Data Source

Losers go to jail

by on November 7, 2016 at 3:30 am in Data Source, Law, Political Science | Permalink

That is the title of the job market paper of Mitch Downey, of UCSD, the subtitle is “Congressional Elections and Union Officer Prosecutions,” and here is the abstract:

Democratic societies rely on fair judicial systems and competitive political systems. If politicians can control criminal investigations of influential groups and use them to undermine political opponents and protect supporters, it subverts these systems. I test whether prosecutions of politically active labor unions respond to Congressional election outcomes. I use novel data on federal indictments, campaign contributions to measure support, and a regression discontinuity to recover causal effects. I find that union officers are 67% more likely to be indicted when the candidate their union supported barely loses. These indictments weaken unions’ ability to influence politics, making reelection more difficult for union-supported Representatives and easier for the union-opposed. As such, the discontinuity might reflect reduced indictments to protect election winners’ union supporters or increased indictments to target winners’ union opponents. A series of analyses suggest it includes both. The results show that US politicians manipulate the justice system to maintain power.

His other papers, at the above link, are interesting too, covering voting, labor market frictions, and also the political economy of Afghanistan.

Not very much, and maybe not at all.  There are numerous papers on this question, with a variety of results, but this one is perhaps the most thorough and best-specified:

Got ID? The Zero Effects of Voter ID Laws on County-Level Turnout, Vote Shares, and Uncounted Ballots, 1992-2014
Abstract: Abstract Do voter ID laws disenfranchise voters? Despite a ferocious, politically charged debate in the media and public opinion, the scholarly evidence on the effects of voter ID requirements is inconclusive. In this paper, I use county-level administrative data from 1992 to 2014 and a Differences-in-Differences research design to identify and estimate the impact of voter ID laws on turnout, Democratic vote share, and irregular ballots. I find no effect of ID laws on any of these outcomes. All estimates are fairly precise and robust to a number of regression specifications. Estimates of heterogeneous effects by educational attainment, poverty rate and minority presence are similarly supportive of ID laws having no impact on electoral outcomes of any type.

That is from Enrich Cantoni, who is on the job market from MIT this year.  That is not his job market paper, however, that paper considers how much the distance to the poll influences turnout.

Make baseball fun again

by on November 6, 2016 at 3:58 am in Data Source, Sports | Permalink

Gregory Howard of MIT is on the job market this year, and I was intrigued by one of his papers in process (not yet available):

Make Baseball Fun Again (with Vivek Bhattacharya)

Abstract: Using Pitch F/X data covering over 6 million pitches, we document that pitchers are averse to throwing fastballs. Controlling for the state space of a baseball game, including balls, strikes, outs, inning, run differential, and pitcher/batter fixed effects, we find the pitching team is more likely to win the game when throwing a fastball. This is inconsistent with a mixed-strategy equilibrium where the pitcher’s utility is winning the game. We document that fastballs are riskier, leading to more outs, but also to more extra-base hits. We outline a possible incentive problem between the team and the pitcher, who has preferences over remaining in the game, similar to career concerns (Holmstrom 1998), leading the pitcher to be risk-averse. As suggestive evidence, we show that these effects are more prevalent later in the game, and that rookie pitchers, who have less leverage over pitch choice, do not exhibit this tendency.

If you are wondering, Greg’s job market paper (also at the above link) is on how local labor migration creates an “accelerator” for labor demand by boosting the demand for housing — a locally-produced good — in that area.

There is a new paper by Malmandier, Nagel, and Yan (pdf) on that question, it seems the answer is yes, here is the abstract:

We show that personal lifetime experiences of inflation significantly affect the hawkish or dovish leanings of central bankers. We link experience-based inflation expectations to the desired level of nominal interest rates using a forward-looking formulation of the Taylor rule. Using data of the FOMC voting history from March 1951 to January 2014, we estimate that a one standard-deviation increase in experience-based forecasts increases the unconditional probability of a hawkish dissent by about one third, and decreases the unconditional probability of a dovish dissent also by about one third. FOMC members also use significantly a more hawkish tone in their speeches if they have experienced high inflation in their lives so far. Aggregating over all FOMC members present at a meeting, we establish a significantly positive relationship between their average inflation experience and the Fed Funds Rate target decided at the meeting. Finally, inflation experiences have a strong direct impact on FOMC members’ inflation forecasts as reported in their semiannual Monetary Policy Reports to Congress, suggesting that experiences affect beliefs. Our findings imply that even professionals are affected by their lifetime experiences of macroeconomic outcomes and shed new light on the importance of FOMC appointments.

This is from their conclusion:

This evidence adds to a growing literature on the role of ‘experience effects’, a term first coined by Malmendier and Nagel (2011) in the context of stock-market investment. What is still debated is whether such influences are weaker among more highly educated decision-makers or even experts. Our results here suggest that this is not necessarily the case.

I would expect such effects to be stronger for the better-educated and the experts.  We are more a prisoner of our prisms, just as we are more likely to have strong prisms in the first place.

It does, and there is a new theory of how, from Erik P. Duhaime and Taylor A. Moulton.  Here is the abstract:

While political experts have long claimed that bad weather lowers voter turnout, the impact of weather on U.S. election outcomes remains unclear. The most rigorous work to date found that precipitation benefits Republicans and suggested that Florida rains influenced the outcome of the 2000 presidential election, but a more recent analysis finding that precipitation only lowers turnout in uncompetitive election states calls this claim into question. Here, we reanalyze the 1972-2000 U.S. presidential elections with a focus on supporters of non-major party candidates, an oft-overlooked contingency. We propose that bad weather affects election outcomes not through its effect on turnout—as has long been assumed—but rather, through its psychological effect on swing voters. Specifically, we find evidence that bad weather increases regret aversion among supporters of non-major party candidates in competitive elections, leading some to instead vote for their preferred two-party candidate.

In other words, rain on Tuesday could swing some Gary Johnson voters to Trump.

Here is a page for Duhaime, and here is the home page of Moulton.  Both are from MIT’s Sloan School, and Duhaime is on the job market next year (I am not sure about Moulton).

China fact of the day

by on November 3, 2016 at 1:54 am in Data Source, Economics, Law | Permalink

Chinese cities are less densely populated than many people think:

While China is a very populous country, density in Chinese cities is typically much lower than major American metropolitan areas. For example, the first tier cities have population density varying from 1,000 to 2,000 people per square kilometer in 2010, whereas New York City has density of 10,000 people per square kilometer and the top 100 American MSAs all have density above 4,000 people per square kilometer.

That is from Glaeser, Huang, Ma, and Shleifer “A Real Estate Boom With Chinese Characteristics,” an interesting and useful paper.  They argue that current Chinese real estate prices might prove sustainable, but there is a basic dilemma that cannot be avoided:

…that path may create significant social costs. Construction employment would plummet. Millions of Chinese may lose the apparent productivity advantages associated with living in Chinese cities (Chauvin et al. 2016). Local governments would lose the financial autonomy from land sales and taxes that has been their institutional basis. The alternative for the Chinese government is to accommodate high levels of construction and housing supply. As we showed, this will lead to very low or negative expected returns to investment in housing. The welfare of potential new buyers will rise, but current owners will suffer losses.

Recommended reading.

Britain’s service sector will see its exports drop up to 60 per cent after leaving the European single market, even with a free-trade agreement with the EU in place, according to research from a leading think-tank.

A new study from the National Institute of Economic and Social Research, to be published on Wednesday, says that signing a free-trade agreement with the EU will not recoup any loss in services exports, but would reduce the long-term fall in goods exports from between 58-65 per cent to between 35-44 per cent.

…In theory, the falls in exports could be reduced if Britain managed to sign a deep bilateral agreement with the EU, including good coverage of the services sector. But Monique Ebell, the author of the report, said: “The average FTA for services at the moment is not very comprehensive and tends not to do very much.”

In 2014, 40 per cent of Britain’s services trade, and 56 per cent of its goods trade, was with other European Economic Area members, meaning that the overall fall in British exports would be 24 per cent for services and 20-25 per cent for goods.

That is from Alan Beattie at the FT.

I am intrigued by this recent paper (pdf) by Jeffrey Clemens at UCSD (visiting UT Austin), here is part of the abstract:

Institutions-centric counterfactuals, which emphasize weaknesses in workers’ bargaining positions, predict that this period’s minimum wage increases would have significantly increased the number of low-skilled individuals with wage rates near or below the minimum wage. The data are inconsistent with this prediction. By contrast, counterfactuals that emphasize the effects of trade, technology, and other competitive market forces are able to match long-run employment changes. My framework highlights that the minimum wage’s effects evolve with labor market conditions. In addition to their relatively direct effects, labor replacing developments in trade and technology exacerbate the minimum wage’s effects on employment. Importantly, this observation holds whether labor markets are competitive or subject to significant bargaining frictions at baseline.

If bargaining power shifts against you because supply and demand factors have changed, that cannot always usefully be undone by a hike in the minimum wage.  Here is a key observation:

I find that the fraction of individuals with wage rates near or below the minimum wage changed little from 2002 to 2014 in spite of substantial minimum wage increases and stagnant nominal wages within low-skilled groups.

More generally, he finds that “…the employment and wage rates of low experience, low education individuals deteriorated more dramatically during the Great Recession than is widely recognized.”  There are many points of interest in this paper, one of my favorite of this year.  Here is the home page of Jeffrey Clemens.

In 1946 the University of Chicago economics department considered the following individuals for job offers: John Hicks, Paul Samuelson, Friedrich A. Hayek, Milton Friedman, Lionel Robbins, A. G. Hart, and George Stigler.

The names making the final vote were Hicks, Hart, Stigler, Friedman, and Samuelson.  The Borda point count method was used, and Hicks turned out to be the clear number one choice.  Neither Friedman nor Samuelson were the number one choices of any departmental voter, while Stigler won three first-choice votes (see Table one in the paper).

The voters themselves were quite prestigious, including Hazel Kyrk, Lloyd Mints, Jacob Marschak, Henry Simons, Tjalling Koopmans, H. Gregg Lewis, Frank Knight, and T.W. Schultz.  If you are wondering, Knight’s first choice was Stigler.  Friedman and Samuelson came in fourth and fifth, respectively, with Samuelson as a distant last place pick.  Schultz however put Friedman dead last.

The winner Hicks was not interested, and that year, Chicago ended up with Friedman and Roy Blough.  Here is the NYT obituary for Roy Blough:

Roy Blough, an economist who served in the Roosevelt and Truman administrations, died on Friday at a retirement home in Mitchellville, Md. He was 98.

From 1938 to 1946, Mr. Blough was director of tax research at the Treasury Department and assistant to the treasury secretary. From 1950 to 1952, he was a member of the president’s Council of Economic Advisers.

Later in the 1950’s, he was principal director of the economic affairs department at the United Nations. He also taught at several universities, including the University of Chicago, from 1946 to 1952, and Columbia University, from 1955 to 1970, when he retired.

He wrote several books, including ”The Federal Taxing Process” and ”International Business: Environment and Adaptation.”

That is all catalogued in this fascinating David Mitch piece, in the latest JPE.  Here are ungated copies and some related information.

Addendum, via Doug Irwin:

Arnold Harberger on Roy Blough: “he came to Chicago and he was a very boring professor. He didn’t inspire anybody to do anything, and he didn’t do very much himself. And he was a little pompous, but nice, a decent analyst, not very deep analytically, didn’t really command the theory of the subject. Then he was named a member of the Council of Economic Advisors and he left Chicago. And all the colleagues sighed a sigh of relief and said, “Gee, we found a way to get rid of him.”

To replace Blough, they hired Arnold Harberger, I am told.

For the elderly:

Consider, for example, the implications for those 60-64 of earning $20,000 more for one year.  Among the lowest quintile, 51 percent will lose more than 80cen ts of every extra dollar earned, 8 percent will lose between 61 and 80cent s, and 7 percent will lose between 51 and 60 cents…Among those in the top quintile, 39 percent are in a 61 to 80 percent marginal net tax bracket.

That is from a new NBER paper by Auerbach, Kotlikoff, Koehler, and Yu.  And for the poor:

But families participating in two or more programs, while still facing negative or modest positive rates at low earnings, usually face considerably higher MTRs [marginal tax rates] at higher earnings ranges, often up to 80 percent and even occasionally over 100 percent. While the fraction of families in this category is not large, they constitute about one-fifth of single parent families.

That is from Kosar and Moffitt.

And finally for the disabled there seems to be greater policy effectiveness.  In the latest AER Manasi Deshpande considers SSI as it is paid out to low-income youth with disabilities, and here is the crux of her conclusion:

Using a regression discontinuity design based on a 1996 policy change in age 18 medical reviews, I find that youth who are removed from SSI at age 18 recover one-third of the lost SSI cash income in earnings. SSI youth who are removed and stay off SSI earn on average $4,400 annually, and they lose $76,000 in present discounted observed income over the 16 years following removal relative to those who do not receive a review.

Here are ungated versions of the paper.  Income volatility goes up as well for those removed from the rolls, and giving them higher benefits does not seem to shrink their labor supply much.

At the very least reallocating more of America’s transfer payments to the disabled seems worthy of consideration.  Do note the caveat that these results apply to those classified as disabled under earlier (and tougher) standards, not the standards of today.

This study estimates the effect of inheriting wealth on inequality and mobility in the wealth distribution. Using new population-wide register data on inheritances in Sweden, we find that inheritances reduce inequality and increase mobility among heirs. Richer heirs indeed inherit larger amounts, but less affluent heirs receive substantially larger inheritances relative to their pre-inheritance wealth than do richer heirs. The Swedish inheritance tax had a small overall impact but appears to have mitigated the equalizing effect of inheritances. We also investigate the potentially confounding role of pre-inheritance gifts and behavioral responses to expectations about future inheritances, but neither of them change the main finding that inheritances reduce wealth inequality.

That is from a new paper by Mikael Elinder, Oscar Erixson, and Daniel Waldenström (pdf), via Ben Southwood.

Via Ben Southwood, from David J. Price and Jae Song (pdf):

We investigate the long-term effect of cash assistance for beneficiaries and their children by following up, after four decades, with participants in the Seattle-Denver Income Maintenance Experiment. Treated families in this randomized experiment received thousands of dollars per year in extra government benefits for three or five years in the 1970s. Using administrative data from the Social Security Administration and the Washington State Department of Health, we find that treatment caused adults to earn an average of $1,800 less per year after the experiment ended. Most of this effect on earned income is concentrated between ages 50 and 60, suggesting that it is related to retirement. Treated adults were also 6.3 percentage points more likely to apply for disability benefits, but were not significantly more likely to receive them, or to have died. These effects on parents, however, do not appear to be passed down to their children: children in treated families experienced no significant effects in any of the main variables studied. These results for children are estimated precisely enough to rule out effects found in other contexts and inform the literature on intergenerational mobility. Taken as a whole, these results suggest that policymakers should consider the long-term effects of cash assistance as they formulate policies to combat poverty.

That’s basically a 40-year follow-up, which is nice to see.  These results should be taken seriously, but they are also a good illustration of the limits of RCTs for some policy questions.  In my recent piece, I argued UBI might be problematic for its interaction with immigration, politics, and the work ethic, all at the macro level.  You may or may not agree, but a smaller-scale RCT won’t pick up those effects.  It can be the case that a marginal move toward UBI makes sense for any small or mid-sized group, or for any particular in-kind benefit, without the full transformation necessarily being welfare-improving.

Here is a recent piece criticizing a guaranteed annual income.  Here is Arnold Kling, mostly defending the idea relative to alternatives.

Will Wilkinson, in his response, doubles down on macro-macro:

I have some misgivings about the method by which Tyler comes to his conclusion that a UBI “would do more harm than good.” It seems that he’s holding the status quo constant, adding a UBI, and then imagining what might happen. But isn’t this a confusing way to proceed? A world in which a UBI were politically feasible would be different in many other ways.

Do read the whole thing.

Maybe voters aren’t quite as irrational as we had thought, or at least not in some of the ways we had thought:

We reassess Achen and Bartels’ (2002, 2016) prominent claim that shark attacks influence presidential elections, and we find that the evidence is, at best, inconclusive. First, we assemble data on every fatal shark attack in U.S. history and county-level returns from every presidential election between 1872 and 2012, and we find little systematic evidence that shark attacks hurt incumbent presidents or their party. Second, we show that Achen and Bartels’ finding of fatal shark attacks hurting Woodrow Wilson’s vote share in the beach counties of New Jersey in 1916 becomes substantively smaller and statistically weaker under alternative specifications. Third, we find that their town-level result for beach townships in Ocean County significantly shrinks when we correct errors associated with changes in town borders and does not hold for the other beach counties in New Jersey. Lastly, implementing placebo tests in state-elections where there were no shark attacks, we demonstrate that Achen and Bartels’ result was likely to arise even if shark attacks do not influence elections. Overall, there is little compelling evidence that shark attacks influence presidential elections, and any such effect—if one exists—appears to be substantively negligible.

That is from a new paper by Anthony Fowler and Andrew B. Hall (pdf).  Here is commentary from Andrew Gelman.  Here is related work by Fowler and Montagnes on football games, here is a response.

Just don’t conclude that voters are so extremely rational, in my view focal, vote-moving irrationalities typically will be tied conflicts in social status across different groups.

According to the most recent Statistics Canada data, in 2012, women over 40 gave birth to 13,395 children, while teenagers produced 12,915. Demographers have been expecting this tipping point for decades. In 1974, the older age group gave birth to just 3,550 children while teenagers produced 38,650—and the numbers have shifted each year since. The transition has just been confirmed in the U.K. and Australia as well, while data show that men are also fathering children later in life: the average age of Canadian fathers at birth of their children was 41 in 2011, compared to 39 in 1995.

That is from Meagan Campbell.  On another issue, Ian Bremmer calls this the best Canada fact he’s seen all year.

Given how much Donald Trump talks about jobs leaving America, you might think that his supporters lost out more than others. In fact, the opposite appears to be true, according to a recent analysis from Gallup.

“No matter how you measure it, there’s not any evidence that Trump supporters are more likely to have lost their job in the manufacturing sector,” Gallup senior economist Jonathan Rothwell said in a call.

The study, which analyzed how various factors predict voters’ support for the Republican presidential nominee, linked living in a manufacturing-dominated area with a 1% lower probability of supporting Trump (after controlling for race, income, and other variables).

Living in a low-manufacturing area was linked to a 1% higher probability of supporting Trump.

That is from Gus Lubin at Business Insider.