?
And of course, reliable as rain, violent bigots are doing daft, violent things,
be it in Germany
or in Manchester.
I’m a little tired of linking to this same
Tim Harford piece, but the message bears repeating: terrorism aims to
inspire both terror and an overreaction. Give them neither.
- Want to go down a rabbit hole with me? The people outside the
door aren’t protesting for nothing: the cost of climate change could be
rather large indeed, as Planet
Money note (transcript).
But walking past the protestors, I’ve heard a few odd chants and read a
few signs that blame the climate crisis on economics. It’s not just
the protestors – Jared Bernstein in Vox has gotten
in on the act, too – and he’s an economist. This conflation of ‘the
economy’ and ‘economics’ drives me nuts, as I’ve pointed out before.
Economists have done a huge amount of work which aims to work out how to
fix imbalances in the economy that are driving unsustainable emissions –
but there seems to be little appetite to implement them. It’s like
blaming doctors for a disease outbreak caused by people refusing to get
vaccinated. I’ve mentioned carbon pricing before; Tim Harford gives
another example in this
typically excellent piece about Martin Weitzman, who changed the
way we think about discount rates and sharpened the tools that
economists can use to analyse and propose solutions for how the economy
drives emissions (oddly, apart from one by a colleague, over email, very
few retrospectives of his career mention this work). The problem is not
that economics has got this wrong, but that the political will to make
difficult choices and listen to good analysis has been lacking. Roger
Farmer argues that to solve this, we need more economics, not less.
- Speaking of ‘more economics’, David Evans and
Almedina Music weave their magic to produce one-sentence summaries
of every paper presented at a recent conference on Development
- The Economist has had a few excellent pieces on
development recently; I particularly liked this one about
the cottage industry in support for ‘entrepreneurship’ that has
mushroomed out of the development sector. The summary is spot on: much
has been tried, but relatively little works. A telling sentence: “most
African success stories involve a lucky break”. To borrow a metaphor from
Stevan Lee: in toxic ponds, most tadpoles die. This has very little to
do with the tadpoles and very much to do with the pond.
- This week in updating my priors: David McKenzie’s new paper, summarised
on Twitter here, finds that schemes to promote self-employment in
developing countries do seem to have a small effect on out-migration. I’m
going to have to think about this one for a while. Given the returns to
migration, is this a net welfare gain? If we simply go by revealed
preference it seems to suggest that small improvements in domestic
circumstances are enough to put people off large possible improvements
elsewhere. Or perhaps it shifts their perceptions of their longer term
prospects (rightly or wrongly)? As ever, the over-riding question of
migration for me is not ‘why do people move?’, but ‘why do so few?’
- I watched The Big Short recently, and loved it
(especially for the use of When The Levee Breaks
when the financial crisis finally starts to unfold). It’s difficult to
make complex economics so gripping, and so comprehensible. In VoxEU, this
piece isn’t quite in the Michael Lewis class of clarity, but is a
really interesting look at the
psychology of asset pricing, distinguishing between ‘bubbles’ and
‘manias’. It’s almost spooky how accurate Hyman Minsky’s model is when
applied to 2008.
- A long
interview with Amartya Sen. For development economists of a
particular vintage (my vintage), reading Sen was a formative experience,
no matter how far from that starting point you’ve moved. What always drew
me to him was the range of his study and perspectives, not any particular
one of them. That has remained.
- In eleven days, the NBA season kicks off, and after
trying to stay calm about it for the last couple of weeks, I’m losing
control. Have you seen the videos of Zion’s
first pre-season matches? The man is basically a bull crossed with
a frog, wearing Nikes. How does someone that big jump so high? He
reminds me of Shawn
Kemp, a man who was medically proven to have springs instead of muscle
in his calves. And that’s not even what I’m most excited about. Ben
Simmons took a three – and
made it! I’m simultaneously happy for him and sad that he’s
t-shirt obsolete. But best of all is this: Markelle
Fultz might actually be able to play basketball again. He was filthy in
college, and if he gets anywhere near that level again, this season is
going to be a lot of fun…
Have a great weekend, everyone!
Today, I have been thinking about shifting goalposts. The
computers I’m working with today (yes, plural: I’m doing some mind-numbing data
work that requires two screens) are light years away from the machines I used
as a teenager, but my emotional responses to them have hardly budged. Rather
than celebrating the fact that I can look at two websites at once, I find
myself barely suppressing a sense of fury at the sluggish pace at which they
work, and my suspicion that a malevolent gremlin is operating them with the
sole purpose of driving my blood pressure up and my vocabulary to the gutter.
Are our expectations forever doomed to stay one step ahead of our capabilities?
Perhaps the paralysed man who today is walking a few feet using a mind-controlled exoskeleton
(try convincing teenaged Ranil of that in the mid-90s) will one day be reduced
to sputtering rage by his Pacific
Rim suit taking too long to charge up its weapons? Humans: never satisfied.
- That said, dissatisfaction is important, even in the
face of progress.
We should be pissed off when things aren’t improving quickly enough, or
where will the motivation to change them come from? Fortunately, the
world is quite good at providing us with reasons to be furious: our
exhibit this week is the
AEA’s report on the diversity and inclusion in the economics profession.
It is grim. I really recommend you take a moment to look at the
original report: there is a lot in there that should make us feel
uncomfortable, not least the responses from those who felt that there
wasn’t any problem at all – going so far as to label it a ‘politically
correct waste of time’. (Exclusive footage of this respondent here).
For those who prefer their information in tweet-sized bites, Ben Casselman
op-ed in the NYT focuses on the experience of black women
specifically. Surely we can do better than this.
- This week in updating my priors: A VoxEU piece focuses
on the limitations of home-building (via regulatory change at least) as a
way to combat inequality. One of my go-to responses on inequality has
always been ‘build more’ – it simultaneously reduces the value of the
wealth that the rich hold and can transmit to their children, and reduces
the cost of moving to higher productivity areas. But apparently, it
doesn’t work quite so well in practice, with local markets being
rather segmented and investment tending to focus in the already-rich areas
– though it is possible that this is a US-specific result. Also giving me
something to think about: Erica Field and Rohini Pande mount a
of microcredit. It’s not that it will suddenly unlock growth in
developing countries, but it can at least be delivered better and with
better results than those that have been observed to date; though whether
this should dramatically change our position on it is still open to
- Dan Honig knows more about how organisations can
torpedo their own best intentions than most; this
piece suggests that by relinquishing control (especially in the
messiest places to work, where the temptation to exert a closer grip is
often greatest) they can achieve better results. Much in the vein of his
(excellent) book, it’s the kind of message big donors need to take
- Depending on what newspaper you read, you may well have
diametrically opposed views of the same factual events. Why is it that
people can look at the same facts and come out with such completely
different views? It’s not just the editorialising that’s to blame: our
own brains play tricks on us, with a number of biases affecting how we
interpret new information. FiveThirtyEight
investigate and focus on the poisonous effect that partisan
affiliation can have on our ability to interpret the world.
- This was one of my favourite things this week: The Economist ran an
essay competition asking for submissions on the topic of what economic or
political change is needed to effectively combat climate change. One
of the entrants to this competition was an artificial intelligence,
an algorithm that was trained to write essays. They published both the
algorithm and how it was judged by their panel of assessors. It’s creepily
rather good, if a bit odd stylistically. After all, who on earth likes
rhetorical questions that much?
- As my working calendar reveals, I am much
more of an Arnie than an Elon; or rather an Arnie in the body of an
- My earliest memories of watching sports are of Magic Johnson’s
Showtime Lakers and Diego Maradona.
There’s more in common between them than you might think – both were
absolute geniuses who had their fair share of off-court troubles, and
turned out as absolute failures on the managerial side of things. This long
read about Maradona is brilliant: it absolutely captures the sense of
chaos you had watching him play, the sense that none of this should really
be happening. It’s also chock-full of barely-believable stories, the
ones that are actually true almost more ridiculous than the myths. And he
really is a mythical figure: there were articles
recently celebrating the 30th anniversary of his warm-up
before a game against Bayern. What a genius.
Have a great weekend, everyone!
Yesterday, a friend sent me an e-mail full of Stata code;
this isn’t how we normally communicate, she was trying to help me format some
tables better. But in a perfect encapsulation of my attitude towards Stata, my
e-mail programme offered me the following prompt: “This message appears to be
in Slovak. Would you like to translate it?”. I tried. It wasn’t any more
comprehensible. After a morning of data entry and wrestling with Stata, with no
cricket on (thanks to a
ground being entirely submerged in Karachi), and a month until I can start
spamming all of you with videos of Zion Williamson dunking
on NBA players, that’s as much of an intro as you’re going to get this week…
- This is a complete disaster. According
to Planet Money, I am a millennial: “millennials are young adults who
are now between the ages of roughly 22 to 38”, they say. [We go live to
my reaction]. But it’s
not all bad: apparently, millennials aren’t quite the reprobates their
elders would have them be. Rather, they entered the economy and job
market in a very particular moment, one which penalised them substantially
relative to previous generations. One sign of this is that (contrary
to popular belief) they are much less likely to switch jobs early in their
career – a sure sign of less than dynamic economy, which normally involves
a lot of churn as people move between jobs and find regular new
- While we’re engaging in some revisionism driven by
data, consider the
case for China as a green giant. Stephen Roach argues that the pace with which China
is increasing renewable energy consumption, switching to more eco-friendly
transport options and moving out of heavy industry is unprecedented once
you account for its level of development. While it’s clear that we need
even more, this is a very different trajectory to those of the previous
generation of advanced economies, and provides a model for the rest of
the world rather than a scapegoat.
- It’s kind of thrilling to read a genuinely radical
idea, even if it doesn’t have a snowball’s chance in hell of being
any time soon. Martin
Ravallion and Michael Lokshin have one here: what if you could sell
your right to enter the labour market to the highest (international)
bidder? Imagine you’re a sixteen year old, but have plans to be in full
time education until you finish a DPhil – let’s say around 8 years if
we’re really optimistic. You can sell your place in the labour market for
those years to someone from outside the country and use the proceeds to
fund your education. Alternatively, you could retire early and do the
same. They even discuss how it could be implemented in practice – though I
will eat my hat if any Government in the world goes with this scheme in
the next decade or two.
Alone, the new book by Branko Milanovic has just been released. I
haven’t got a copy myself, but it’s surely self-recommending. He
summarises what he considers to be the four central themes of the book here.
Branko is one of my favourite economists to read. Even if you wind up
disagreeing with everything he says, you will always learn something on
John. It turns out that money can buy you happiness (love remains
to be proven). Previous studies showed that lottery winners do not
wind up happier than non-winners, but it turns out that the canonical
study had a sample of just 22 winners! Kelsey Piper at Vox points out
that when studies were run on larger samples, winners
did indeed appear happier. You know what else makes you happier?
Power calculations. And bigger samples. Sheesh.
- Income inequality in the US (using the Gini
now higher than at any point since data started tracking it.
- Finally, The Joker opens next Friday. I’ve already gone
on more than one massive geek-out over this, but the point bears
repeating. Batman has the best villains: funny, anarchic, monstrous (and mumbly),
and just plain weird.
And apropos of that last link, The Ringer write a loving
celebration of Danny De Vito, though they manage to get through the
whole thing without mentioning Rod Lurie’s unforgettable description
Have a great weekend, everyone!
I went out at this afternoon for a meeting, and walked
face-first into an enormous, boisterous crowd of young people (and a few
conspicuous parents trying not to embarrass their children). Rather than a
Boyzone concert (am I showing my age there? My first thought was New Kids on
the Block, which was even worse), it was the climate strike, all carried out in
an atmosphere of generally good humour and outrage at the future we’re in the
process of making. They have a point. We have reached a point where we must
make trade-offs, for example between the price of goods today and the climate
tomorrow. Yet we refuse to: we want to keep our goods and services artificially
cheap by not pricing the emissions they embody, instead looking for some solution
that will involve no pain (it turns out that a policy of having our cake and
eating it is less uncommon than we’d like to believe). We are kicking the can
down the road – those we are kicking it to are getting pissed off and well they
- While I’m on the subject of climate change, Nick
Stern and Andrew Oswald reckon economists
are letting the side down by not publishing more research on it,
citing the eye-opening number of climate-related articles published in
QJE, the top econ journal: zero. I’m not entirely sure they’re right,
though. We might not get everything right, but economists have known
for about 200 years that you need to put a price on externalities.
It’s not really our fault that Governments just won’t price carbon
- If you only look at one link this week, make it this: in
1974, Studs Terkel published one of my favourite books of all time, Working.
For those of you not familiar with his approach, Studs just listened to
people. He talked to them, got them to open up and then just gave their
voices a platform, transcribing their thoughts for the wider world to read.
Apparently, Studs recorded all of the interviews he conducted in making
the book and then left them in an attic at his house. They’ve now been
rediscovered by the Radio Diaries crew, who have turned them
into a podcast and, even more amazingly, gone back and re-interviewed
some of them. Planet Money also get
in on the act (transcript).
Listening to people and really capturing a voice on the page is incredibly
hard, and Studs was a genius at it. I hope this leads to a rediscovery of
his work. Speaking of underappreciated work, the PM
show on Edith Penrose is also great, and made me realise I need to
read her for my own research (transcript).
- Tyler Cowen suggests abolishing
econ Ph.Ds. Unusually, I’m pretty much on Tyler’s side here, as daft
as it sounds coming from someone in the middle of doing one (albeit in
Public Policy). Being a good economist is not the same thing as being a
good researcher; and I don’t see any particular reason why research
skills need to be learnt all at once and intensively. Maybe I’m unusual,
but I think I’m a much better economist for having worked on hard problems
in practice, even if I wasn’t making an original contribution to any at
- Back on the topic of the youth and the cans we’re
kicking down the road to them – Lee
Crawfurd argues for reducing the age of suffrage. He makes a
convincing case, pointing out that the investment choices we make now
(including in education) primarily affect those too young to have a say in
them. He also makes what I hope fervently Lant
Pritchett would call the Kinky Voting argument: that there is
nothing special about the age 18 in terms of cognitive development,
political activism or knowledge.
- Do you love XKCD? Why do I even ask, obviously the
answer is yes.
Anyway: Randall Munroe’s new book, How To… features a section on how to
win an election. His answer is a little more complex than ‘ask Vlad
for help’. Rather, he finds the most one-sided polling data in history and
constructs a sure fire people-pleaser platform. His speech guaranteed
to lose an election is a work of genius and worth reading the whole
is really cool: researchers installed monitoring technology on matatus
and tracked how they changed the behaviour of matatu drivers, matatu
owners and passengers. There is a lot of good economics and some very cool
- I normally start the links with cricket, but today I’ll
close with it. Cricinfo have crunched the numbers to find the
best bowler of each decade for which we have proper data; a couple
of weeks ago, I linked to a video of Murali’s greatest deliveries, and in
case you thought that was just selection bias, have a look at the graph
for the 2000s! He was truly one of the most freakish performers in history.
And while Sri Lanka don’t have all that much to cheer in our teams these
days, keep scrolling down. The numbers don’t lie: Kusal Perera’s astonishing 153*
against South Africa this year was the greatest batting performance in
cricket history. As if it wasn’t obvious.
Have a great weekend, everyone!
Steve Smith is batting. In 2229, when the earth is a
furnace, stripped bare of vegetation and the humans are being
harvested for energy by the machines, Steve Smith will still be batting.
And in 21917, when the universe has almost completed it’s implosion, and all
life has been extinguished, and the only movement is the c-beams glittering in the
dark by the Tanhauser Gate, Steve Smith will still be shuffling across his
stumps and tucking the ball to leg and running across for an ambled single. He
will still look like he’s 12. While Steve Smith is batting, here is some
economics, all of which will be out of date by the time Steve Smith is finally
dismissed, because Steve Smith will never be dismissed.
- There are few things in life as inevitable as Steve
Smith’s batting, but in my darker moments I wonder whether ill-thought out
and short-sighted policies about migration are another. A couple of migration
links today: first, with a little hope – Japan has a policy to increase
the amount of inward migration it attracts to counteracting a shrinking
population. Rebekah Smith and Anita Vukovic suggest
how they can achieve it; Rebecca is setting up a new organisation
dedicated to labour mobility, which is definitely worth keeping an eye.
It’s interesting, though, how Governments make this so much harder for
themselves than they need to: rather than looking for a few thousand
engineers or a few hundred something-or-others, why not just let people
in and let the magic of labour economics work? We know that there isn’t a
finite number of jobs, and that new entrants will lead to the creation of
new jobs; and we know that the increased competition leads incumbents to
move up the value chain. My colleague Adam calls this ‘magic economics’
and it really pretty much is. Less hopefully, Maggie
Koerth-Baker in FiveThirtyEight points out that there are no legal
norms or structures in place to deal with refugees fleeing from climatic
disasters, and little hope on the horizon for any coherent set of them.
- While I’m on a downer, Dani Rodrik considers whether
the relevant inequality to consider is between or within countries; he
points out that while it’s still typically true that you will be better
off in absolute material terms as a poor person in a rich country than a
rich person in a poor country, the dramatic rise in inequality in rich
countries over recent decades has made it closer. In the US it may not
even be true anymore. Fortunately, you don’t need to choose between caring
about these two problems. You can address both.
- I’ve had a few conversations outside of work which have
really driven home how little about trade is widely understood. I’m
absolutely not an expert by any means, but much like migration, it’s clear
that things that seem obvious and straightforward quickly dissolve into
dust with a little thought. One point I’ve found myself making repeatedly
recently is that it’s not exactly the ‘price’ of trading that matters
(for example, the tariff on a traded good), but the cost of it in terms of
documentation, management attention and time. This piece
on rules of origin is a case in point; many exporters pay tariffs
rather than fill out all of the required documentation, and others may
choose not to export at all.
- This is very cool: an experiment on adolescent
girls’ empowerment in Sierra Leone was interrupted by the Ebola crisis,
researchers discovered that their intervention substantially improved
girls’ outcomes in the places hardest hit. You’d expect as much with
such an amazing cast of researchers on the project, but it’s very
impressive how they managed to use their data and experiment to
investigate this – it can’t have been what they started off with the
intention of examining.
- This is interesting, though I haven’t fully digested it: Philippe Aghion and
that credit constraints can have a positive effect on productivity by
removing the safety net that keeps the worst firms alive (though it also
has a negative effect by making it harder to finance innovation). It makes
sense to me, and has implications for our current period of prolonged
cheap credit. It occurs to me that they might test it to see if the
relationship between credit and productivity differs by term structure of
debt, but they’ve probably already thought of that.
- How much rest do people need? I’m on the
‘perpetual-ball-of-energy’ end of the spectrum, and lean towards long,
infrequent holidays to completely recharge – a bit like how you’re meant
to let your phone die completely and then charge it up completely rather
than keep topping it up. Tim Harford (and my wife; to be clear these
are separate people) tell me I’m doing it wrong, and you need lots of
frequent breaks. Tim
Harford brings the evidence.
- I’ve had a few crikey-I’m-old moments in the last
couple of weeks.
I injured myself falling down trying to get on a bus. A friend pointed out
to me that our friendship pre-dated the existence of e-mail, and now
bringing a vat of salt to marinade my wounds in, The Ringer is running
a 90s nostalgia week. Even worse, the Grauniad’s list of the
best moves of this century has reminded me that Gladiator is almost
twenty years old. On the one hand, this isn’t making me feel
younger. On the other, my memory must be in decent shape if I can still
recite that speech: “My
name is Maximus Decimus Meridius…”
The century must be over now, because Steve Smith is no
longer batting. Have a great weekend, everyone!
Normally, these intros write themselves. I say something
about the weather (this is England, after all, where complaining about the
weather is almost a spectator sport), make a thinly veiled allusion to whatever
the political farrago of the day is, and then settle into a proper geek-out on
the cricket. Today has been a bit more difficult: the politics is far too
eventful to comment on (without throwing caution to the wind); the cricket
likely to be won by some combination of rain and dead pitch and the weather is
already incorporated into the rain. It says an enormous amount about how much
has changed in the last couple of years that it didn’t even occur to me until
now to run with news of Mugabe’s death; his deposition from power has sucked so
much of the charge from it.
- This one is bittersweet: Ricardo Hausman mounts a spirited defence of economics… by unloading both barrels onto public policy schools. It’s like someone saving my childhood home from a flood by diverting the waters onto my current apartment. Hausman’s main argument is that economics has already produced much of the knowledge we need to rectify many of the world’s problems– but public policy schools haven’t actually produced a model that can populate Governments with the kind of people who can find and use them. He draws an analogy with medical schools to suggest how public policy should change, arguing that long hands-on practice should be the core of the curriculum. It’s an analogy that makes some sense, but I think it rather falls apart under closer scrutiny. Unlike medical schools, public policy departments do not have monopoly status on the production of Government staff, nor should they. Policy schools are difficult to run because they cannot improve Government simply by churning out good graduates, they also need to identify how best to structure the incentives, objectives and apparatus of Government. I’m not sure Hausman’s suggestions would get us there.
- Speaking of public policy in the real world, Branko Milanovic was hanging out in Argentina and observed the culmination of their most recent economic crisis. As ever, his take on it is well worth reading, especially for those who haven’t been following this closely.
- This is completely brilliant and continuing on the public policy theme: Planet Money cover the Moving to Opportunity project, a great example of good public policy and research in action, and also a textbook case of how complicated it can be even know a good policy when it happens (transcript). The basic premise, that moving people into ‘better’ neighbourhoods could have long-lasting effects on their life chances was reasonable; the problem was the benefits didn’t show up until after the programme had been initially evaluated, since those benefits mainly manifested in the youngest children, the ones who didn’t enter the labour force data until relatively recently. It was sheer good luck that Raj Chetty and Nathan Hendren picked up the same people in later research; and when Chetty wins the Nobel I imagine this will be given as an example how his work has attempted to remake Government policy.
- If I had to guess which Nobel-winning economist would hang out at Burning Man and have fun, I probably would have picked Paul Romer (although an outside guess would be Elinor Ostrom, whom I bet would have a field day with all the collective action that has evolved). Romer apparently uses maps of Burning Man’s road layout to explain how cities can evolve around basic infrastructure and it seems somehow typical that he used these maps without ever having been there. Still, whether or not you agree with the underlying economics (long time readers will know what I think about Mr. Romer’s cities), this is a really fun read, and Romer comes off really well.
- Johannes Haushofer and colleagues report on an RCT investigating the impact of cash transfers on gender-based violence. There is a lot of good research on this and related topics in the pipeline, so expect much more to be added to this literature. It makes for uncomfortable reading in some places, but then I imagine writing about GBV always should.
- FiveThirtyEight continues it’s excellent coverage of how science works in this piece on another battlefront of psychology’s replication crisis, this time questioning whether forced smiling really can make you happier. It’s a very thoughtful, interesting piece, distinguishing between what replication tells you about a methodology from what it says about a hypothesis and pointing to ways forward.
- But just in case smiling really can make you happier (though it certainly didn’t seem to work for The Joker, did it?) here is a random list of that will reliably make me smile, and I hope they work for you, too: Lasith Malinga taking four wickets with consecutive deliveries (twice); The Allman Borthers Band playing Blue Sky; My Name is Aram by William Saroyan; The Big Lebowski; watching Vasyl Lomachenko box; the intro to The Muppet Show; Spike Milligan, in writing or on screen; Craig Robinson; Calvin and Hobbes; Rumpole of the Bailey – though even more so in writing; and just to bring this to a close, every delivery Murali ever bowled.
Have a great weekend, everyone!
Well, what the heck am I supposed to say about that innings? No England
batter can ever have batted better (say that three times fast), doing virtually
everything a batsman will ever have to do in a career in one day. Seriously:
tough out seventy balls for just 3 runs, recover after getting whacked in the
head, shepherd the tail, then slaughter the bowling to win a match with no
wickets left – done, done, done, done. It says a lot for how incredibly um… eventful
this week has been that when thinking about how to open this e-mail, I almost
entirely forgot about it. I suspect that no amount of careful word-choosing can
render the remaining events of the week safe to comment on here, so I will
swiftly move on to the economics.
- What would the plot of an economics horror movie be? I suspect it would
involve a plot to do real damage to the economy just when the powers and
policy levers most often saved for exactly these occasions have
mysteriously stopped working (yes, I’m aware this is basically the plot of Superman III).
There’s a growing school of thought that this is exactly what is
happening in the global economy right now, with an incipient slowdown to
be weathered without any functioning monetary policy with which to combat
it. Larry Summers and Anna Stansbury explain how
and why monetary policy is weakening, and suggest that a return to
Keynesianism in its classical sense may be necessary. Meanwhile, Planet
Money trace the history of a radical idea that is gaining currency these
idea of money that expires, thus forcing us to spend it and invest
if it isn’t to slowly denature entirely. Summers and Stansbury actually
give the big argument against it in their piece: how messed up is an
economy in which losing investments are still more attractive than not
- Speaking of investing well, one of the big problems in
lots of programmes that seek to support businesses with grants, loans or
services is the kissing frogs problem: you have to support a whole
bunch of failures to
find a few successes. A cool
new paper by Natalia Rigol and Benjamin Roth finds the seeds of a
solution: apparently peers and community members are actually really
rather good at identifying the most likely successes, perhaps because they
have more knowledge or more difficult to codify and express knowledge
about the ability of different entrepreneurs. They also suggest it
might even be possible to leverage this ability to distribute support more
efficiently, provided we incentive people not just to give the help to
- While on the subject of growth, Dietrich
Vollrath has a new book about growth coming out, called Fully Grown.
Readers will know this is self-recommending: Dietz is one of the best and
clearest communicators of modern macroeconomics out there, and a fantastic
writer, to boot. If anyone out there is looking to buy me a present,
consider this a link-sized hint.
- Esther Duflo explains how female role models in positions
of power lead to all
sorts of good outcomes for women in this nifty VoxDev video. She
and Abhijeet Banerjee also have a new
book out shortly.
- The generation and application of economic policy is
inherently a political process; that exposing economics to politics
typically leads to worse economics is the reason why most Central Banks
have been made independent of Government, despite recent
efforts to influence them. The dangers of Government capture when
politics rules economics can be one of the most fun things to teach,
because it leads to some properly ridiculous policy. Take Trump’s
tariffs on China: since it is possible to get exemptions on tariffs, the
second a trade war loomed on the horizon, interest groups pulled out their
wallets and mobile phones. As a result, you have tariff exemptions on cod,
haddock and salmon, but not on pollock; and bibles being shipped
tariff-free because they’re printed in China. It’s funny for a second, until
you realise it’s basically redistribution of a bizarre kind: rewarding
people who eat haddock and read the Bible over the pollock-eating atheists
of the USA. Planet
Money have a show on tariff exemptions and their genesis (transcript).
- How many times do you think you can cite your own work
before it becomes a little much? Is it fine if 10% of your citations come
from yourself? What
about 94%? A new database provides transparency; I’d say it also
provides an opportunity for navel-gazing, but I doubt anyone comfortable
with a 90% self-citation needs any more of that…
- Lastly, I have been trying quite hard to distract
myself this week, and luckily being a massive nerd has come to the
rescue once again. The new
trailer for Joker has dropped, and if this film isn’t brilliant I’ll
eat my hat. What is it about The Joker that brings out the best in actors? (We’ll
ignore Jared Leto here). And if that wasn’t enough, there is a
new Star Wars trailer. I repeat, THERE
IS A NEW STAR WARS TRAILER. And in the most unnecessary words ever
written in the links (against strong competition): it is AWESOME.
Have a great weekend, everyone!
I had a whole spiel prepared to open the links, warning you
that since the first link is all about the prospect of an impending global
recession – which may turn out to be permanent – those looking for a shot of
optimism before diving in should refer to the Ashes scorecard, in which King
Jofra was the hot knife and the Aussie batting line-up the butter. But England,
never missing an opportunity to punish hope with despair, promptly surrendered
four early wickets and now look like they may contrive to lose even this test.
Added to the news that Boogie
Cousins has had yet another career altering injury, this week’s links are
in an absolutely filthy mood, no doubt to be made worse by the UK rail network
this evening. Gah.
- So, about that impending global recession… (five wickets now. Mood darkens). Increasingly, I’ve been wondering whether part of the apparently unpredictability of the economic policy of major players in the global economy has in fact been the result of incorrectly diagnosing what their ultimate aims are. Take Trump’s trade policies. They appear to most economists short-sighted and counter-productive against his stated aim of improving the US economy, living standards and trade deficit. But what if his actual aim is far more radical than that? What if the US is actually aiming to completely decouple their economy from the other major economic superpower, China? If this is the aim, then much of what they’re doing is at least internally consistent. Chad Brown and Douglas Irwin make this case in Foreign Policy, and Brown discusses it further on Planet Money (transcript). Nouriel Roubini lays the doom on thick in his Project Syndicate forward look, explaining that the consequences of this may not be a simple recession, but permanently lower global living standards.
- My mistake, six wickets down. Grrr. However, channelling both Hans Rosling and Charles Kenny, trying hard to be positive: Africa is *this far* from being Polio-free, a tremendous victory for technology, policy, service delivery and the hard work of some incredible people.
- Lest you get all misty-eyed about how great humanity is, let me draw your attention to another story on the same day from the same source: an immigration judge refused an application for asylum on the basis that the applicant was insufficiently camp. This is not an exaggeration: he literally drew comparisons between the poor man he refused and another witness who wore bright colours and lipstick. Just when I think that my outrage at how absolutely messed up the sheer injustice and callousness of the way humanity treats those who leave their homes has peaked, along comes this relic.
- Are you still upset about the global recession? Well, one point to bear in mind is that economists are actually quite rubbish at predicting recessions – though most of the mistakes come in the form of false negatives (i.e. predicting no recession when one is actually around the corner).
- Seven wickets down. Words fail me. Well, not actually – they’re just unprintable. In other news, I very much liked this piece on India’s demonetisation and its effects on the real economy (technically, according to some macroeconomics, money is basically neutral and should not have real economic consequences). This is one for the economists, having few policy implications, despite the final section.
- David Evans’ regular round-up of education research is always worth reading, but this week’s is particularly so, especially the section on the impact of secondary schooling on teen pregnancy. Secondary schooling reduces the risk of teen pregnancy, even if learning is basically absent. Policies typically have lots of impact (and not all good). Good research thinks through many of them.
- Lastly, this week’s links have been rather miserable – and England are nine down for 66 right now – so I’m going to make an effort to sign off on a happy note. Firstly, this great FiveThirtyEight video highlights the absurdity of American political discourse by asking participants (all of them either political or sports journalists) whether a given quote comes from political pundits or sports broadcasters. Both are ridiculous. Secondly, it feels appropriate to celebrate the emergence of a genuinely fast, scary England bowler with this fantastic interview with Shoaib Akhtar, once probably the fastest bowler on the planet, and certainly the maddest. From his very first words he’s endearingly nuts. And lastly, I was telling a colleague from abroad about Bake Off yesterday, and trying to explain the appeal of it. I don’t think I quite did it justice, but this interview with Selasi and Val, who developed an odd-couple friendship gets somewhere close to it. And with that, the links (much like England) are all out of material for the week.
Have a great weekend, everyone!
Are there any grimmer, more inevitable words in the English
language than ‘rain
stops play?’ The rain has put a dent in Sri Lanka’s attempt to rescue the
reputation of Galle Fort against New Zealand and England’s efforts to even up
the Ashes (for what it’s worth, both tasks currently looking out of reach). At
least the interminable rain delays have actually left me time for work; there
was a real risk that two tests in different time zones would take up all my
waking hours. As it is, I’m at home, doing some exceptionally mind-numbing data
work watching the rain pummel my back garden into submission. The Great British Summer continues.
- I’m about to hit a rare pitch of geekery, so brace
Planet Money go to Liwonde National Park in Malawi, one of my favourite
places in the world, where I finally got a full and unobstructed view of Pel’s
Fishing Owl at around 5am on Boxing Day in 2006 after several days of
dawn excursions, dodging crocs on the riverbank. It’s not owls that send
Planet Money there, though, but elephants, and specifically the sound of
elephants. In an amazing feat of automation, scientists
have used neural networks to train computers to learn what an elephant sounds
like (its motion, noises and calls), to facilitate censuses in
remote places we cannot easily access (transcript).
As interesting as the conservation aspects, though, are what this tells us
about how automation and the labour market interact. We typically worry
that robots and computers will take our jobs, but combing through 100,000
hours of tape is the kind of thing that is so labour-intensive and
expensive that we don’t do it at all. Instead, automating this task
creates jobs interpreting the data and coming up with policy responses
that could never have occurred if we hadn’t been able to automate.
- I really liked this: CGD helps explode
the idea that there is anything particularly special about Chinese firms
in Africa, pointing out that nationality explains relatively
little of their characteristics.
- There is a lot to chew on in this
Diane Coyle piece about progress, and the need to study it (quite apart from the
fact that I found myself disagreeing with her just two sentences in: it is
of course possible that we know lots about what drives progress, but can
do little to affect any of it). One thing that really stuck with me was
her point that we lack any good definitions or measures of what
progress actually is. There are things that seem obvious to me as
progress, but which don’t show up in GDP or things like the Human
Development Index, my favourite example being the dramatically reduced
cost of obtaining information today compared to my teenaged years.
I used to have to make a trip to the library, spend hours searching
for books and within them and writing down notes, while now I can google
almost anything and simply save entire papers or books onto my hard drive.
- Two good pieces on thinking long term: first, in
VoxEU Jon Danielsson and Robert Macrae discuss how bad
the tools we have for thinking about long term risks are; they don’t
have any solutions, but it’s a very good statement of the problem. And Eva Vivalt discusses why
you might want to ‘give later’, with one compelling reason being that
we are constantly learning more about how to make the world better, a
good (and evidence-based) reason for being an optimist. Of course
knowing how to make the world better doesn’t mean we actually do it, but
it’s a necessary step…
- The IMF’s
Article IV note on China is also optimistic, marking yet another point
at which the Chinese bureaucracy and policy makers have managed to avoid
widely-predicted disaster and keep the economy ticking. We were discussing
this in the office recently: at some point they’ll have a recession
(everyone does), but bets against the Chinese economy are almost always
- Really nice VoxDev piece on how
to structure promotion incentives to induce high performance. I will
definitely be citing this one day.
- So, normally the last link is where you go for
frivolity and pop culture references, but there’s been an acute shortage
of good marginalia this week. So in lieu of a Ringer list of the 50
greatest rap beefs of all time or something similar, here is a list of Shakespeare’s
best insults. It misses out my favourite (Kent’s extended rant
in Lear, describing Oswald as – among other things – a
‘one-trunk-inheriting slave’), but it still brought a smile to my face.
Have a great weekend, everyone!
Well, I couldn’t keep my mouth shut, could I? No sooner did
I suggest England were on top than… well, watch for yourself.
England now place their hopes in Jofra Archer, who has never played test
cricket before, though in his defence, he’s basically a Game of Thrones
character and has just taken six wickets and scored a
century in a warmup match. No doubt the England brains trust are working on
a way to comically screw this up, too, but take solace in the hope for as long
as it lives and remember – it has sometimes been worse (in that
06/07 series, I remember thinking at one point that Mike Hussey should just
change his name by deed poll to Michael Hussey Not Out, because that was all
anyone ever called him).
- “An iPhone, it seems to me, is a bottomless bowl of digital cashews.” Tim Harford has lunch with Richard Thaler and in a moment of fan service worthy of a Marvel movie, places a bowl of nuts in front of him. The joke is this: when Thaler invited some friends (academic economists, all) to dinner, they were eating so many of the cashews left out as a snack that they were destroying their appetite before the main course arrived. He removed the nuts and was thanked – a sequence of events that he credits with the inspiration for behavioural economics because a rational consumer would never benefit from having less choice. It’s a fun read: if you know your behavioural economics, there’s nothing new here, but Thaler takes gleeful aim at politicians on both sides of the pond and the announcements on the tube, all while managing to resist the temptation of the nuts. Related, Tim has an angry and evidence-based rant about the atrocious state of US healthcare.
- A really cool piece of work by Abi Adams and Alison Andrew is summarised on VoxDev. They use a very clever set of survey instruments and vignettes to elicit information on preferences to understand how education can affect the age of first marriage of young women in India. What they find is that education is seen as a way of improving marriage prospects – but such prospects decline rapidly after the end of formal education. This means that those girls who drop out of school early for any reason are at great risk of early marriage – and there appears to be little intrinsic value attached to education for girls, beyond its marriage benefits. Great research, depressing findings.
- Planet Money examine the long and strange history of research into twins – a history that covers some pretty grim episodes in science (transcript). I cannot for the life of me understand why they didn’t interview Arnie and Danny de Vito, though.
- A good piece in Vox about how software and information might be the next big margin on which we reduce carbon emissions, by carrying out large-scale synchronisation of electricity demand, which is now possible thanks to computing power and the digitisation of the household.
- Branko reviews Paul Collier’s new book, The Future of Capitalism. It’s the first part of a putative two-parter (the second is yet to be published), and this part focuses on what Branko disagrees with. As with any good review, of course, you need not agree with either the original book or the reviewer, but it does introduce a lot of ideas worth thinking about. There’s one point in particular that struck me, however: how much progress relies on conflict (either latent in the form of a threat or active in the form of protest). Eric Hobsbawm put it thus: ‘the world will not get better on its own’, and I think he’s right.
- Toni Morrison died this week; I think she would very much have agreed with Hobsbawm’s sentiment. A very good appreciation by Yiyun Li was published in the NYT, and for those (like me) who have not read enough of her work, The Ringer have a handy syllabus of her work. And lastly, because I don’t want to end on a downer, scientists have discovered the remains of a three-foot tall parrot, and they have named it Squawkzilla, because of course it has to be called Squawkzilla.
Have a great weekend, everyone!