Last week, I was doing rather a lot of navel-gazing as I
wrote a presentation on being wrong better, but it turned out to be one of the
most illuminating exercises I’ve undertaken. Thinking through the things I’ve
gotten wrong in the past (spoiler: there was a lot) also made me think much
more about what I might be wrong about now, always a sobering exercise. Anyway,
after a couple of whatsapp conversations with friends I’ve decided there is a
lot of mileage to this topic. So if anyone is feeling brave, please e-mail me
and tell me your best ‘being wrong better’ story: what have you believed in the
past, but have changed your mind on, and what made you change your mind. It was
really striking to me that many of the biggest changes of opinion I’ve had have
been driven by arguments with friends, people whose beliefs or worldviews I
have something, but not everything in common with (there were relatively unexplainable
reversals). If I get enough responses, I’ll write something about them
(anonymised of course). Who knows, maybe we’ll learn something.
- Looking for a gift for that one incorrigible economics
geek in your life?
Never fear, there is now a
coffee-table book of portraits of famous economists. Tim Harford uses
the occasion of its publication to ponder
the many ways economics has and hasn’t changed over his career (I’ll
give you a hint as to what hasn’t changed much: it starts with a ‘d’
and ends with ‘iversity’). Still, it’s not only econ that struggles
here – Planet
Money cover the extreme disparity in prices paid for male and female
If I had more money and faith in humanity I’d say the correct response
to this is to by female art now and sell it at a higher price when we stop
being so basic. But I’m not sure my time horizon is long enough for
that particular bet.
- It’s kind of weird that a discipline as materialist as
economics doesn’t often study the welfare implications of having more
choice over what to buy. This deprecation of the value of choice is one of the
reasons why it’s so hard to sell the importance of importing to
politicians (seriously, why are they so convinced that selling stuff is
better than buying it?). Jan Willem Gunning, Pramila Krishnan and
at the cost in human welfare of low choice in Ethiopia, where the poor
transport networks make remoteness particularly costly in this regard.
- Two bits of glorious geekery: David McKenzie, who can
apparently explain almost anything elegantly, goes deep on one of the
key assumptions of Difference-in-Difference estimation. Typically, he
keeps the discussion tight and keeps relating things back to actual
research choices you might have to make. And secondly, Andrew Gelman trains
his sights on regression discontinuity designs, arguing that they’re a
lot less robust than we think or wish. I can’t be the only person who
gets slightly petrified every time he clicks ‘publish’ for fear he’s
taking down one of my methods.
- Arvind Subramanian and Josh Felman question whether
developing countries (specifically India and China) have the institutional
wherewithal to generate
a domestically-grown philosophy of development. They are not
- Even as someone who has studied and does research
involving behavioural economics, it does get quite annoying when people
start using it to bury rationality alive, as
Sigal Samuel does at Vox here. They’re going to find it harder to keep
down than a Deadite
if they keep ignoring the flip side to all the cognitive bias research:
that for most things, including some very complex calculations,
rationality is still the best starting assumption we can make.
- Anne Krueger extensively accuses
Trump’s economic policy of cutting off its nose to spite its face,
pointing out that while it has reduced imports from China (though, see
point 2), it has also massively increased imports from Vietnam. It
turns out people want stuff, and they’re going to find a way to get it.
- Finally, this
is amazing: a maths teacher has taken a class from one of the most
deprived areas of Cardiff and somehow helped them all reach A* grades in
their GCSE maths exams – despite sitting them several months early.
I’m sure there’s going to be some serious regression to the mean next
year, but that’s pretty amazing, and rather heartwarming.
Have a great weekend, everyone!
I’m giving a talk on How to be Wrong on Monday, a topic I
know intimately. The idea behind the talk is simple: most of us are wrong about
most things for a large chunk of our lives, and that consequently there’s a
high return to being actively open-minded about our views, and to learn what
kind of mistakes we make most often (there are more Wile E.
Coyote’s in this world than there are Road Runners).
As part of this, I was thinking about what the most persistent mistakes I’ve
made were. I immediately thought about Michael Jordan. I must
be one of the only fully sentient people in the 1990s who didn’t believe that
Michael Jordan was the greatest basketball player of all time (at least to that
point). Part of this was sheer contrariness – wanting to find a flaw in an
accepted argument; another part was conflating aesthetics with results (I would
still watch highlights of
Magic Johnson over Jordan any day). There was more to it, but I still worry
about these tendencies. Even after scoring a century, again, and a year of
consistent brilliance, I still can’t convince myself that Ben Stokes is the
best all-rounder England has produced. Am I wrong?
- Right and wrong feel like binary categories, and in a
deep philosophical sense, it may be that they are. But in practice, for
most things that matter, we are unlikely to ever have certainty of right
and wrong. Tim Harford argues that this is partly because the
distinction is less clear cut than it seems – the
Salvator Mundi problem, as he describes it – and partly because we may
only observe one outcome. His answer is to embrace and be explicit
about uncertainty and probabilities. It isn’t perfect, but if the
alternative is to pick a side and fight for it, it may be preferable.
- I’ve written a lot about the navel-gazing that the
economics profession has been doing recently; Dani
Rodrik picks up this theme in Project Syndicate. He argues that increasing
the inclusiveness of the profession will also widen the topics we are
interested in and understand well – and bring them closer in line with the
things that matter to the wider world, beyond the economic mainstays
of productivity, growth and trade. I’d argue we’ve already done a lot
outside of these fields but I do like the focus he puts on the moral
and ethical content of economic policies – an area that I think is deeply
under-rated. Related: I very much like Berk
Ozler’s rules for better seminars, though I note that DFID seems to
have already adopted many.
- Economics isn’t all bad, of course, and this
Planet Money episode is a great way to remind yourself. They go to the AEA
conference in San Diego and ask a bunch of eminent economists the same
question: what is the most important idea in economics? They ask some
brilliant people: Emily Oster, David Autor, Betsey Stevenson… and for the
record, I think Lisa Cook’s answer is the best one (transcript).
- Two good pieces on migration. First Rebekah Smith on
a really clever idea: using
outcome-based financing to better connect potential migrants to jobs.
The mechanism bears some similarity to new ways of funding higher
education (essentially buying a small percentage of the future earnings of
a student you fund). I really like the careful consideration of the
underlying economics: they have clearly thought this through as a
principal-agent problem, and thought about alternative contracts to solve
it. Related: Lant Pritchett on the predictable
big problem of the future in rich countries: aging populations, and
asks why there is so little policy traction over it.
- Related: Marginal
Revolution on a new paper that uses the lottery for assigning
high-skilled visas to companies to show that even in the US, the returns
to domestic firms of higher migration appear massive.
- Two good pieces on gender: first a study in
Tanzania looks at the
role of men in optimising gender outcomes, demonstrating that engaging
both men and women lead to better outcomes (an effect driven in part by
poor communication between spouses). And secondly, a good piece from the
Florence Kondylis and John Loeser on female labour
force participation and what can be done about it.
- Lastly, I went down a musical rabbit hole while writing
started when I was writing about binary knowledge, thinking about how
pointless it is to argue about who the best guitarist in the world is…
before thinking it was probably Christone Ingram,
before discovering that he’s recorded a song
with Rakim, easily the best news of the day so far… and then that led
me to this brilliant
Vox video about science of rapping – which, obviously, starts with
Rakim. I’m back to Ingram now, and I hope you are too.
Have a great weekend, everyone!
to the future. I have to confess it didn’t even occur to me that we’d be
soon starting a new decade when I last sent out the links (yes, pedants, I
know: the new decade ends at the end of this year, but there comes a point
where you just have to stop fighting); the last couple of years have, after
all, felt less like Back to the Future and more like Groundhog Day. Still, to
start the year off and in concession to the new page in the calendar, I thought
I’d have a go at structuring the links around a few predictions for the future.
- Let pessimistic Ranil start. The 2020s will not, in the
advanced economies, see a reversal of the ‘disappointing’ growth of the
last ten years.
It might creep up a bit, but we should get comfortable with the idea of
(often substantially) sub-3% real GDP growth for a while. Why? I think
there is a lot to the arguments Dietrich Vollrath has been laying out over
the last few years, and has collected in his forthcoming (must-buy) book, Fully
Grown. It is not a sign of failure that growth is slowing, but of
success: we have accumulated so much, and made so many gains to
productivity and material well-being, that much of what we have turned our
attention to is no longer designed to feed us and make more stuff we need
– instead we want to make life more liveable, and attention is turning to
increasing choice. Meanwhile innovations are not necessarily marketed and
hence do not show up in the GDP numbers – at least not directly – think of
Wikipedia. Dietz writes here about why slowing business
dynamism may, too, be a symptom of a successful economy, rather than a
harbinger of doom. The negative side of this argument is Tyler Cowen’s
who argues that we
have exhausted all of the easy gains to productivity, and those that
remain (like open
borders) appear beyond the limits of our social preferences.
- And as an antidote to that, a ray of sunshine: deep
and entrenched structural inequalities will be substantially eroded in the
next ten years. You might ask why I’m optimistic here, when in the last
few weeks, I’ve read (deep breath): about the way the econ profession has a
particularly deep blind spot on black women; that women are less
likely to rate
their own performance in maths as competent, even when they observe
their own high test scores; that female authors of research are less likely to claim that
their results are important or unique and both male
and female referees hold women to higher standards; that the AEA
meetings show a
discipline making small steps, not big strides; that discrimination
against minority candidates in jobs may
be underestimated by many studies; and that single women
do substantially worse in the housing market than single men. But
this itself is one reason to be optimistic: I have never in my life
read so much about these problems as I do now. Brilliant people are
thinking about the world differently, and this is a first step towards
- I also predict that in the next ten years, the
Technocrats will Strike Back. It won’t be nearly as cool as Star Wars Episode V,
I think the value of independent advice or actors will become increasingly
apparent. Garret Jones’s forthcoming book, 10%
Less Democracy has a provocative title, but if you read this e-mail
you probably already believe in an independent Central Bank, and that
evidence has a place in policymaking. As the world becomes more complex
and our problems more difficult, does this become more or less true? Diane
Coyle suggests intervention may become more necessary – it is likely
to also be harder.
- My last prediction is this: that the best people will
still get lots wrong. 538
revisit the biggest mistakes they made this year in their political
commentary, and Michael
Spence discusses the changes he never saw coming. Unfortunately,
those who are most transparent in their work are probably going to be
shown up the most, too, but I hope that doesn’t serve as a disincentive.
I think my biggest mistake last year was to underestimate the resilience
of zombie ideas: things I thought were dead kept coming back, and unlike
the Janets, they don’t improve. I need to call Ash.
- I don’t have a prediction around these two, but I do
recommend reading them. First, Markus
covers a new paper which shows how intra-household inequality
traces through to mortality among women in India. And secondly, a
VoxDev piece raises the bar beyond poverty, suggesting that a healthy
diet, rather than one that keeps you alive, may be a more appropriate
- Finally, The Rise of Skywalker was a massive
disappointment (as Matt said, my god it felt like it was written by an
algorithm in Disney studios), but it did prompt this: what
does the Resistance need to do in order to govern effectively after
defeating the First Order? Pop culture has never bettered Deadwood as an
investigation of state building, but I’d watch a Star Wars movie about
economic policy and governance. Yes, I am a geek. I predict this will
not change in the next decade.
Have a great weekend, everyone!
It’s kind of stunning how little and how much changes in a
year. I was reading through all of the links emails I sent out over the year
(40 so far – one every week, with a couple of gaps to get married – hooray! –
and go on holiday) to pick some of my favourite ones for today’s email, and my preoccupations
and concerns have barely evolved. In January, I started by first links of the
year talking about political ructions and said that, and I quote, “I just hope
my go-to 2019 gif isn’t this.”
Between politics and the various stages of cricketing grief, I can imagine that
2020 will bring many of the same emotions – and the same gif in constant use.
And whatever else it brings, I can predict there will be a lot of good writing,
analysis and economics; great analysis is borne of curiosity and chaos – as
Harry Lime would say, stability
only brings the cuckoo clock (transcript).
2019 hasn’t exactly been smooth sailing, and look what we got:
- Crisis drives us to ingenuity. When I mentioned to a
friend that I’d do a round-up of 2019 today, he immediately picked his
favourite link of the year: NPR’s
coverage of the amazing elephant census that uses sound recordings and
an algorithm to develop an accurate count of how many forest elephants –
notoriously difficult to count from either air or land – remain in the
This is such a great piece because it brings in so much about what goes
into good research. The original idea came years ago, but until
recently technology hadn’t advanced far enough to try it. Then, once it
was tried, researchers discovered they had much more to do: to build what
was essentially a neural network so that the computers could learn their own
way to recognise elephant calls. And finally, they discovered that
there was something else in their data: poachers, and their idea for a
census may evolve into a potent anti-poaching tool. Great research is
unpredictable: you never wholly know what you’ll learn from it.
- Reflecting my own research interests, I also linked
to a bunch of stuff throughout the year on the enormous welfare
implications of the structure of firms, markets and contracts. This
stuff sounds really dry, but once you dig into it and realise how much
of what we care about ultimately derives from these imperfect transactions
and institutions, it becomes mesmerising. I loved this piece about the impact of monopsony on
economic outcomes in the UK and its regional variation; this is one of
the most underrated issues facing UK public policy right now (bonus
Robinson and her development of the monopsony concept). In a
completely different context, Rocco Machiavello and Arthur Bluoin show how much poor contract
enforcement can cost developing countries: in this case completely
undoing any good from linking to global markets. And on a similar theme,
this VoxDev piece focuses on how the slow movement of complaints through
the courts in India causes
firms to sacrifice productivity for reduced risk of getting fleeced.
- I also absolutely loved the podcast series that uncovered
Studs Terkel’s original interviews for his book, Working. No-one
illuminated ordinary lives better than he did.
- My interest in Studs probably reflects that I think a
lot about inequality and discrimination, and how we can improve these
things. To the extent that the econ profession turned its gaze inwards
in 2019 and examined its own performance on these fronts, it discovered
some very ugly truths. The NYT reported
on widespread sexual abuse and gender and racial discrimination in the
discipline; and shone
a light on the treatment of black women in particular. The AEA, whose
survey uncovered all this, also produced a
report that should make us very uncomfortable.
- That said, though our house is in some disarray,
economists have also done some amazing studies of inequality and what to
do about it.
Planet Money (again!) cover Raj Chetty and Nathan Hendren’s amazing work
Moving to Opportunity project (transcript). And I
absolutely loved this paper
by Eliana La Ferrara and co-authors which finds both that Italian
teachers were biased against migrant children, and that revealing this to
them helped them reduce this bias. Sticking to education, the graphics in this
piece by Pam Jakiela and Susannah Hares about gender gaps in global
education are amazing.
- It’s annual, but the Development Impact Job Market
Papers series always throws up little gems from younger researchers. I
loved this one by Asad Liaqat about how
little Pakistani politicians know of their constituents and how
information can change their policies. And though I didn’t link to it
earlier in the year (it was published a few days ago), this is another
great one, by Susannah Oh about how
caste identity shapes what kind of jobs people will accept in India –
even huge wage premia do not overcome this.
- There is so much more I could mention – I haven’t
talked about the coverage of this year’s Nobel, such as this
herculean summary of Michael Kremer’s life-work by David Evans – but
I’ll add just one more series to read: Dietrich Vollrath’s
series on the deep roots of economic development. Dietz is an
amazing macroeconomist who reminds us at every turn why all economists
should still care about macro and how it’s possible to be careful,
interesting and important in the field.
- There was a huge amount of happy geekery over the year,
too, to end the links on a frivolous note. I was alerted to the
brilliance of the Bank of Jamaica’s twitter feed, displaying how you
communicate to the
The BBC uncovered the greatest
Principal-Agent problem of all time, one so amazing I structured a
lecture around it. The Ringer developed a standardized test to measure
what really matters: our
knowledge of the lyrics to Gin and Juice. And finally, they
answered the question we all had going into The Rise of Skywalker:
is the monetary policy of the First Order?
I won’t be doing the links again till the New Year, so have
a great Christmas and New Year, everyone!
It’s getting very Christmassy now, isn’t it? I find my inner
becoming less inner and more outer with each passing day. Though as an
economist I should enjoy the spiritual aspects of a frenzy of consumer
activity, illiquid asset exchange and (if you’re lucky) some redistribution of
the wealth acquired over the last year, it’s amazing how quickly it dissipates
when I have to fight my way through rioting customers of John Lewis to find the
‘perfect’ novelty corkscrew. In all seriousness, though, this season is a
good time to remember that the choices we make – especially our consumption
choices – can nevertheless have substantial welfare implications. And if you
don’t believe me, Michael Schur, the genius behind The Good Place may yet
convince you, describing how
Peter Singer helped him become less of a forking shirtbag.
- Christmas can be a difficult; elections can be
Tim Harford is here to tell you how
to get through the silly season without mortally offending relatives
and strangers (unless they really deserve it) or exhausting yourself
fact-checking every bit of mendacious rubbish you read in the news.
do polls report voting behaviour or shape it? Worth reading just for
Nate Silver’s cameo at the end.
- This might be my
favourite Job Market Paper so far: Asad Liaqat reports on an amazing
experiment which looks at how providing information on voter preferences
can affect the policy choices of politicians. It is fascinating: at
baseline, these politicians know almost nothing about their constituents,
which may not surprise you. Giving them information finds a larger
effect on elected officials (unsurprisingly), but also that information
on the preferences of female voters moves preferences more. The
mechanism is apparently that politicians think they know more about what
men want than women, and so are more responsive to information about
women. In a sense, being aware of your own ignorance is the first step
to correcting it, and the ignorance we acknowledge is selective. Another
cool JMP (by Antonella Bancalari) looks at how a public health
programme in Peru actually increased mortality rates, apparently because
implementation was usually abandoned before complete.
is important (this opinion is both so true as to be trivial and
worryingly underrated). And in celebration of macro, Dietz Vollrath has stuck
his head above the parapet to investigate the
Kaldor facts; a series of ‘stylised facts’ about the economy that
Nicholas Kaldor first observed in 1957. What’s stunning about them is
that they have largely remained true over the interceding 60 years.
Yes macroeconomics is hard, and our evidence on it is less causally
robust; but much is consistent and remains important despite being
which we are, we are, as Rumpole might say, quoting one of my
- Imagine being having written a book so compelling that
Branko Milanovic compares it to Maradona’s football; Francis
Fukuyama has achieved it. “It is like Maradona lulling his
opponents to sleep just in order to strike a more improbable goal.”
- Christopher Pissarides joins
the techno-optimistic bandwagon. Well, I say he climbs on the
bandwagon, but his argument is basically that it’s not technology that we
should worry about but frictions in labour market adjustment. So in a
sense, he built the bandwagon, won a Nobel prize for it and then
arrivistes like me clambered on board.
- Here’s some basic economics: pandering to the lowest
common denominator is often a winning strategy. Tumblr
took the high road and banned p*rnography; while a dip in demand
probably won’t surprise you, the fact that visits declined by 20% and
usage by 50% might do.
- Life is a simplified metaphor for cricket. I think we can all
agree on this. In case the Good Place and Peter Singer wasn’t enough
philosophy for you, Anthony McGowan wrote a piece in The Nightwatchman
the main schools of classical philosophy would resolve the Walking problem:
do you do the right thing, even if it comes at a personal, or team-wide
cost? [Of course, the correct answer here is to take the sandpaper out of
your pocket and focus on the real issues]. And just in case you’re one
of the few readers who isn’t here for the cricket chat, here’s Alan Taylor
remembering the year they gave James Kelman’s How
Late it Was, How Late the Booker – and the cost to his career.
Kelman should win the Nobel for literature, and never will, the fools.
Have a great weekend, everyone! Next week will be the last
links for the year, and will include a brief round-up of my favourite ones of
Remind me never to make cricket predictions. No sooner had I
finished predicting the collapse of the England cricket team in New Zealand
than they proceeded to fold like origami – if origami came in the form of
spineless amoeba. Clearly, this was a causal relationship, and I spoke the
collapse into life (just in case this is true, I’m hereby predicting an
anonymous millionaire choosing to make a large lump sum transfer to my bank account
by the end of the day). Anyway, with Tom Latham unbeaten on a century, I’m not
going to tempt any further fate. Straight into the links:
- If it’s true that the best economics comes from the
hardest times, we should be in for a bonanza of economic thinking soon. Barely a day goes by
that I don’t faintly bruise my forehead facepalming at the latest bout of
economic insanity proposed by some politician somewhere in the world. Kaushik
Basu is surely right that what will come next for economists is almost
certainly a better understanding of how our economic interactions are
shaped by norms and values – an interrogation of the assumptions in
the woodwork of our models. This is what Sam Bowles, George Akerlof and
others have been recently investigating and I am
increasingly convinced of their importance.
- There is a fantastic quote from Thomas Schelling in this
piece by Tim Harford on why we should all play games: “One thing a
person cannot do, no matter how rigorous his analysis or heroic his
imagination, is to draw up a list of things that would never occur to
him.” I’m a big believer in letting your mind and attention wander:
part of understanding the world can only come from being in it, and being
surprised by it.
- Every year, my friend Paul texts me to ask when the
Development Impact crew will start their Job Market Papers series. Well, it’s kicked off,
and from the first few entries, it’s going to be another fun season.
Bloem looks at the massive negative effects of the Dodd-Frank Act
on conflict in the DRC (that’s negative as in more conflict, not the
good kind of negative). He starts with a great first line, pointing out
the reader is most likely using a conflict mineral to read it. And another
post (by Julian Dyer) looks at the impact
of crime and insecurity on agricultural productivity.
- Vox have a
really good write-up on the latest paper on GiveDirectly’s basic
income experiments in Kenya. This paper, by Ted Miguel and co-authors, finds large
general equilibrium effects from their transfers. It appears that the
demand stimulus creates a supply response and essentially creates a rising
tide. I haven’t read the underlying paper yet, but these are really
- I like to argue with people. (Note: This will not be
news to anyone whose ever expressed an opinion in my presence). With
Thanksgiving in the US yesterday, both Vox
ran pieces this week on how to argue better; I have to say I find 538s
more convincing. But if you don’t agree, that’s ok: we can argue it
- CGD look at the manifestos for the forthcoming
elections are discuss what
they mean for international development.
- Finally, are you a cat person? If you are, there are
few things I can recommend more than this
excerpt from Bohumil Hrabal’s book about his cats. Hrabal was a
genius; who else could turn a single run-on sentence by a boasting
drunkard in the pub into a novel (Dancing
Lessons for the Advanced in Age), or an extended attempt to hide his
short stature into a history of his country (I
Served the King of England). His skill for plausible exaggeration is
on full show here. If you don’t like cats, maybe you like rap? A man of
similar talents, Rakim,
has a new book out; it doesn’t take too much squinting to see the
links between I
Ain’t No Joke and Dancing Lessons…
Have a great weekend, everyone!
It may seem like nothing ever changes: the seasons still
follow one another with grim inevitability (in England, Winter follows Autumn,
and then Winter comes back to annoy us after a mere insinuation of Spring or
Summer); LeBron James continues
fools and the Gods of Cricket find ever-more inventive ways of crushing
dreams (England look good now, but I await the inevitable Trent Boult double
century, followed by Ben Stokes getting out hit wicket, tying his shoelaces).
Occasionally, though change shocks us into uncharacteristic action. Specifically,
climate change can shock us to act out of character: I know many people who
joined the climate protests whose previous heights of rebellion were to send
back a lukewarm tea in a café. And now, that venerable institution, the Oxford
English Dictionary has revealed its word of the year:
‘climate crisis’. Yes, that’s the word of the year. The end of days is
upon us, verily.
this is awkward.
What do you do when a senior World Bank Official goes off on one, calling
you a Marxist (“committed or uncommitted”, as he puts it) because you run
a piece of analysis and post your code for transparency’s sake? Well, if
your Justin Sandefur you clap back, and point out that whatever name
you call him, the analysis is still up there, and still not proven wrong.
- What do you remember from 13 July, 1994? If you’re anything like
me, you remember Roberto
Baggio running circles around Hristo Stoichov’s Bulgaria to send Italy
into the final of the most boring World Cup ever, towards a mouth-watering
confrontation with Romario.
Silvio Berlusconi guessed that would occupy most other football-crazed
minds (which covers about 88% of the Italian population), and used the day
to sneak out the news that he would, by emergency decree, absolve hundreds
of Italian politicians from corruption allegations. Can you keep a
straight face while saying “I’m sure it was just a coincidence?” If not, then this
paper is for you – Milena Djourelova and Ruben Durante show that the
political news cycle is carefully choreographed to bury bad news, surely
shocking news to anyone in the civil service.
- This is great: a David
McKenzie twitter thread reviewing the migration and trade chapters of
the new Banerjee-Duflo book; he considers a dissonance in how they handle
the two topics. And on the subject of migration, this is fantastic:
Planet Money look at how a
small town in the US has turned itself into a refugee hub and is
reaping the benefits (transcript).
And on the benefits of migration (how often have I written these words
here over the years?), this
VoxEU piece sets out some of the benefits of returning migrants on
growth in their country of origin.
- Daron Acemoglu and co. have produced a model of the
data economy to illustrate the myriad ways it can generate
My go to analogy for Facebook and the like has for a while now been that
of the Eiderdown
farm, but they’ve extended the analogy: they point out that by
providing free services, Facebook is in effect paying for our data, but
also that they can use data collected from users to infer knowledge about
- Two good pieces about urban mobility, though very different.
Hausmann discusses why it shouldn’t be surprising that a small metro
price rise has generate such a large backlash in Chile. And then this
VoxDev piece looks at the genesis of long journey times in India,
finding that it’s not traffic but ‘uncongested travel times’ that is the biggest
contributor time spent in traffic. Something to think about while I sit on
the X90, cursing my way through the journey to London.
- Vijaya Ramachandran has done a survey of tech
entrepreneurs in Nigeria, and reports
some of the results here; they’re interesting and worth reading in
more detail. I particularly like how she unpacks their responses on the
perennial problem of credit. Read it carefully and it sounds like a
banking system working well (even if that means not funding many
firms) than one doing its job badly. As I never get tired of telling
people here: fix the problems, don’t try and force yourself through them.
- Star Wars and economics collide in a supernova of
Ringer run a surprisingly economically literate analysis of monetary
economics in The Mandalorian and the broader Star Wars universe. They
consider what might be behind the multiplicity of currencies the
Mandalorian operates in (surprisingly, they omit to consider currency
hedging as an important part of the Bounty Hunter’s economic toolbox);
they look at exchange rate volatility and relate it to incessant conflict;
and finally, they ask if the failure to establish a single currency and
unify trading standards was cause, not consequence of the Rebellion’s fall
and the rise of the New Republic. Can you tell how much fun I had with
Have a great weekend, everyone!
Every once in a while, you can actually see the economy
evolve before your very eyes. I’m going to Porto next week for a short break
(long hours working on my data have taken a toll), and have just received an
email from the airline asking me to participate in an auction for an upgrade. I
would like to announce this clearly for all companies who might be reading: GET
YOUR FILTHY MITTS OFF MY CONSUMER SURPLUS. I’m so annoyed I’m not even going to
bid zero. I’m not going to help them construct their demand curve. While part
of me admires this attempt to maximise their revenues, is it surprising that so
many are dissatisfied with the economy when companies weaponise personalisation
- Arthur Cecil Pigou was, by reputation, a somewhat odd
in the days when he was the only Professor of Economics at Cambridge, he
used to rock up to meetings with an axe, on his way to climbing
expeditions. He was a genius though, arguing for paid maternity leave
roughly a century before it became a thing; and he came up with an idea
for taxing negative externalities that is both intuitive and difficult
to teach (I know: I was teaching it last week). Planet Money have a
very fun show on him (transcript),
including the way Canada has tried to adopt a tax on carbon, pairing it
with a flat payment to citizens, which winds up being rather progressive,
since the rich consume much more carbon…
- A very
wise man gives a 90 second interview about a very good book. Matt
wants more. Don’t @ me, mainly because I’m not on Twitter.
- Diane Coyle looks at productivity
and its discontents, arguing that the dematerialisation of the economy
(basically, the fact that we make, buy and sell less actual stuff and more
ideas, services and information) has fundamentally undermined our
traditional measures of productivity. Robert Solow once observed that the
technological revolution is observed everywhere except in the productivity
statistics. Diane is suggesting the problem is with the statistics and
not the technology.
- When Michael Clemens talks about migration, just pull
up a chair and listen. This
blog (with Jimmy Graham) is typically excellent and will be a learning
experience for most of us. I particularly liked the heading: “the effect
of aid on migration is complex – because so are migrants’ motives”. No-one
who has been receiving these links for more than a few weeks shouldn’t
need a primer on why human movement is such a force for good, but it’s
always nice to find a new angle: Planet Money discuss the
social mobility of the children of migrants and why it is so
- Erica Field and co show that using
digital payments to women to give them greater control over their
resources increases the labour force participation of the most constrained
women significantly in the long term. And on the subject of control, this
piece by Aleitheia Donald and Markus Goldstein finds that surveys
can uncover disagreements between spouses as to who has decision-making
responsibility in the household – and these disagreements are predictive
of negative outcomes for women. Meanwhile, Charles Kenny bemoans
the lack of women in senior positions in think tanks.
- One for the contracting geeks (and if you’re an
economist but not a contracting geek, shame): Oliver
Hart and David Frydlinger on the role of stated norms and principles in overcoming
- I normally end the links on a note of pop culture
marginalia, but this week it’s something different: one of my
friends, Paul, helps run an amazing football club in Glasgow dedicated to
helping refugees, asylum seekers and minorities of all stripes find a
sense of community there. The BBC gives a small taste of how
amazing United Glasgow is, and if you live nearby and have some
spare kit going, they
are looking for donations.
No links next week: I’ll be knee-deep in Port and Francescinhas.
Have a great weekend, everyone!
Winter is coming. More accurately, winter has arrived, taken
off its shoes and declared its intention to crash on our couch until further
notice, much like John Belushi. I’m
sitting in the DPhils office at BSG, looking out the window onto an incredibly
grey and depressing day, made worse by Sri
Lanka’s third consecutive capitulation to the Aussies. On the plus side,
the Challenges of Government Conference is running here at the same time, and
the benefit of the pitiful weather is that it discourages attendees from
straying too far from the coffee point during the breaks. Honestly, if it
wasn’t for the
NBA season, there would be no reason not to hibernate from mid October
- Twitter seems like an extremely risky pastime to me. Every once in a while,
people seem to let slip with a spectacularly ill-considered opinion that
more be brought up to mock them. Even by the standards of the
twidiocracy, though, this tweet
by Larry Summers in the middle of his critique of Gabriel Zucman and
Emmanuel Saez’s new work on the tax system in the US was ill-considered
noticed, too). The economics underlying this debate are fascinating
though: Zucman and Saez argue that the American tax system is regressive,
and in doing so make a number of methodological choices that depart from
the norm in tax policy analysis; in particular, many economists from
across the ideological spectrum have focused on the exclusion of tax-based
transfers to poor people in their assessment of the progressivity of the
tax system. The NPR
write-up of the debate is very good; I can see both why it seems
strange to exclude tax refunds from the analysis, but also that Zucman is
surely correct to point out that the rich also benefit from Government
transfers, ones that are probably much less transparent. (In Twitter’s
defence, it does facilitate the
occasional zinger, too. Round 1 to Zucman, surely.)
- Zucman and Saez are at the centre of another, closely
related debate: whether the US should implement a wealth tax, an
idea associated in particular with Elizabeth Warren and Bernie Sanders. Tw
pieces in Project Syndicate discuss the ins and outs of the idea, one by Jean
Pisany-Ferry and the other by
Michael Spence, who points out “The fact is that incremental wealth
gains… above $1 billion… have little to do with consumption and lifestyle.
They are signals of success and status.” This seems about right to me,
though with the caveat that the closest I’ve come to being a billionaire
Zimbabwean dollars. And Branko Milanovic discusses the
extent and effect of inequality in Chile, in light of the recent unrest.
- Lee Crawfurd, Susannah Hares and co. take
a critical look at the construction of the World Bank’s new metric for
educational quality, Learning Adjusted Years of Schooling (LAYS). Their concern isn’t the
unfortunate acronym (do we really want to talk about how many LAYS our
kids got in secondary school?), but rather that the metric will need to
subjected to quite a lot of scrutiny over quite a long time to ensure it
keeps improving. While that is certainly true, it’s important not to
forget that it is still a big improvement from where we started. It’s
a huge thing that we have a metric that provides us with information about
both schooling time and learning achieved, imperfect though it may still
be. Related: the crew also take a look at the literature on low-cost
private schooling, updating a review DFID funded a few years back with
- Is this the greatest
example of Principal-Agent Theory in practice ever? A man in China (the
Principal) hired a hitman (the Agent) to kill a business competitor; and
being a rational young man, the hitman promptly turned around and
sub-contracted the job – a possibility only because the Principal was
unable to effectively monitor the effort exerted by his hitman of choice.
So far, so classic, but it gets better. The subcontracted hitman in
turn decides to farm out the dirty work to yet another subcontractor; but
even he decided that the effort of killing a man was too great, and
subcontracted the work out yet again. This goes on, seriously. Eventually,
the fifth subcontractee decided to collaborate with the intended victim,
collect payment and then inform the police. There has to be a way for
me to incorporate this into teaching this term.
- People are the worst, part 12,393,393,191 of a
checking fraudulent claims about migrants and minorities hardens attitudes
against them. In other words, once primed to think negatively about
migrants, learning that in actual fact they are not out to steal your job
and mug you in a dark alleyway does not at all reduce negative attitudes
towards them. People: mindlessly bigoted since walking upright.
- It used to be a running joke among some of my friends
that I would begin answering any question with some variant of the line
“It’s actually a little more complicated than that” (I swear this was
before Ben Goldacre published a
book with that title). Tim Harford goes
on a magnificent rant against virtually every politician in the UK,
accusing them of seeing simplicity where complexity lies and selling
clarity when a fog is the reality. Can we make him Emperor?
- Lastly, in the latest example of Japan being far cooler
than any of the rest of us, it turns out that there is a tradition
there on Halloween whereby people
dress up as the most horrifyingly mundane thing they can think of.
There is a real art to capturing the horrors of everyday life, and
these people have absolutely nailed it.
Have a great weekend, everyone!
That sound you can hear faintly in the background is faraway
crowds mispronouncing the word ‘defence’ at great volume and repeatedly. That
is correct: the NBA season has started again, and while Zion
Williamson has injured himself (it turns out being built like a container
ship and jumping
like Super Mario is bad for the knees), the rest of it has been gripping. LeBron
may finally be slowing from his Thanos-like peak! Markelle
Fultz has remembered how to play basketball! Luka
Doncic is still an extraterrestrial wearing a chubby Slovenian teenager
suit! And my productivity is about to make like Wile E.
- Having said all that, I’m never too busy for economics.
There’s still a Nobel hangover on the econoweb (and a literal
hangover if, like me, you celebrated with a little too much wine), but
rather than link to all of it – there’s too much good writing to do
justice to – let me mention two pieces. Firstly, Abhijeet Banerjee and
Esther Duflo have apparently celebrated by uploading another paper to
follow up on their much earlier work on microfinance that identifies
the small group for whom microfinance does turn out to be very effective
for. They call them ‘Gung Ho Entrepreneurs’, and they do very well
indeed when they get access to credit; whether we can tell who they are
early on, though, is the real kicker. And David Evans has done one of his
summaries dedicated entirely to the output of Michael Kremer, who was
his DPhil supervisor. Like supervisor, like student: David is a marvel,
one of the best and most concise communicators of ideas I have ever had
the privilege to meet.
- This requires a bit of attention and patience, but has
outsize rewards. Brad Larsen at Stanford summarises an extremely
cool new paper which looks at how often potentially viable trading
negotiations (i.e. those where the buyer and seller have a shared price on
which they can agree to mutual benefit) fail. He has some amazing
data, and the finding is also kind of amazing; between a fifth and
quarter of potentially beneficial negotiations fail. This should
make us much less sanguine about… well, everything.
- When a paper digs into how humans interact with one
another, you can bet there will be at least one result that proves that
humans are the worst.
Case 1,204,291,91: a
recent analysis of tipping behaviour on Uber finds that men are more
likely to tip female drivers… and that this effect is almost entirely
explained by heavy tipping of young women with almost zero effect on older
women. Men: transparently one-track minds since recorded history begins.
For Uber drivers looking to get their own back: work in the small hours.
Tips are highest between 3:00 and 5:00am; presumably to make up for the
- It’s always reassuring when Tim Harford likes ideas I
ascribe to. Here he discusses how
to think about worst case scenarios and sings the praises of
- By the way, speaking of people being the worst: this
fantastic piece by Berk Ozler looks at how hopelessly biased samples
in early medical studies (almost exclusively conducted on white males)
have led to (some) systematically worse health outcomes for minorities,
and how algorithmic diagnosis can – sometimes – help rectify these
- CGD continue to bang the drum for sensible migration
policy, for which we can only applaud them. A first piece sets out
how the new EU Commissioners for migration can use
legal pathways to achieve their policy objectives; and another looks
at how regularised
migration can be a development tool for Nigeria. Both push the Global
Skills Partnership idea, which I’ve pitched more than once, too. Are we
getting any closer to it having a moment?
- Lastly, may I quietly and calmly point out that THE
LAST TRAILER FOR STAR WARS: RISE OF SKYWALKER IS OUT AND IT I’M VERY
SCARED THAT SOMETHING BAD IS GOING TO HAPPEN TO C-3PO. Sorry. I’m not
sure what came over me. It is going to be a long wait for this movie.
While we’re waiting, we can check out these ultra-creepy
author photographs from LitHub. While no-one should be surprised that
Angela Carter’s makes her look like a ghost, what is up with Patricia
Highsmith and HP Lovecraft? Why does she look like she’s planning my
murder? Why is Lovecraft eating his own face? And is it time for Star
Have a great weekend, everyone!