Noah writes: Note the big jump and trend break when Abe took office.
Noah writes: Note the big jump and trend break when Abe took office.
This paper presents novel evidence on the role of credit scores in the dynamics of committed relationships. We document substantial positive assortative matching with respect to credit scores, even when controlling for other socioeconomic and demographic characteristics. As a result, individual-level differences in access to credit are largely preserved at the household level. Moreover, we find that the couples’ average level of and the match quality in credit scores, measured at the time of relationship formation, are highly predictive of subsequent separations. This result arises, in part, because initial credit scores and match quality predict subsequent credit usage and financial distress, which in turn are correlated with relationship dissolution. Credit scores and match quality appear predictive of subsequent separations even beyond these credit channels, suggesting that credit scores reveal an individual’s relationship skill and level of commitment. We present ancillary evidence supporting the interpretation of this skill as trustworthiness.
That is a new Fed working paper (pdf) by Jane Dokko, Geng Li, and Jessica Hayes.
Here is a pdf of his remarks, with useful graphs, excerpt:
So in recent quarters, the investment story has been about oil. But drilling cannot explain the broader trends over the past five years. Since 2010, most of the step down in investment growth was attributable to reduced growth in equipment investment, as shown in Figure 6. At the same time, intellectual property products investment has been accelerating and over the last four quarters it grew 7.3 percent, the fastest pace since 2005. In fact, stronger growth in intellectual property products investment has partially offset the slower growth in equipment investment over the past two years. Intellectual property products consists of about 45 percent research and development (R&D) investment, 45 percent software investment, and 10 percent artistic originals.
Yet if you look to Figure 8 on p.7, you can see that the overall trajectory for fixed business investment is not entirely positive, even worse if Figure 11 on p.10 (alas I cannot get them to reproduce in this post). The bottom line is this:
…today’s gross investment is 2.3 percentage points lower than its historical average…Investment net of depreciation as a share of GDP was already lower than its historical average going into the recession and today remains well below its historical average…
You will find many (appropriate) caveats in the study itself, most of all that investment in software may be different, although this can cut either way. Software has been improving rapidly, but it is also not very durable as business investments go.
Addendum: Paul Krugman comments.
You can already rate restaurants, hotels, movies, college classes, government agencies and bowel movements online.
So the most surprising thing about Peeple — basically Yelp, but for humans — may be the fact that no one has yet had the gall to launch something like it.
When the app does launch, probably in late November, you will be able to assign reviews and one- to five-star ratings to everyone you know: your exes, your co-workers, the old guy who lives next door. You can’t opt out — once someone puts your name in the Peeple system, it’s there unless you violate the site’s terms of service. And you can’t delete bad, inaccurate or biased reviews — that would defeat the whole purpose.
Imagine every interaction you’ve ever had suddenly open to the scrutiny of the Internet public.
That is the new piece by Veronique de Rugy, Ryan Daza, and Daniel Klein, the abstract is this:
From 2013 to the present in 2015, the Export-Import Bank has been widely and actively discussed, because its charter was expiring and because people then wrangled (and still wrangle) over its extension and possible recharter. Working from a list of the top 200 economics blogs, we examine the discourse on the Export-Import Bank. We find that classical liberal economists were very often highly vocal in opposition to the institution, but that left economists were mostly silent. The impetus of our investigation is to promote reflection on a question of political psychology: Why weren’t left economists more opposed and more vocal on the issue?
Jeremy Horpedahl asks a related question about defending Uber and Lyft. Both pieces are from the latest issue of EconJournal Watch.
One plausible estimate suggests this additional pollution has been killing 5 to 27 Americans each year, with that number worldwide reaching up to 404 as a maximum.
To put that number in context, the World Health Organization estimates that about seven million people die each year worldwide from air pollution. Even within the United States, early deaths from air pollution have been estimated to run about 200,000 a year, in comparison to which the losses from the Volkswagen scandal are a rounding error. For the American deaths, however, the culprits are often cars, trucks and cooking and heating emissions, so there is no single, evil, easily identified wrongdoer at fault. As Pogo recognized, often the real enemy is us.
Here are alternative estimates of the death from Volkswagen, published after my piece was set to run but the comparisons do not change fundamentally. From that same article here are two paragraphs of note:
Don Anair, deputy director of the vehicles program at the Union of Concerned Scientists, said the precise effect of the Volkswagen fraud would require intense and complex computation.
Still, he cautioned against taking the view that the Volkswagens have reversed the progress with pollution from automobiles. Since the standards went into effect from 2004 to 2009, he said, emissions of nitrogen oxides have been 90 percent lower. “It’s not like this is going to offset the majority of the benefits of these standards,” he said. “But there will be some impact, and we need to get a better handle on it.”
“Since the standards went into effect from 2004 to 2009, he said, emissions of nitrogen oxides have been 90 percent lower.” is a sentence which I fear will not receive much attention in the current debate.
Financial services accounted for a whopping 20 per cent of China’s economic growth in the second quarter of 2015, according to a recently released breakdown of GDP data by the Chinese National Bureau of Statistics.
Of course that is not a good sign for third quarter gdp, or fourth quarter gdp for that matter. The FT article is here.
Slate has an interesting interview with Leon Nayfakh speaking to John Pfaff, here is the critical excerpt from Pfaff:
What appears to happen during this time—the years I look at are 1994 to 2008, just based on the data that’s available—is that the probability that a district attorney files a felony charge against an arrestee goes from about 1 in 3, to 2 in 3. So over the course of the ’90s and 2000s, district attorneys just got much more aggressive in how they filed charges. Defendants who they would not have filed felony charges against before, they now are charging with felonies. I can’t tell you why they’re doing that. No one’s really got an answer to that yet. But it does seem that the number of felony cases filed shoots up very strongly, even as the number of arrests goes down.
You will note that district attorneys are relatively politically independent at this level. And this:
But just letting people out of prison—decarcerating drug offenders—will not reduce the prison population by as much as people think. If you released every person in prison on a drug charge today, our state prison population would drop from about 1.5 million to 1.2 million. So we’d still be the world’s largest incarcerating country; we’d still have an enormous prison population.
Keep in mind that some in prison on drug charges are actually violent offenders who did a plea bargain down to a drug charge.
The interview also offers evidence against alternative explanations of the boom in the prison population, such as putting the blame on longer sentences. Here is Pfaff’s home page and his related papers.
I will turn the mike over to Chris Blattman:
It’s a business plan competition for $50,000, and I think it’s a contender.
In 2011 the Nigerian government handed out 60 million dollars to about 1200 entrepreneurs, and three years later there are hundreds more new companies, generating tons of profit, and employing about 7000 new people.
David McKenzie did the incredible study.
24,000 Nigerians applied, the government selected about 6,000 to get some training and advice to develop their plan, the plans were scored, and about 1,200 were funded. They got an average of $50,000 each. Fifty thousand US dollars! Who the hell thought this was a good idea?
All the highest scoring plans got funded automatically, but McKenzie worked with the government to randomize among the runners up.
The results are amazing. Looking just at the people who had no firm to begin with, 54% of the control group have a firm after three years, compared to 93% of those who got the grant. And these firms are bigger. Just 11% of the control group have a firm with at least 10 employees, compared to 34% of those who got the grant. They’re more profitable too.
If you are the President of a developing country, one of the great problems that will occupy your thoughts is: how to get more people jobs? How to grow domestic businesses? Even I, Mr. Cash, did not think big grants would be the answer.
These entrepreneurs are not the deserving poor, to be sure, but the employees are more likely to be. They made $143 a month, so they probably weren’t the poorest of society. But 7000 people earning $7 a day they might not have earned otherwise—that is something. And this ignores the multiplier: the expansion of suppliers, the people employed by the 7000 employees spending that money, the taxes collected by the state, and so on.
Two other things occur to me:
What if, in 10 years, we learn that after all the struggle to build infrastructure and services and other stuff was bullshit, and ALL ALONG we should have just been funneling more cash to the middle and bottom. I do not believe the cashonistas should go so far, but today I wonder.
I should start responding to all the emails I get from Nigerians promising me $50,000 in cash.
In the United States, there is more interest in heaven than in hell, at least based on searches. There are 1.5 times more searches for “heaven” than “hell,” 2.8 times as many searches asking what heaven looks like than what hell looks like, and 2.75 times as many searches asking whether heaven is real than whether hell is real.
…Relative to the rest of the country, for every search I looked at, retirement communities search more about hell. In retirement communities, there are a similar number of searches asking to see visuals of hell as visuals of heaven.
There are 4.7 million searches every year for Jesus Christ. The pope gets 2.95 million. There are 49 million for Kim Kardashian.
That is from Seth Stephens-Dawidowitz.
A new paper by the Institute for Fiscal Studies (IFS) shines a new light on how well the British tax system redistributes incomes over people’s lifetimes, in addition to using the cross-sectional approach. It presents several interesting findings. For a start, it finds that lifetime inequality in Britain has always been much lower than cross-sectional inequality (see first chart). This is because the poorest in any given year are not always poor for their entire lives; the IFS’s simulations suggest that those who, over the whole of their life, are in the lowest 10%, only spend an average of a fifth of their lifetimes at the bottom.
More startlingly, policies that increased or cut welfare expenditure appear to have had very little impact on lifetime inequality. For instance, while the benefit cuts of the late 1980s reduced benefits and increased cross-sectional inequality, it had a much more muted effect on lifetime inequality. And, similarly, although Gordon Brown’s massive expansion of means-tested tax credits in the 2000s reduced cross-sectional inequality, they had very little impact on cutting lifetime inequality.
The paper also finds that the redistribution performed by the British welfare state is, to a great extent, smoothing incomes over people’s lifetimes rather than over their entire lives. Whereas 36% of individuals receive more in benefits than they pay in tax in any given year, only 7% do so over their lifetimes. Over half of all redistribution is simply across peoples’ lifespans; the young pay in while they work, and take out when they retire (see second chart).
Visits to medical institutions, hospital visits, and primary medical facilities are growing at 2.98%, 5.40%, and 1.56% respectively.
That is from Christopher Balding, read the whole post. And that is for an aging population and in a setting where the demand for health care is for structural reasons growing rapidly. Furthermore the use of traditional Chinese medicine is declining rapidly, fifteen percent this year from Balding’s citation.
Now let’s say the Chinese economy is about fifty percent services, though the exact number can be debated. And we know that manufacturing PMI is down seven months in a row.
What is your estimate of the overall rate of economic growth in China? The overall rate of growth six months or a year from now?
In the middle of this post you will find Scott Sumner on China’s growth.
Here is Krugman’s excellent post on how large China spillovers will be. I say watch for who is exposed to the sudden weekend ten to fifteen percent devaluation. Lots of other EM currencies have gone down by about that amount, why should China be so different or immune? The Chinese government isn’t going to spend trillions of dollars on fighting a losing battle in the currency wars, they are simply waiting for the right time for this to happen. Don’t be caught off-guard.
Our empirical subjects are public and private entities’ compliance with the U.S. Clean Air Act and Safe Drinking Water Act. We find that, compared with private firms, governments violate these laws significantly more frequently and are less likely to be penalized for violations.
Giacomo Ponzetto emails me:
I’m glad you found our recent working paper on urban networks interesting and cited it on Marginal Revolution. I’m also glad that your readers pointed out our lack of clarity concerning Busan.
As they have already noted, what we meant is that the metropolitan city of Busan would be the second largest city in the European Union by population within administrative city limits, after Greater London (8.5 million) and pretty much tied with the city-state of Berlin at 3.5 million (the latest official figures we could find are 3,563,578 for Busan in 2013 and 3,562,166 for Berlin on 31 December 2014). We find this an interesting fact. It reflects political and administrative decisions to facilitate urban integration in Asia and conversely to preserve local identities in Europe. On the other hand, we agree that administrative boundaries often don’t provide the most useful definition of a city. The problem is that no other definition is unambiguous and plainly comparable across countries.
In its 2006 Territorial Review Competitive Cities in the Global Economy, the OECD defined the Busan metro area to include the administrative units of Busan, Ulsan, and Gyeonsangnam-do. By this definition, greater Busan has around 8 million residents, which is also the figure reported by Wikipedia, without defining the metro area. As the OECD noted, this is probably an overstatement because Gyeongsangnam-do is a large province including non-urban districts. Yet, a much smaller Busan-Ulsan-Changwon metro area (including Gimhae, Yangsan, Miryang and Geoje) has around 7 million residents. It would be the third largest in the European Union, behind London and Paris (12 million residents in the functional urban area as defined by Eurostat) but ahead of Madrid (6.5 million).
However, if instead one takes the view that Busan, Ulsan and Changwon are three continguous metro areas instead of a single one, then Busan-Gimhae-Yangan would have only around 4.5 million residents. It would be smaller than Madrid, the Ruhr, Berlin and Barcelona, but at the top of the pack that includes Rome, Milan and Athens. We chose to rely on the administrative-city figures to avoid having to adjudicate which is the most accurate functional definition of Busan’s metro area. Either way, you’re right it’s all too easy to underestimate Busan.
New data, released by the Centers for Disease Control, show that America’s love for fast food is surprisingly income blind. Well-off kids, poor kids, and all those in between tend to get about the same percentage of their calories from fast food, according to a survey of more than 5,000 people. More precisely, though, it’s the poorest kids that tend to get the smallest share of their daily energy intake from Big Macs, Whoppers, Chicken McNuggets, and french fries.
That is from Robert Ferdman. By the way:
More than a third of all children and adolescents living in the country still eat some form of fast food on any given day, a number which hasn’t budged in decades, according to the CDC.
And many children are getting alarmingly high proportions of their diet from chicken nuggets and french fries. About a quarter of all kids in the United States get 25 percent of their calories from fast food. And 12 percent of kids get more than 40 percent of their calories from fast food.