Links round-up

Hi all,

Sorry I forgot to warn you all that I wouldn’t be sending any links out before Easter: partly forgetfulness, partly the fact that my stomach had entirely overtaken my brain in anticipation of our Easter trip to Italy. The preparatory re-routing of blood to my belly proved a good move as much more of me has returned than left (a growth rate that would make China blush with shame). I’ve just spent hours catching up with my RSS feed. This one might be a bit epic, but on the plus side they start with a clip from Ferris Bueller and end with Justin Bieber’s moobs.

  1. How often do you get to preach free trade with the help of Ferris Bueller’s Day Off? But if you remember the greatest teaching scene in the history of movies (thankfully, no idiot climbs up on his desk to shout ‘oh Captain, my Captain’) you’ll know that the tariffs made famous by Ferris Bueller’s absence, those of the Smoot-Hawley Act made the Great Depression – anyone, anyone? – worse, not better. Planet Money uses this scene as a stepping off point to talk some of the dumber tariffs of all time here (transcript); they also investigate the effects of China’s retaliatory tariffs here (transcript, note that the US and China have now escalated the proposed schedules and China will be imposing tariffs on Boeing and soybeans), pointing out they’re hitting agriculture hard to hit Trump’s base. 538 used the impending trade war to teach us a little game theory, but found that their readers tended to get more vindictive as games repeated, rather than less, as the theory would predict. We might all be headed to an – anyone? Anyone? – recession, but at least we got some good reading.
  2. Let’s cheer up by reminding ourselves how dumb our more popular political instincts are. Jonathan Portes summarises around 20 years of reading on the effects of immigration on the UK’s economy and points out that not only does it have no negative effect on employment in the medium/long run, it appears it doesn’t have any in the short run, either (Adam is saying ‘magic economics’ somewhere); it increases productivity; and increases wages for most of the distribution. Also, immigration increases in the US haven’t increased crime: if anything they’re associated with lower crime. And if the US does restrict its H1-B visas, not only will it disproportionately hit the most highly-skilled groups, it seems local people will not be employed in their stead – companies would just shrink.
  3. Lant mentions immigration in this barnburner of a post, but really it’s about focusing on the big questions of economics. Elaborating on a point he made in our last economics conference, he points out that successful growth accelerations (or decelerations) have a much, much larger impact on welfare than even the best things donors can implement directly, like cash transfers or livelihoods work. I agree with Lant that the big questions are the most important ones, but the implied either/or isn’t there for me. Not everyone should be doing the same kind of work. We need more Lants, but not fewer Esthers.
  4. Speaking of more Esthers, a series of podcasts with women in economics – the most recent one is Claudia Sahm. And researchers have found that in the movies, men are much more likely to be smart and make cognitively sophisticated points. Someone should show them Iron Fist, which should really be renamed ‘Leaden Brain’. Lastly, Justin Sandefur argues that girls education is not the answer to the gender pay gap; the problems lie elsewhere (he is not, obviously, saying we shouldn’t fund it – it is the answer to a lot of other things).
  5. I’ve thought about this a lot, because I expect some of the things I want to research to throw up null results: how do you emphasise how interesting the lack of a statistically significant effect is? David Evans has answers. Also on Development Impact, Berk goes into great detail about why the new Give Directly results imply no long-term effect from cash transfers in the setting investigated.
  6. Dietz is back – and he’s dissecting a paper from the fantastic Jane Humphries, who taught me years ago, when I was an 18 year-old.
  7. “OK, so basic income is all about the freedom to say no. That’s a privilege for the rich right now. With a basic income, you can say no to a job you don’t want to do. You can say no to a city in which you no longer want to live. You can say no to an employer who harasses you at work . . . that’s what real freedom looks like.” There’s some I disagree with here (especially the implication that in developing countries structural problems can be ignored and cash will solve all), but a very good piece on UBIs.
  8. Lastly, as a reward for wading through all those links, a definitive ranking of all the ridiculous tattoos on Justin Bieber’s ridiculous torso. Did you know he has what appears to be a lion wearing a tiny crown tattooed on one of his moobs? There’s a bear on the other one. He looks like the drawing wall at a kindergarten.

Have a great weekend, everyone!

R

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Links round-up

Hi all,

I’m going to be honest: my brain is fried. The CSAE conference started on Sunday morning, and I was either in a session, picking brains for opinions about my own research design or pickling brains with Matt in The Bear pretty much constantly until Wednesday morning; then there was the one-day GrOW conference, about research on women and economic growth; and after that a half day in DFID where I spent some time lobbing grenades of ill-informed speculation at some of the smartest researchers out there on gender and jobs, growth and the economy, trying to work out what the frontiers for new research are. So, if this week’s links are even more incoherent than usual, that’s the reason; that and the fact that I’ve spent the day trying to get my own ideas into some kind of coherent shape for transfer of status. They are putting up an enormous fight against my attempts to impose order, like a group of highly persistent anarchists in my brain.

  1. The CSAE conference is amazing. The sheer range of research being presented by researchers from the US, Europe and Africa was mind-boggling, and logistically what must have been a nightmare to synchronise went off without a hitch. I wrote something about each of the three days: on the first, talking about Pamela Jakiela’s paper with Owen Ozier, considering the links between ‘gendered language’ and female outcomes; on the second I focused on Rachel Glennerster’s fantastic keynote, while noting that I think not all researchers are good at communication, nor should focus too much on becoming so; and on the final day, talking about optimisation, and how the limits to how people make decisions can help frame our understanding of the world. If that’s not enough, check out Markus and co’s set of one-line summaries of most of the research presented; and the #OxCSAE2018 tag on twitter. My only gripe: when the chair asks for a short question, please stop with the speeches disguised as questions.
  2. Raj Chetty has just released the latest paper from his gargantuan equality of opportunity project, and it’s a barn-burner. He shows that while being born to wealthy parents is typically a great predictor of one’s own wealth, this is not true for black males, who have large gaps in their employment and wage results compared to similar white males. Paper here, NYT coverage here.
  3. While we’re being pessimistic about the world, Seema Jayachandran blogs on the persistent and substantial gender gap in the kind of things men and women study in academic economics. Also depressing: a court case is raging in California, about who should pay for climate change. 538 have a fantastic summary of how it’s being argued, and it boils down to whether you blame fossil fuel companies for digging the stuff up, or society for wanting it.
  4. I really liked this research from Japan, using an experimental design to elicit attitudes about migration from elderly Japanese without really making it clear that it was about migration at all. Two interesting things: first, it manages to partly separate out the economic and cultural objections to migration; and it manages to induce people to change their attitudes towards migration by providing information on the former.
  5. In a kind of empirical economics version of Pacific Rim, Guido Imbens brings the ruckus to Angus Deaton’s critique of RCTs. I feel strongly that you should only read this while listening to the GZA verse of Bring da Ruckus.
  6. Brian McCaig and Nina Pavcnik look at the effect of a trade agreement between Vietnam and the US on labour demand. We were literally discussing the need for more research on the demand effects on employment yesterday. This fits the bill.
  7. Lastly, with March Madness in full swing, a reminder that DeAndre Ayton may not be in the Elite Eight, but he could still fold you up and play you like an accordion.

Have a great weekend, everyone!

R

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Who’s optimizing what, now?

As a horde of tired and wired academics prepare to converge on Stefan and Pramila’s (I feel like this has to instrument for something) this evening, I’m using what little is left of my brain to think about some of the links between the various sessions I attended today – on migration, education and institutions, and the final panel on the limits of evidence-based interventions. The papers themselves were hugely varied, with slides ranging from detailed maps of Addis Ababa to screenshots from a role-playing game a researcher created for a lab experiment. As an aside: has anyone documented the rise of pop-culture paper titles over the last decade? The biggest surprise of the week was that none of the job-search papers was called Searching with my Good Eye Closed.

One thing that occurs to me: in some way, a number of the papers being presented examine (or inadvertently) reveal the surprising ways individuals and firms or groups optimise (or don’t) some of the most fundamental decisions they’re making. In the morning, Zack Barnett-Howell presented a very cool lab experiment he ran, showing how well people process information to optimise a ‘migration’ decision in a game he designed – doing better than the computer, which is pretty staggering. So, chalk one up for optimisation. So, feed people information and watch social welfare grow? Not quite: the discussion in that session was rammed with people who have been doing field research or working in migration policy, and the consensus seemed to be that information doesn’t seem to really shift what people actually do. As Zack said, what a lab experiment can show is an underlying mechanism – not necessarily all the nuances it manifests in reality with, particularly when we know as little as we do about the decision to migrate in practice, and what activates it.

There was a throwaway comment in Justin Sandefur’s education presentation that I found amazing in the opposite direction – he mentioned that all the various education providers he was investigating had completely different practices when it came to managing their teachers. They’re all trying to optimise something (in this case the effort/impact of their teachers, subject to cost), but they’ve settled on totally different ways of doing it. Now it’s possible that they’re all optimising cleanly with totally different technologies, but it’s got to be equally plausible that noise just drowns out the last bits of signal. Getting that last 10% of effort might not matter that much as long as you’ve got the 90 in the absence of the kind of cutthroat competition that kills everything but the absolute best.

I’m going to torture this back around to the final panel – policy is, in many ways, not a process of optimisation subject to evidence. It’s a process of occasionally making incremental improvements over the next cab on the rank. That doesn’t mean that research shouldn’t be about constantly looking for margins of improvement. It just means that which battles are available to fight are often a small subset of the battles that matter; and that the costs of getting things perfect (personally and globally) might be prohibitive, or outweigh the gains available; and that the most useful metric for success is getting better, not getting ‘best’.

Now, if you’ll excuse me, I’m going to sleep for a week.

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Bring your whole toolbox, and kill your priors

I’m a DFID economist, working out of a public policy school, so Rachel Glennerster’s superb keynote presentation was like catnip to me. She talked about turning research into policy impact, a production function of sorts that remains something of a black box, despite being the presumed intention of all social science (as Rachel asked – if we’re not trying to change things, then why the hell are we here?).

There aren’t many economists better placed to talk about this: her research pedigree is well-established, but she’s done time at HMT, the IMF and now DFID; her presentation well-reflected her experience. A lot of what she discussed focused on those margins of communication and engagement that don’t have a very direct return on the research incentives of an academic economist – things like repetition of the message (you don’t change minds with a single presentation); good use of descriptive data; focus on the broader literature and not just one’s own paper; and engaging in the language of policy rather than academia. She located her advice in a behavioural theory of research uptake by policy makers – something like quasi-hyperbolic discounting, with up front costs looming very much higher than substantial long-run benefits. More subtly, she was also appealing to the intrinsic motivation of researchers: much of the implied gain to better engagement from researchers was about using evidence to make the world better, at least in the dimension your research covers. (She did point out the research returns to gaining the trust of a policy partner, too).

Coming from a policy background, I loved Rachel’s suggestions. My inner geek rejoices when a presenter at DFID spends 15 slides on identification, but I know they’ve lost the room before they get to their results; and my experience is that good descriptives and a strong story often carry more weight than a poorly explained or contextualised causal estimate. If researchers listen to her, I’m pretty confident policy makers will listen more to researchers.

But in discussion with some of the people who commission research for DFID, they’ve surprisingly often pushed back at the idea that academics should be the people fighting for policy change. The skills required to have great policy impact and to be a great researcher don’t often overlap (though they sometimes do – as with Rachel). So perhaps this is a conversation crying out for an interpreter? More specialisation might not be the answer, but surely that job of translating good research into the language of politics and policy is or should be the central job of good think tanks. In any case, I am very much in favour of more direct contact between researchers and policy makers. It doesn’t just improve research uptake, but also the questions we choose to ask.

On that note, before I started my career break from DFID, I spent a lot of time discussing what the right questions were if we wanted to investigate what is holding back job creation in productive activities in Africa, and in the afternoon, Francis Teal presented his take on it. It was a fantastic presentation, not least because he started it by explaining that the results he would present completely contradicted previous research he did. It smashed my priors, too: I went in expecting him to tell us there was a bargaining/rent sharing explanation for the high wages paid by large firms in Africa, but the story turns out to be much more complex, and at root one about the scarcity, and marginal return, of capital. I can’t do justice to the research here, partly because I will be digesting it for some time, but anyone interested in the topic should read it.

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Optimists, pessimists and speeches disguised as questions

Academic conferences are strange events: a gathering of intelligent and well-informed people, each of whom is either engaged in or expecting to be engaged in serious research pushing the frontiers of human knowledge, who struggle to ask questions in fewer than 200 words.

This is my first time at the CSAE conference, though I’ve been to many others over my lifetime (quite how long that lifetime has been was brought into sharp focus when a bullet discussing ‘a long history of research’ discussed a paper that was breaking news when I was studying my undergrad). In some ways, it’s much like the others – lots of very smart people, lots of debate in the margins, Matt’s presentation uniting Walter White, Taylor Swift and several trillion bank transactions. But what struck me most was how varied the methods, interests and worldviews on show were. In particular, I was thinking about how profoundly optimistic some of the presentations left me, and how pessimistic others felt.

In the morning, Matt Collin chaired a session loosely focused on trade, and featuring an incredibly striking result presented by Habtamu Fuje: Ethiopia’s investments in market integration (notably infrastructure) have led to an incredible reduction in the impact of drought on crop prices and child malnutrition. I agree with Matt that the paper seems to undersell what a fantastic result this is. Lant Pritchett would describe it as a massive win for Team Development – a vindication of the idea that doing sensible economic policy, planned for the long term underpins a huge array of additional development gains. The returns won’t be the same everywhere (they depend in part on the effects of drought being spatially heterogeneous – which makes it possible to trade your way out trouble), but for those of us who believe that there is a lot about development that isn’t rocket science and just needs to be implemented effectively, it’s hard to think of a more upbeat start to the day.

Similarly, I found Ketki Sheth’s results from her lab-in-the-field work in Ethiopia a win for my inner Bobby McFerrin. She found pretty strong evidence that discrimination ‘from below’ (i.e. female managers being undermined by their workers) was primarily driven by beliefs about their ability. Investing in a signal that demonstrates their competence updates behaviour to compensate for the initial discrimination. The result reminded me of Chris Woodruff’s experiment in Bangladesh with female garment factory managers, which demonstrated a similar mechanism, if I recall correctly.

Probably the most interesting paper I saw today, though, left me feeling pretty pessimistic. That was the work Pamela Jakiela presented. She looks at ‘gendered language’, that is, languages that have a structural disjunction between masculine and feminine, and finds a strong negative correlation with female outcomes. Why does this leave me down? Well, they are looking at the grammatical structure of the language, rather than usage; so while usage can change quite quickly (as for example with the creation of new pronouns in English), the deep grammatical structure seems far more fixed – think about how the grammar in Chaucer or Shakespeare is intelligible to a reader today, even though the words and usage is so different. So is the implication ‘have a different history’? That was my first take, but after speaking to Pamela later in the conference, she pointed out that there are examples of languages that made conscious or unconscious but widespread changes to their grammatical structure. So this isn’t destiny – it’s something that can change over time. Not an intervention that’s going to show results in a year like a cash transfer, but something much deeper that will correspondingly take longer.

This summary doesn’t come close to doing justice to the first day – I haven’t said a thing about Benno Ndulu teasing Jonathan Ostry about the IMF’s new interest in inequality (products of a programme with DFID), but if you want a more complete blow-by-blow, I suggest the #OxCSAE2018 tag on twitter. David Evans has already summarised about 20 papers. Seriously – how does he do it?

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Links round-up

Hi all,

These links start with deaths a disturbing amount these days. I must be getting old. I had thought Simspons characters don’t die, but apparently it’s quite common. Still, Stephen Hawking probably had a bigger impact on the world than Bleeding Gums Murphy, befitting a man who apparently said ‘my goal is simple: a complete understanding of the universe, what it is and why it is at all’. Imagine being a supervisor reading that in a research proposal. I’m not going to pretend to have read A Brief History of Time, though like everyone else I’ve written the odd note ripping off its iconic title. You can get flavour of his gift for communicating complex ideas simply in this excerpt, though.

  1. Speaking of communicating complex ideas simply, there are some gems in this Tyler Cowen interview with Chris Blattman. I particularly liked this: “I usually think of the incentives as aligned for peace, so war is the puzzle to be explained”, but he also picks out the aspects of conflict that economists tend to understate. In particular, he mentions our failure to really get to grips with the psychic costs and impacts of war and how much about conflict comes from people making mistakes (more generally, despite the influence of behavioural economists, mistakes and their implications for organisational forms, regulations and individual economic interactions are still under-studied). The interview goes through lulls when Tyler shoehorns in all sorts of tangential detritus (designed to showcase how clever he is, rather than how clever his interviewee is?), but it’s worth reading. Related: Blattman savages community-driven development in this twitter thread.
  2. What’s 22 trillion digits long and still getting longer? Fascinating piece about pi by Oliver Roeder, not least this: “A value of π to 40 digits would be more than enough to compute the circumference of the Milky Way galaxy to an error less than the size of a proton”. It also makes mention of Ramanujan, one of the most amazing people I have ever read about.
  3. Two papers on migrants and education. The first, by Michela Carlana and co-authors, finds that simple aspiration-raising interventions can have a substantial effect on performance;  the second that large influxes of refugees does not compromise native children’s educational outcomes, rather improving them.
  4. Planet Money make a point that was missing in most of the hand-wringing I read about Trump tariffs, specifically that the formal justification used for the tariff is ‘US national security’. This takes advantage of a WTO loophole for the establishment of tariffs, and may result in very specific form of tit-for-tat that could fundamentally undermine the WTO’s institutional effectiveness (transcript).
  5. In news that will not exactly stun people who have transacted official business in much of South Asia, it turns out who you are matters for your outcomes. But interestingly, the mechanism may not be discrimination so much as an enhanced ability to pick ‘better’ economic partners when they’re from your own group – which might be an information or an enforcement effect, I would imagine.
  6. This map of Africa made the social media rounds this week, giving the etymology of every country’s name. But before we exoticise the ‘Land of the Milking Nomads’ too much, let’s not forget that England means ‘Land of the Angles’ and Italy probably means ‘Land of the Young Cattle’.

Have a great weekend, everyone!

R

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Links round-up

Hi all,

This week’s post is pretty much getting the last bit of me before I sleep for 48 hours to recover from the end of term. I’m just studying and I find it exhausting: I have no idea how the various lecturers manage to teach multiple classes, help their various charges negotiate incipient academic life and actually do their own research. But I can only sleep for a while: next Sunday is the start of the CSAE Conference. It’s going to be awesome, not only because of the Aid Thoughts reunion happening in the margins (and associated hangovers), but also for the incredible line-up. So much is happening in parallel, after the failure of my attempts to clone myself, I’m going to be glued to the internet to wait for David Evans’ inevitable (and inevitably brilliant) summary of all I missed. A side note: I’ll be blogging during the conference, hopefully both for CSAE and Aid Thoughts, so please do feel free to send me comments, rants or insights that you don’t have time to write up yourself: I promise to pass only the very best off as my own.

  1. It was International Women’s Day yesterday so a few gender links to get us started, some incredibly depressing and some … well only slightly less so. Let’s start with ‘incredibly depressing’: Seema Jayachandran on India’s 21 million unwanted girls. It’s superb, looking at the sex ratio of last-born children in India and noting the behavioural implication – that parents keep having children until they have a boy. The trouble with this is that it means that even if there isn’t any discrimination in investment in children by sex, girls are born into larger families and on average receive fewer resources per head than boys. Also troubling: CGD ran pieces looking at the gender gap in US non-profits, and how it can be resolved. And more hopefully, Markus Goldstein on a very cool intervention in Norway that seems to improve gender norms among men, a key constraint to women’s economic empowerment. Lastly, and most trivially – the gender gap in IMDB movie ratings.
  2. I’m quite pessimistic about our ability to resolve the man-made crises of the environment through behaviour change: bad behaviours are too entrenched, there are too many free-rider problems and too many of the really big culprits are organisations who face very strong incentives not to behave better in a world where aggressive regulation is pretty frowned-upon. A technological solution that is incentive-compatible, though? There must be huge optimism bias here, but MIT reckon they can get nuclear fusion to work within 15 years.
  3. This link both reinforces and subverts some of what I said above: Bloomberg on how US Steel was the biggest culprit in its own descent into irrelevance. Apparently, powerful individuals in the industry resisted change, and the organisational incentives to get things right just weren’t strong enough to overcome that, leading us to where we are today: the industry begging to be protected so it can continue comfortably without moving with the times.
  4. A really fascinating piece of work by Paola Giuliano and Nathan Nunn using climatic variation to test the proposition than societies in places with greater environmental instability are more likely to adopt new cultural practices – getting empirical estimates for an effect that evolutionary anthropologists have argued for a while.
  5. All of Tim Harford’s five guidelines for thinking about statistics are unsurprisingly brilliant, but the first one is really important. He advises that you really think about your gut response to seeing a number  – really owning the way your priors and associated beliefs about the world are pushing you is necessary before you can be dispassionate about evidence.
  6. Want to improve productivity? Make it less miserable to work. Sounds obvious, but apparently not everyone has clocked it. Also, ignore your phone. Which is easier said than done. My solution used to be to go out and celebrate a birthday. It would be days before I had a working phone again. Apparently, it works less well as the number of birthdays celebrated increases.
  7. As someone who occasionally struggles with anxiety, I absolutely loved this piece by Kevin Love (yes, Kevin Love, the basketball player with the three stroke and outlet passes). He talks openly about his recent panic attack during a game and the emotional turmoil that led to it, and more generally about attitudes to mental health in competitive settings (academics, take note). Amazing.

Have a great weekend, everyone!

R

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Links round-up

Hi all,

Greetings from Narnia! My perpetual pessimism about an endless winter has finally been borne out. I’m writing this e-mail on the bus between Oxford and London, looking out at a landscape almost entirely white, punctuated by the odd treetop and broken down car (please, take great care on these roads!). We just drove past a frozen lake. Seriously: this isn’t cool. Somebody, please kill that goddam groundhog.

  1. About a year ago, I gave a presentation discussing the likely implications of the Trump regime on global trade, and said that there was much more noise than signal when trying to actually forecast his economic policy, concluding that a serious trade war wasn’t imminent. Well, it sure seems to be now: the US has imposed substantial tariffs on steel and aluminium, and the EU has already begun making retaliatory threats. This could be the start of something very bad, but it also could also be something of a prelude to not very much. The last time the US implemented similar tariffs, they were abandoned after nine months when it became clear that the cost of retaliation and the benefits gained were insubstantial.
  2. I love food, a fact that can be easily observed by either becoming my friend or looking at a time-lapse of my waist over the last five years; crap research that scaremongers about eating or tries to turn the enjoyment of food into some sort of disorder really bothers me, especially when it turns out that it’s had the life p-hacked out of it. Stephanie Lee uncovers a litany of malpractice in the research of a Cornell academic who has done a lot of this kind of work. It prompted an uncharacteristically forgiving response from Andrew Gelman which is well worth reading. Side note: this piece of bacon-assassination is completely cack-handed, too: bacon is killing us, really? When, to increase my chances of getting bowel cancer from 5% to 6%, I’d need to eat two rashers a day for the rest of my life? That sound you just heard was me laughing into my Gino’s bacon sarnie.
  3. Tim Harford jumps on the McKenzie, Bloom et al. bandwagon, reporting on the paper I linked to last week, and investigating why so many good practices firms use don’t seem to be picked up and emulated by other ones. I’ve been thinking about this too, and it strikes me that given how much noise there is in observing firm performance, it’s unlikely that even successful firms have a full understanding of why they’re successful, let alone their competitors. In such a context, any imperfection of competition allows for the possibility of good practices going unremarked and uncopied.
  4. David Robalino, one of the World Bank’s jobs gurus, on the perils of measuring the ‘cost per job’, something DFID have had to grapple with extensively too. He uses general equilibrium modelling to come up with some very high estimates that nevertheless ring true. Well worth reading.
  5. Get smarter in three minutes, Chris Woodruff edition: Chris distils a serious amount of accumulated knowledge into a pithy summary of what makes firms improve, coming to a conclusion that economists should have tattooed on their forearms for ease of reference: competition matters. In similar vein: everyone needs to be quiet for five minutes and read Francis Teal.
  6. This week in “um… I’m going to need about three years to think about this… then maybe I can get back to you”: the conditions in which mice were conceived seem to affect their future characteristics, through an identifiable genetic mechanism. So many jokes to choose from (what the hell were Donald Trump’s parents thinking about? Were mine reading the FT?) but my thoughts are best summed up thus.
  7. Lastly, I never thought I’d say this, but screw FiveThirtyEight readers. How dare they rank the greatest song in movie history a measly 71st out of 81? Clearly, they are much more a muppet than a man (or a very manly muppet). Also, apropos of absolutely nothing, LeBron James did this yesterday. I repeat: my thoughts.

Have a great weekend, everyone!

R

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Africa in the 21st century: The more things change the more they stay the same?

Francis Teal (Editor, Journal of African Economies)

During the course of the latter part of the twentieth century Africa went through a cycle of great optimism, at the time of independence from the late 1950s to the mid-1960s, to great pessimism in the 1980s and 1990s – the African Tragedy – to equally great optimism at the turn of this century – an African Renaissance – to where we are today with (some) guarded optimism. Indeed, the Economist in April 2016 ran an article on Business in Africa entitled ‘1.2 billion opportunities’.

A special issue of the Journal of African Economies asks if things really have changed or are they much the same. In one dimension there has certainly been major change. Africa’s GDP per capita has expanded rapidly in the last 20 years. While there is much scepticism of the numbers there is such clear evidence in complementary data sources that there can be little doubt of the increase. The problem on which the papers focus is that while this change is clear, underneath, whether anything fundamentally has changed is much less so. Africa remains a continent in which employment in small-scale low productivity enterprises dominates and in which the employment share in manufacturing remains small. The recent improvement in growth rates has depended overwhelmingly on rising commodity prices for Africa’s exports and abnormally low global interest rates, and the possibility is real that with any decline in commodity prices and/or rising interest rates incomes will fall. The argument advanced by Dani Rodrik in the paper that opens the special issue is that Africa’s very limited industrialisation is a crucial barrier to high sustained growth rates.

Sustained growth would critically depend on reasonably high levels of labour productivity. But just how does labour productivity in Africa compare with elsewhere? In agriculture, where most of the poorest Africans still work, the highest productivity country (the US) has labour productivity more than 80 times that of the country with the lowest labour productivity (Ethiopia) – see Table 2 in the paper by Diao et al. If things have improved they clearly still have some way to go. And, it is these very low productivity levels that prevail across all sectors.

How to get to sustained growth and poverty reduction is a common theme across the papers. Two approaches are adopted. One looks at how growth, inequality, and poverty link. The second looks to changes in the structure of the economy. It turns out that these two apparently very different approaches might well be linked. It would appear that there should be a relatively simple mechanical link between growth and poverty: growth is good for poverty reduction, but then inequality matters – high inequality is bad for poverty reduction. Well, to adapt a well-known phrase, you might very well think that, but you would be, at best, only partially right. As two papers in the special issue show, very different results from this proposed identity can arise in different periods and across different parts of the developing world, not to mention differences due to which econometric technique is used. The evidence points to income growth in Africa being less effective at reducing poverty than it is in other parts of the developing world. Further, the relationship between inequality and poverty appears much weaker in Africa than it is elsewhere.

Why might that be? Well, the papers that focus on structure suggest an answer. How countries grow matters for how both growth and inequality impact on poverty. When growth takes the form of high income from commodities such as oil the income effect on poverty is limited. When it takes the form of improvements in agricultural incomes the impacts of income growth on poverty reduction are large. We need to know not simply that GDP is rising, we need to know whose incomes are rising. The weak link between inequality and poverty reduction may reflect that inequality has changed relatively little or it may reflect that the measure of inequality used does not do a good job of capturing the changes of income of the poorest who feature in the poverty measure. The implication is that Africa is indeed different and in ways we wish to see changed. Finding out what is behind this difference and how to magnify any effect of growth on poverty reduction is the question that the results in these papers pose. The papers themselves provide an up-to-date guide on what is known on these issues and should challenge researchers to find answers to this and many other related questions.

The Journal of African Economies Special Issue (Volume 27, Issue 1, January 2018) is now available online

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Links round-up

Hi all,

Can someone please explain to me why, every time it gets even slightly warm for a few days, we get an arctic blast of sub-zero temperatures, like being slapped in the face by an angry snowman? Waiting for spring to actually happen makes me feel like Silvio: just when I thought I was out, they pull me back in. I’m so desperate for warmth and sunshine that I’ve started watching the West Indian domestic cricket, just to be reminded what a hot country looks like. One compensation: this amazing video of Shiv Chanderpaul (still scoring runs, aged three-hundred and twenty-four) running out his son. I felt my age when I realised I identify with Chanderpaul Senior, rather than Junior.

  1. Remember in Moneyball, where the woman who inspired the Sabermetrics movement that transformed baseball was being showered with praise? Of course you don’t, because it didn’t feature at all. Sports and statistics are two stereotypically ‘male’ obsessions, but Sherri Nichols, an outsider in each had an important (and hugely under-celebrated) influence on both. A very long read, but worth your time. “I know how hard it is to be in a field where there’s nobody like you… It’s a constant subtle message that maybe you don’t belong, that when you screw up maybe it’s more than just a mistake.”
  2. More on gender: There’s a school of thought that increasing the prominence of female role models in positions of decision making power will spur greater female participation in politics. Here’s another theory of change: put a troglodyte with extremely questionable sexual politics in the top job, and they’ll be so pissed off they flood into the system to force change. Danielle Kurtzleben makes the case. Also: one of the bigger problems with owning a business, if you’re a woman, seems to be that people just don’t want to buy from you.
  3. That sound you hear is the heavenly chorus that announces a new paper co-authored by Nick Bloom. This time, David McKenzie reports on the ten-year follow up to their seminal experiment on management practices in Indian firms, which provided causal evidence that management matters for firm productivity. Incredibly, gains persist ten years later. Even more excitingly, firms that had both plants that received the management support and plants that didn’t demonstrate convergence: that is, the plants that didn’t get the support improved towards the level of the plants that did, demonstrating within-firm spillovers. Equally interesting: the firms that didn’t get any support at all do not converge. Competition is still not quite doing its job. Related: you know what else increases productivity (and exports)? Migration.
  4. Michael Young was a Labour grandee, an architect of the 1945 election manifesto, and co-founded the Open University. He also wrote a book predicting that meritocracy would eventually create barriers to social mobility and cause enormous unrest, and a revolution of sorts, led by the excluded. The Economist reckons this is part of the Brexit story.
  5. Jean Dreze does seem like an amazing man. This tribute, by a fellow Indian academic, is very moving.
  6. I’m a happiness sceptic. Tim Harford seems to be as well. This strengthens my priors substantially…
  7. Lastly, The Ringer are running a Jordan-LeBron week. The basketball side of this question will never be settled (Jordan was unbeatable when he had a very good supporting cast, but before Pippen joined him, he never got out of the first round of the playoffs; LeBron never made teams invincible, but he could pick four dudes from Chicken Cottage on the corner and get to the finals). But this article really gets at why I have far more affection for LeBron than Jordan: he’s a far more inspiring character when you take the ball out of his hands.

Have a great weekend, everyone!

R

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