The CSAE Blog

Hi all,

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 until April.

1. 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 will forever 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 (he 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.)
2. 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 was in Zimbabwean dollars. And Branko Milanovic discusses the extent and effect of inequality in Chile, in light of the recent unrest.
3. 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 new findings.
4. 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.
5. People are the worst, part 12,393,393,191 of a continuing series: apparently, fact 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.
6. 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?
7. 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!

R

Hi all,

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. Coyote!

1. 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 RePec,  a 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 unbelievable 100-paper 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.
2. 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.
3. 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 drunken ‘banter’.
4. 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 pre-mortems.
5. 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 inequalities.
6. 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?
7. 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 Wars yet?

Have a great weekend, everyone!

R

Hi all,

I write this sitting in the kitchen sink. Actually, that’s not remotely true, I actually write this sitting on the bus to Oxford at ridiculously early o’clock, though the odds are I’ll actually wind up sending this e-mail out sometime this afternoon. These rare occasions I motivate myself to get up extremely early to travel to work remind me how lucky I am. There’s an entirely different economy moving in the early hours of the morning, travelling from deepest north London (where I live) to the bus terminus in Victoria. More people on the buses were coming home from work than going to it, or for the person next to me on the underground, going between jobs. Never let me complain about my workload again.

1. It’s not going to surprise anyone what I lead off with today. The Banerjee-Duflo-Kremer Nobel is a massive win for development economics. I first studied development economics in the mid-1990s when I was a young economics-obsessed teenager at school (I’m older, but not much different). Back then it was considered an esoteric choice; it’s not anymore. This Nobel and the one for Angus Deaton a few years ago has put understanding, measuring and impacting on poverty and human immiseration (as well as progress out of both) at the heart of what economics is about, not an esoteric side-issue. The Nobel’s formal justification is worth reading, but I particularly liked the pieces on Marginal Revolution about Banerjee (“He was always willing to help those less advanced [in his econ class at Harvard]. Furthermore, that was literally everyone else.”), and Tabarrok’s discussion of Michael Kremer’s work, as well as this Planet Money conversation with him (transcript). Someone said to me yesterday that the idea that doing RCTs somehow limits one’s vision of economics is most elegantly disproven by reading Michael’s CV. My colleague Tom sent me a nice explainer of his O-Ring Theory, which made me dig out the original paper, here. My favourite coverage on Esther Duflo, though, was her own comments on the award: what this (should) mean for women in a male-dominated field, and explicitly recognising the hundreds of researchers they have worked with or inspired.
2. On that note – the Royal Economic Society is doing a campaign to increase diversity in economics in the UK, which still showcases disproportionately few female and ethnic minority voices. This piece by Arun Advani, Rachel Griffith and Sarah Smith points out that this isn’t simply an equity consideration (though, of course, it would be fine if it was), since background does seem to affect the policy advice offered, which means that a monocultural discipline provides less diversity of thought and advice (hilariously, this means that economists aren’t disagreeing enough, which anyone who has been to an econ seminar since the dawn of time will be surprised by). More of the piece, though, focuses on the pipeline of potential economists: access to A-Level econ courses (where I first studied development) is incredibly uneven, and economists are apparently projecting an ‘unappealing’ image to young women, of ‘boring men in suits’. Though the Barney in me wants to defend the suit as an excellent sartorial choice, the bigger problem is boring. Economics isn’t boring, especially when you have dirty shoes.
3. So, boring men in suits doing equations – if this is still the dominant picture of what a great economist does, we’re doing something very very wrong. Great economists look at whatever they see in the world that they think we need to understand better. That can take you all sorts of places. If you’re Steven Levitt (John Bates Clark award winner), it might mean studying cheating in exams, or playing poker with Tim Harford. If you’re Robert Shiller, Nobel Laureate, it’s trying to understand narratives – stories with emotions, morals, world views – and what their role is in determining peoples’ expectations and decisions. I don’t know if either Levitt or Shiller wear suits (they are, admittedly both men), and I know there’s a lot of data work and coding going on under the hood, but hey – they never showed Indiana Jones dusting off thousands of pointless rocks, did they? Just cut to the Holy Grail.
4. Natalie Bau and Adrien Matray summarise their new paper in VoxDev, a very cool look at how foreign investment stimulates economic development, focusing in on its roll in reallocating capital towards the most productive firms.
5. This one definitely tends towards the geeky, but there is now a stata command to directly query the World Bank’s povcalnet data, using any poverty line you like – though I haven’t seen yet if this will also allow us to use the median income data. Somewhere, I can hear Nick Lea laughing – he worked out how to do this in Excel years ago.
6. I’m going to have to cut the links slightly short today as I’m teaching this morning and buried in Stata for the rest of the day (I’m not wearing a suit, though). But there is no way I could let you go without sharing these glorious images of Kim Jong Un on a white horse; what is it with oddball dictators and horses? Nothing will ever rival the Vladimir Putin barechested horse riding, though. It looked like an advert for a cologne called Machismo. And speaking of Machismo, here’s Zion Williamson, a man who would make Achilles quiver in fear, dunking your soul out of your body.

Have a great weekend, everyone!

R

Hi all,

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 is rewriting 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.

1. 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.
2. 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 Economics.
3. 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.
4. 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?’
5. 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.
6. 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.
7. 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 rendered this 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!

R

Hi all,

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.

1. 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 comments here; and this op-ed in the NYT focuses on the experience of black women specifically. Surely we can do better than this.
2. 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 (partial) defence 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 question.
3. 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 more seriously.
4. 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.  
5. 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?
6. As my working calendar reveals, I am much more of an Arnie than an Elon; or rather an Arnie in the body of an Elon…
7. 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 30^th anniversary of his warm-up before a game against Bayern. What a genius.

Have a great weekend, everyone!

R

Hi all,

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…

1. 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 opportunities (transcript).
2. 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.
3. 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 implemented 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. 
4. Capitalism, 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 the way.
5. Sorry, 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.
6. Income inequality in the US (using the Gini coefficient) is now higher than at any point since data started tracking it.
7. 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 of him.   

Have a great weekend, everyone!

R

Hi all,

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 should.

1. 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 properly.
2. 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).
3. 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 the time.
4. 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.
5. 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 article for.  
6. This 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 data here.
7. 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!

R

Hi all,

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.

1. 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.
2. 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.
3. 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.
4. This is very cool: an experiment on adolescent girls’ empowerment in Sierra Leone was interrupted by the Ebola crisis, and the 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.
5. This is interesting, though I haven’t fully digested it: Philippe Aghion and co-authors propose 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.
6. 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.
7. 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!

R

Hi all,

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.   

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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!

R

Hi all,

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.

1. 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 days: the 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 doing anything?
2. 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 their friends.
3. 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.
4. 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.
5. 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).
6. 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…
7. 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!

R