Here is Jody Lanard and Peter M. Sandman on the risks of an Ebola pandemic in the developing world:
The two of us are far less worried about sparks landing in Chicago or London than in Mumbai or Karachi.
It is by Eva Vivalt and is called “How Much Can We Generalize from Impact Evaluations?” (pdf). The abstract is here:
Impact evaluations aim to predict the future, but they are rooted in particular contexts and results may not generalize across settings. I founded an organization to systematically collect and synthesize impact evaluations results ona wide variety of interventions in development. these data allow me to answer this and other questions across a wide variety of interventions. I examine whether results predict each other whether variance in results can be explained by program characteristics, such as who is implementing them, where they are being implemented, the scale of the program, and what methods are used. I find that when regressing an estimate on the hierarchical Bayesian meta-analysis result formed from all other studies on the same intervention-outcome combination, the result is significant with a coefficient of 0.6-0.7, though the R-squared is very low. The program implementer is the main source of heterogeneity in results, with government-implemented programs faring worse than and being poorly predicted by the smaller studies typically implemented by academic/NGO research teams, even controlling for sample size. I then turn to examine specification searching and publication bias, issues which could affect generalizability and are also important for research credibility. I demonstrate that these biases are quite small; nevertheless, to address them, I discuss a mathematical correction that could be applied before showing that randomized control trials (RCTs) are less prone to this type of bias and exploiting them as a robustness check.
That is the new Foreign Affairs piece by Andrei Shleifer and Daniel Treisman, and they argue that matters have gone strikingly well and are relatively normal. Here is one excerpt:
Newspapers overflowed with accounts of soaring mortality amid the stress of transition. On average, however, life expectancy rose from 69 years in 1990 to 73 years in 2012. The speed of improvement was two thirds faster than in the communist 1980s. Russia’s life expectancy today, at 70.5, is higher than it has ever been. Infant mortality, already low, fell faster in percentage terms than in any other world region.
Eastern Europe is infamous for unhealthy binge drinking. However, average alcohol consumption fell between 1990 and 2010 from 7.9 to 7.6 liters of pure alcohol a year per resident aged over 14. There were exceptions — drinking rose in Russia and the Baltic states but even in Russia recorded consumption in 2010, 11.1 liters, was lower than that in Germany, France, Ireland, or Austria. (Of course, more drinking might escape the statisticians in the Slavic region.) Smoking among adult males was high – 42 percent on average but about the same as in Asia. In short almost all statistics suggest a dramatic improvement in the quality of life.
In short, almost all statistics suggest a dramatic improvement in the quality since 1989 for citizens of the average postcommunist country — an improvement that rivals and often exceeds those in other parts of the world.
You will note that the published version in Foreign Affairs has slightly different wording and organization.
To develop an intuition for our main result, note that the equilibrium private saving behavior must be resistant to rare mutants.
That is from the new Robson and Szentes AER paper, “Biology and Social Discounting,” which argues that the nature of sexual reproduction causes private discount rates to rise above social ones.
Further evidence of a dramatic slowdown in patent litigation activity in the United States is provided today in data published by Unified Patents, the entity whose business is based on helping SMEs fight frivolous patent suits. According to the research, which covers the third quarter of this year (June to September), there was a 23% drop in the number of suits filed compared to the second quarter, and a 27% year-on-year reduction.
The findings come just weeks after data released by Lex Machina showed that there had been a 40% fall in patent suits in September 2014 as compared to the same month in the previous year. Commenting to IAM on the reasons for the decline, Lex Machina founder Professor Mark Lemley claimed that much of it could be attributed to the Supreme Court’s Alice v CLS decision. The Alice judgment was handed down towards the end of June.
Alice has made a difference as well as the cheaper post-grant challenge procedure in the AIA. Once the first software patents make it through, however, there will be an uptick as people learn the new system. Still this is good news especially for software patents but we have a way to go on the larger issue of IP, including copyright.
Here is the updated “Tabarrok curve“.
Paul Krugman argues the contrary here. But let’s say there was a supply slowdown starting in 1999 or so, as reflected in wage and jobs data, masked a bit by the real estate bubble of 2004-2006 and with some of the productivity figures inflated for domestic purposes due to outsourcing.
If there is less produced, there are eventually perceived negative wealth effects. What happens to demand? It goes down, in this case with a lag because of credit. Yes, it is a big mistake to assume Say’s Law always holds but it is an even bigger mistake to think it never holds. Supply slowdowns are bad for demand, and they likely are bad for credit creation too, which hurts demand further yet.
There is no contradiction in a model where both aggregate demand and aggregate supply curves shift in unfavorable directions! And in the medium run, each of these shifts pushes the other curve around too.
Let’s not forget that economies have real wage and price stickiness in addition to nominal stickiness. That is another channel through which negative supply shocks can hurt aggregate demand and throw people out of work.
Krugman is worried about policy implications:
If labor force growth and productivity growth are falling, the indicated response is (a) see if there are ways to increase efficiency and (b) if there aren’t, live within your reduced means. A growth slowdown from the supply side is, roughly speaking, a reason to look favorably on structural reform and austerity.
But if we have a persistent shortfall in demand, what we need is measures to boost spending — higher inflation, maybe sustained spending on public works (and less concern about debt because interest rates will be low for a long time).
It’s not either/or. Circa 2008-2009, we should have had a higher inflation or ngdp target. We could do structural reform too, whatever you might think that means, obviously opinions will differ. We could build productive infrastructure, boosting both supply and demand, and with little risk of default on the debt. And yes, we might wish to cut some other government expenditures in the process (farm subsidies anyone?), with looser money to pick up the slack. What we shouldn’t do is all that Keynesian ditch digging. Even if you agree with the argument for it (and I don’t), it so hurts the reputation of legitimate government investment that we shouldn’t be going near it. There are many, many other better things to do, including giving our government a reputation for careful project selection looking forward.
Simple textbook economics indicates that the AD-AS distinction makes the most sense in the short run. Of course hysteresis is a mechanism by which low AD can over time translate into low AS as well, but the causation runs both ways, don’t forget that.
That is a new suggestion made by Alwyn Young in the latest American Economic Review.
The cost disease argument suggests that some services do not augment their productivity very readily (e.g., the barber), and furthermore the demand for many services is income elastic and price inelastic, so with economic growth services take up a rising percentage of gdp over time. The relative cost of producing service output rises. And since services are more sluggish in productivity, and being weighted more heavily in output, we can expect economy-wide productivity rates to decline.
Young’s argument is to draw out the implications of the heterogeneity of workers. Let’s say that a worker’s skill in one sector is only loosely correlated with his skill in some other sector. That will mean when individual workers have comparative advantage in a sector, they also are likely to have absolute advantage in that same sector. The typist really is a better typist than the lawyer.
Now let’s go back to the services sector. It expands over time and sucks in labor by offering higher relative wages. That draws in more individuals with low comparative and also low absolute advantage in that sector. More concretely, the system ends up pulling in a lot of losers into law and medicine, while we are left with only the very best factory workers still on the job. Or think of all those mediocrities who flooded into punk rock in the early 1980s. It’s a bit like a Peter Principle.
The services sector will appear less efficient, but what is called “underlying true levels of productivity growth” — taking into account the average efficacies of the workers present in the two sectors — might not be changing much at all. In other words, a quite different mechanism can generate the same observation as Baumol’s cost disease.
The paper presents plenty of industry-level evidence that this declining efficacy of service workers is indeed the case.
The theme of a study by Melanie Manion is that China’s approach to fighting corruption hearkens back to Maoist campaigns of the 1950s, with the same undesirable effects: campaigns are too frequent, do not last long enough to enlist public confidence, and undermine the growth of long-term institutions of surveillance and enforcement…
Most secessionist movements want independence. But a small group in Sardinia, the beautiful island off Italy’s coast has another idea for secession.
Angered by a system they say has squandered economic potential and disenfranchised the ordinary citizen, they have had enough. They want Rome to sell their island to the Swiss.
“People laugh when we say we should go to become part of Switzerland. That’s to be expected,” said Andrea Caruso, co-founder of the Canton Marittimo (Maritime Canton) movement.
While many have dismissed the proposal as a joke, its supporters insist they are serious. “The madness does not lie in putting forward this kind of suggestion,” said Caruso. “The madness lies in how things are now.”
The Sardinians are not mad. As with Charter Cities the idea is that if you can’t move to good rules then have the good rules move to you. Charter city proponents, however, are focused on relatively uninhabited areas to avoid political problems but the Sardinians are inviting new rules and rulers. In the United States, firms can choose which state to incorporate in and thus which of 50 packages of laws will govern the relations between their shareholders and managers. Why not let cities, states and regions adopt wholesale a package of laws that will govern them? Competitive federalism on a world scale.
Here is a new paper by Aaron A. Duke and Laurent Bègue:
The hypothetical moral dilemma known as the trolley problem has become a methodological cornerstone in the psychological study of moral reasoning and yet, there remains considerable debate as to the meaning of utilitarian responding in these scenarios. It is unclear whether utilitarian responding results primarily from increased deliberative reasoning capacity or from decreased aversion to harming others. In order to clarify this question, we conducted two field studies to examine the effects of alcohol intoxication on utilitarian responding. Alcohol holds promise in clarifying the above debate because it impairs both social cognition (i.e., empathy) and higher-order executive functioning. Hence, the direction of the association between alcohol and utilitarian vs. non-utilitarian responding should inform the relative importance of both deliberative and social processing systems in influencing utilitarian preference. In two field studies with a combined sample of 103 men and women recruited at two bars in Grenoble, France, participants were presented with a moral dilemma assessing their willingness to sacrifice one life to save five others. Participants’ blood alcohol concentrations were found to positively correlate with utilitarian preferences [emphasis added] (r = .31, p < .001) suggesting a stronger role for impaired social cognition than intact deliberative reasoning in predicting utilitarian responses in the trolley dilemma. Implications for Greene’s dual-process model of moral reasoning are discussed.
1. Vijayawada, India
2. Visakhapatnam, India
3. Chennai, India
4. Hyderabad, India
5. Secunderabad, India
6. Pune, India
7. Teheran, Iran
8. Bangalore, India
9. Kolkata, India
10. Dhaka, Bangladesh
For absolute numbers, Hyderabad is #1.
That is all from the new Brookings report, The Geography of Foreign Students in U.S. Higher Education, by Neil G. Ruiz.
I’ve long wanted to read a paper on this topic and I just ran across a 2011 essay in the American Sociological Review, by Delhey, Newton, and Welzel. Most papers on trust work with general questionnaire responses, but those queries often conflate whether you trust the people you know, or the people who surround you, with whether you trust your government and other larger social institutions. You can imagine for instance that a country could have strong interpersonal trust at the micro level but also lots of cynicism about its establishment power structures.
The innovation of this paper is to compare micro trust measures with macro trust measures and see where there are big differences. Not surprisingly, the most trusting coutries, such as Sweden, Norway, and Switzerland, score high on both the micro and macro measures of trust.
The countries where asking the macro question makes the biggest difference in overall trust rank are South Korea (falls 18 places when macro considerations are considered explicitly), Thailand (falls 17 places), and China and Romania. Argentina, Poland, and Slovenia gain the most in their relative trust rankings when the radius of trust is brought into play. In general, when we account explicitly for the macro governance dimension, Asian countries decline in the trust rankings and Latin countries go up in the trust rankings by some modest amount.
1. Economics in Hollywood romantic comedies, a history (fun, some interesting points too).
3. Update on Catalonian independence — it seems they will be holding a symbolic, non-binding referendum on November 9th, organized by volunteers.
4. John Gray on H.P. Lovecraft. The horror.