Data Source

A new paper by Ronald Q. Doeswijk, Trevin Lam, and Laurentius (Laurens) Adrianus Petrus Swinkels addresses exactly this question:

Using a newly constructed unique dataset, this study is the first to document returns of the market portfolio for a long period and with a high level of detail. Our market portfolio basically contains all assets in which financial investors have invested. We analyze nominal, real, and excess return and risk characteristics of this global multi-asset market portfolio and the asset categories over the period 1960 to 2015. The global market portfolio realizes a compounded real return of 4.38% with a standard deviation of 11.6% from 1960 until 2015. In the inflationary period from 1960 to 1979, the compounded real return of the GMP is 2.27%, while this is 5.57% in the disinflationary period from 1980 to 2015. The reward for the average investor is a compounded return of 3.24%-points above the saver’s. We also compare the performance of an investor who holds the market portfolio with an investor who uses simple heuristics for the portfolio allocation. Our results suggest that the market portfolio is close to the mean-variance frontier, but our heuristic allocations achieve a significantly higher reward for risk.

Do note that is for many countries, not just the United States.  For the pointer I thank Samir Varma.

…we estimate that refugees pay $21,000 more in taxes than they receive in benefits over their first 20 years in the U.S.

That is from a new NBER paper by Evans and Fitzgerald.

“The amount of high bridge construction in China is just insane,” said Eric Sakowski, an American bridge enthusiast who runs a website on the world’s highest bridges. “China’s opening, say, 50 high bridges a year, and the whole of the rest of the world combined might be opening 10.”

Of the world’s 100 highest bridges, 81 are in China, including some unfinished ones, according to Mr. Sakowski’s data. (The Chishi Bridge ranks 162nd.)

China also has the world’s longest bridge, the 102-mile Danyang-Kunshan Grand Bridge, a high-speed rail viaduct running parallel to the Yangtze River, and is nearing completion of the world’s longest sea bridge, a 14-mile cable-stay bridge skimming across the Pearl River Delta, part of a 22-mile bridge and tunnel crossing that connects Hong Kong and Macau with mainland China.

The country’s expressway growth has been compared to that of the United States in the 1950s, when the Interstate System of highways got underway, but China is building at a remarkable clip. In 2016 alone, China added 26,100 bridges on roads, including 363 “extra large” ones with an average length of about a mile, government figures show.

Here is the Chris Buckley NYT piece, excellent visuals too.  Via Kevin Lewis.

That is the title of a new paper by Robert Kaestner, Ryan Gallagher, and Joseph Persky.  Here is the abstract:

A recent series of studies by the Equality of Opportunity Project has documented substantial geographical differences in intergenerational income mobility. These spatial differences are important because they suggest that place matters more than previously thought in determining economic well-being. In this paper, we show that family characteristics vary widely across areas and simulations indicate that differences these family characteristics can explain a substantial share of the variation in intergenerational income mobility across places documented by the Equality of the Opportunity Project. Additionally, we show that the characteristics of families that move differ substantially from families that do not move, which raise doubts about the external validity of causal inferences based on the Equality of Opportunity Project’s analysis of movers.

And from the paper:

…we find that differences in the income of adult children associated with mother’s race, age, education, marital status and nativity explain 80 to 120 percent of the difference in intergenerational income mobility between the lowest and next lowest quintiles of absolute mobility in Chetty et al.’s (2014) place-based distribution of intergenerational income mobility.

I am wondering to what extent this is a criticism of Chetty, or simply a disaggregation.  I’m still trying to wrap my mind around what exactly are the differences between place-level characteristics and family- or person-level characteristics.  I don’t take Chetty’s original story about places to concern what kind of molecules are in the dirt, or what is the climate, but rather how people in a particular place interact with each other.  In that sense the result always was about family- or person-level characteristics.  Does the ability of family-level characteristics to pick up these interaction effects mean that place-level effects are not operating?

Anyway, regardless of interpretation this paper does seem to me to make some very real progress toward figuring out what is going on in those mobility studies.

Here are some of the results:

Here’s what they found: bike network connectedness seems to immediately pay off in the form of lower risk to people biking. The risk of a biking trip in Seville seems to have fallen dramatically in 2007 and stayed mostly flat afterward. No other single variable predicted bike safety as well as that single yes/no question: Has a network been built yet?

More accurate still was a formula that took into account both variables — the length of bikeways built and that yes/no question about whether or not the network had been connected.

In other words: Generally speaking, every additional mile of protected bike lane somewhere in the city improved safety. But network connections improved safety most.

Here is a summary, here is the study itself.  For the pointer I thank Roland Stephen.

An interesting test of what3Words, the location addressing system for the planet that I have blogged before. It’s not exactly an RCT to say the least but should motivate further testing.

what3words would be very useful in India where street addresses are less common and rigidly adhered to than in the US.

Hat tip: Samir Varma.

I was surprised by some of this:

We found that Energy companies have the highest average Revenue per Employee, while Industrials and Consumer Discretionaries perform worst on this metric.

Technology companies performed at the lower end of the range on Revenue per Employee; part of the reason for this however, is other companies in spaces like Energy and Healthcare have large non-employee costs that Technology companies do not have.

AmerisourceBergen, a pharmaceutical distributor, tops the list, generating more than $7.9M per employee in 2016. With a reported team of 19,000, which is less than half the workforce of Cardinal Health (37,300) and McKesson (68,000), the company compares favorably to its peers on revenue per employee. Cardinal Health and McKesson‘s RPE were $3.3M and $2.8M, respectively. Overall, Healthcare companies score well on revenue per employee, though they have other huge costs (the costs of administering drugs and health services).

As for the lowest revenue per employee:

It is perhaps unsurprising that Restaurant and Hotel chains make up the majority of the list. What is more striking is that IT providers Cognizant and Accenture have among the lowest revenue per employee in the Index.

There are several useful tables at the link.  I do not think this is making any adjustment for independent contractors.

For the pointer I thank the estimable Chug. the 10 years from 1999 to 2009, India’s workforce increased by 63m. “Of these, 44 million joined the unorganized sector, 22 million became informal workers in the organized sector, and the number of formal workers in the organized sector fell by 3 million.” This is a social catastrophe. It is due not only to labour-market distortions, but to a host of constraints on the creation, operation and, not least, closure of organised and large-scale businesses.

White defendants in Winnebago County, Wisconsin were nearly twice as likely as non-whites to enter diversion programs instead of going to jail. A straightforward example of judicial racism? Surprisingly, no. The study, which was looking at people with no previous records who had committed non-violent misdemeanors, found that

… judges were offering white and non-white defendants the option to enter diversion programs such as drug rehabilitation at equal rates. But non-white defendants opted for jail time more often. And choosing jail means opting for a criminal record, which can mean opting for a life in which everything from jobs to loans become much tougher to get.

Does the rehabilitation program cost the defendants more? Do non-whites feel they are guiltier? Is there a lack of trust? Are there deeper structural issues that can account for these different choices? And why are we “privileging” the white decision? Could it be that whites are making the wrong decision? WIRED doesn’t offer a solution but discusses the new Zuckerberg financed dataset, Measures for Justice, which led to the discovery of the discrepancy.

And here is yet another paper suggesting that medical care, or at least some forms of it, has relatively low marginal value.  The subtitle of this one is “Evidence from Mandatory Checkups in Japan” and the authors are Toshiaki Iizuka, Katsuhiko Nishiyama, Brian Chen, and Karen Eggleston.  Here is the abstract:

Using unique individual-level panel data, we investigate whether preventive medical care triggered by health checkups is worth the cost. We exploit the fact that biomarkers just below and above a threshold may be viewed as random. We find that people respond to health signals and increase physician visits. However, we find no evidence that additional care is cost effective. For the “borderline type” (“pre-diabetes”) threshold for diabetes, medical care utilization increases but neither physical measures nor predicted risks of mortality or serious complications improve. For efficient use of medical resources, cost effectiveness of preventive care must be carefully examined.

Here is the NBER link.

Those are one year nominal interest rate futures, basis points on the vertical axis, and this was the result of political troubles relating to another impeachment.  The image is courtesy of AJ.

As Table 3 shows, eight of the nation’s 12 largest metropolitan areas have lost domestic migrants since 2010. These areas are either pricey coastal regions, or are located in the industrial Midwest. New York, Los Angeles and Chicago have led the nation in domestic out migration for more than three decades. However, because each also receives substantial numbers of international migrants, their overall migration loss for 2010-2016 is minimized. This is also true for other domestic migration losers on the list.

In contrast, Dallas, Houston, and Atlanta registered significant domestic in-migration gains.

That is from William H. Frey, there is much more at the link.  The pointer is from Amy Liu.


That is nominal rates of change, and that is from Pedro Nicolaci da Costa.

It’s taken some time but owner’s equity in real estate is rising and getting close to its 2006 peak.* The wealth of most households is in the family home so household balance sheets look to be in good shape.

See this video on the importance of owner’s equity and Vernon Smith’s book with Steven Gjerstad, Rethinking Housing Bubbles.

Hat tip: Vernon Smith.

*The graph is now corrected for inflation. My bad. Fortunately FRED makes it easy to fix. You can make your own changes by clicking customize.