Data Source

David Smith sets us straight on this one:

One of the most enduring claims about the British economy in recent years is that the then coalition government abandoned austerity in 2012. It is a claim that gives comfort to those who see everything that has happened to the economy through the lens of fiscal policy. Only when austerity was abandoned in 2012, some argue, did the economy begin to recover. Unfortunately it does not fit the facts. It is a myth.

There are two elements to this. The first is the question of whether, in response to slower growth in the economy, or other factors, George Osborne abandoned his programme of fiscal consolidation.

The two foremost authorities on fiscal policy in Britain are the Institute for Fiscal Studies and the Office for Budget Responsibility. The IFS set out the position clearly after each budget and autumn statement during the last parliament. Chart 1.6 on p26 in its latest green budget, here, sets out the broad position. As it shows, consolidation continues through the parliament.

The IFS’s updated figures, published as part of its Election 2015 coverage, has the following sequence of numbers for the fiscal consolidation: 2010-11, 1.5% of GDP, 2011-12 2.3%, 2012-13 1.1%, 2013-14 1.5%, 2014-15 0.7%, 2015-16 0.6%, adding up to a cumulative fiscal tightening between 2009-10 and 2015-16 of 7.7% of GDP.

The OBR also addressed this, in its paper, Crisis and Consolidation in the Public Finances, here. Chapter 3 is the relevant chapter which, like the iFS, shows a programme of fiscal consolidation extending through the parliament. There was no abandonment of austerity.

There is more here, with other points of interest, hat tip goes to Chris Giles.

Adding the ‘errors and omissions’ deficit to recorded net hot money outflows gives an aggregate estimate of overall hot outflows or capital flight from the mainland. By construction, this slumped to a record $209.5bn ($838bn annualised) or an eye-watering 9¼% of GDP (Chart 2). Overall, in the year to Q1, China has seen capital flight of $584bn or 5.6% of GDP.

That is from Richard Iley, cited by David Keohane at the FT.

By the way, here is the response of the Chinese government:

China has again ruled out the possibility of massive capital outflow, saying an overwhelming majority of foreign companies that pulled out their investments in the country were shell firms, The Beijing News reported on Wednesday.

The average investment scale of those firms is relatively small, and 20 percent of them entered China less than five years ago, said the newspaper citing Tang Wenhong, head of the Department of Foreign Investment Administration of the Commerce Ministry.

Judge for yourself…a better response would have been “this outflow is a natural process of investment diversification, as China liberalizes its capital markets gradually over time.”  That doesn’t account for everything that is going on, but at least it makes potential sense.

By the way, if you ask some Chinese about India, they will mention Buddhism and people riding on the top of trains.

Declan Butler reports:

Giving some of the world’s poorest people a two-year aid package — including cash, food, health-care services, skills training and advice — improves their livelihoods for at least a year after the support is cut off, according to the results of an experiment involving more than 10,000 households in six countries.

The poverty intervention had already been trialled successfully in Bangladesh, and the study’s researchers say it shows the approach works in other cultures too. “We finally have truly credible evidence that a programme for the poorest of the poor can really help them meaningfully reduce their poverty,” says Dean Karlan, an economist at Yale University in New Haven, Connecticut, and a co-author of the study, reported today in Science. “Until now, we haven’t really been able to go to a government outside Bangladesh and say, we’re confident this works.”

Ethiopia, one of the countries that was in the trial, is planning to continue and scale up the intervention to cover around 3 million people, says Karlan, and Pakistan and India are considering scaling up interventions, too.

Banerjee and Duflo are involved in the work as well, and this is sometimes called the “graduation model,” because the aim is to graduate people out of poverty.  Note this:

The intervention is not cheap. Costs per household ranged from $1,455 in India to $5,962 in Pakistan, although they were offset by positive returns on investment ranging from 133% in Ghana to 433% in India. The researchers hope to cut costs in future by scaling back the experiment’s more expensive components, such as training.

And while the model worked in many places, it failed in rural southern India and Honduras, in part due to…problems with chickens.  Nonetheless this is big, big news.  The link to the original research is here.

For pointers I thank Kevin Lewis and Michelle Dawson.

The U.S. classical music market

by on May 13, 2015 at 2:12 pm in Data Source, Music | Permalink

The classical sales situation in the US has hit the pits. Aside from Andrea Bocelli, who trundles on at around 400 a week – cds and downloads combined – the best performer on Nielsen Soundscan was the Anonymous 4, chirping sweetly on a farewell tour with just 189 registered sales.

Sales are so bad that Hilary Hahn, at number 10, failed to clear 100.

There is more here, and for the pointer I thank Samir Varma.

For just a while?  Keep in mind that an aging population still can be moving more people into prime working age:

Changes in demographics are an important determinant of economic growth, and although most people focus on the aging of the “baby boomer” generation, the movement of younger cohorts into the prime working age is another key story in coming years…

The prime working age population peaked in 2007, and appears to have bottomed at the end of 2012.  The good news is the prime working age group has started to grow again, and should be growing solidly by 2020 – and this should boost economic activity in the years ahead.

That is from Bill McBride at Calculated Risk.  Check out this St. Louis Fed graph, via Conor Sen.

Wealthy Hindu temples such as this one are repositories for much of the $1 trillion worth of privately held gold in India — about 22,000 tons, according to an estimate from the World Gold Council. In 2011, one temple in south India was found to have more than $22 billion in gold hidden away in locked rooms rumored to be filled with snakes. Another has enough gold to rival the riches stashed at the Vatican, experts say.

There is more here, the main theme of the article is that some are calling for the gold reserves to be mobilized, a running theme in economic debate since Keynes and earlier in the nineteenth century as well.

The University of Toronto’s commercialization office states that it is “in a class with the likes of MIT and Stanford.” But Stanford has generated $1.3-billion (U.S.) in royalties for itself and the Massachusetts Institute of Technology issued 288 U.S. patents last year alone; U of T generates annual licensed IP income of less than $3-million (Canadian) and averages eight U.S. patents a year. Statistics Canada reports that in 2009, just $10-million was netted by all Canadian universities for their licences and IP. Even when accounting for universities that have open IP policies, this is a trivial amount by global standards.

That is from Jim Balsillie, and is interesting more generally, most of all on Canada and innovation.  For the pointer I thank Scott Barlow.  My previous post on this topic is here.

It is basically statist vs. classical liberal, and it is strongly uni-dimensional.  Those are the main lessons from a new and interesting paper by Jennifer Pan and Yiqing Xu:

We offer the first large scale empirical analysis of ideology in contemporary China to determine whether individuals fall along a discernible and coherent ideological spectrum, and whether there are regional and inter-group variations in ideological orientation. Using principal component analysis (PCA) on a survey of 171,830 individuals, we identify one dominant ideological dimension in China. Individuals who are politically conservative, who emphasize the supremacy of the state and nationalism, are also likely to be economically conservative, supporting a return to socialism and state-control of the economy, and culturally conservative, supporting traditional, Confucian values. In contrast, political liberals, supportive of constitutional democracy and individual liberty, are also likely to be economic liberals who support market-oriented reform and social liberals who support modern science and values such as sexual freedom. This uni-dimensionality of ideology is robust to a wide variety of diagnostics and checks. Using post-stratification based on census data, we find a strong relationship between liberal orientation and modernization — provinces with higher levels of economic development, trade openness, urbanization are more liberal than their poor, rural counterparts, and individuals with higher levels of education and income and more liberal than their less educated and lower-income peers.

Here is some NYT coverage of the piece.  Here is some good Foreign Policy coverage.  Currently this is the most downloaded piece on SSRN.

I am late to covering this excellent piece by David Leonhardt, but it is worth your attention.  The core result is this:

Low-income children who grow up in Manhattan make less money as adults than similar low-income children who grow up elsewhere…It’s just that affluent Manhattan children don’t grow up to be quite as affluent as affluent children elsewhere.

To make the case of the affluent child concrete, if the Manhattan parents earn 400k a year, the child at age 26 averages 50k a year, compared to an average of 55k for comparable non-Manhattan kids at that same age.  David considers a few hypotheses:

1. That effect is possibly diminishing as Manhattan improves, but the changes doesn’t yet show up in the data.

2. Perhaps Manhattan parents, or Manhattan itself, teach that money is not so important.  For one thing, you get interested in culture there.  Or maybe you want to become famous more than you want to become wealthy.

3. People who grew up in Manhattan are less likely to be married at a particular age.

4. Manhattan schools are less than perfect.

I would add a few hypotheses (not claims) of my own:

5. Manhattan is a selection of the most ambitious, highest-achieving individuals from elsewhere, and thus if you grow up there ambition and achievement seem to be especially forbidding prospects.  Better not to try too hard.  Recall David Hume on the “posts of honour” appearing to be filled?

6. Manhattan is a bad place, and bad things happen in bad places.

7. Manhattan families are more likely to spoil their children, create problems of moral hazard by promising or implying future support, and have less of an internal aspirational culture.

8. If you grow up there, Manhattan appears to be the center of the known universe and you are less likely to leave it in pursuit of higher earnings.  Fewer people from New Jersey feel this same way, and so they end up in the region with the highest potential earnings for them; that is sometimes but not always New York City.  (This mechanism also means Manhattan children are more likely to remain near their parents, see #7.)

9. A lot of Manhattan wealth is linked to finance and entertainment, and other superstar markets, which are maybe “less heritable” in terms of income than that small Midwestern furniture factory.

What else?

The end of doggie privacy?

by on May 6, 2015 at 1:05 pm in Data Source, Law, Science | Permalink

Dogs can run, but they can’t hide from PooPrints.

BioPet Vet Lab, which specializes in canine genetic testing, is partnering with the appropriately named London borough of Barking and Dagenham to track down dog owners who fail to remove their pets’ public deposits.

Starting in September 2016, people who don’t pick up after their dogs could be fined 80 pounds, or about $125. The registration of dogs’ DNA could become mandatory five months earlier if a pilot program proves successful.

There is more here, via Ray Lopez.  And here is a related story from Vancouver.

Fans of Game of Thrones know that “a Lannister always pays his debts.” So too do nearly all alumni from Notre Dame, Vassar, Harvey Mudd, and Brigham Young, at least when it comes to federal student loans.

There is more here, from Brookings, via Matthew C. Klein.  Ahem…and for whatever reason, students from St. Johns do well too…

The limited data available do not suggest a recent overall increase in the number of homicides by police or the racial composition of those killed, despite the high-profile cases and controversies of 2014-2015, according to a New York Times analysis. But a January 2015 report published in the Harvard Public Health Review, “Trends in U.S. Deaths due to Legal Intervention among Black and White men, Age 15-34 Years, by County Income Level: 1960-2010,” suggests persistent differences in risks for violent encounters with police: “The rate ratio for black vs. white men for death due to legal intervention always exceeded 2.5 (median: 4.5) and ranged from 2.6 (95% confidence interval [CI] 2.1, 3.1) in 2001 to 10.1 (95% CI 8.7, 11.7) in 1969, with the relative and absolute excess evident in all county income quintiles.”

And this:

For the most recent period where statistics are available (2003-2009), the BJS found that 4,813 persons “died during or shortly after law enforcement personnel attempted to arrest or restrain them… About 60% of arrest-related deaths (2,931) were classified as homicides by law enforcement personnel.” However, among these 2,931 homicides by law enforcement personnel, 75.3% were reported to have taken place in response to a violent offense — constituting a force-on-force situation, such as an intervention with an ongoing assault, robbery or murder: “Arrests for alleged violent crimes were involved in three of every four reported homicides by law enforcement personnel.” Still, 7.9% took place in the context of a public-order offense, 2.7% involved a drug offense, and among 9.2% of all homicides by police no specific context was reported.

There is much more of interest at the Harvard Kennedy School link.

Roberto Ferdman reports:

Ratner has a new study titled ‘Inhibited from Bowling Alone,’ a nod to Robert Putnam’s book about Americans’ waning participation in group activities, that’s set to publish in the Journal of Consumer Research in August. In it, she and co-writer Rebecca Hamilton, a professor marketing at the McDonough School of Business, describe their findings: that people consistently underestimate how much they will enjoy seeing a show, going to a museum, visiting a theater, or eating at a restaurant alone. That miscalculation, she argues, is only becoming more problematic, because people are working more, marrying later, and, ultimately, finding themselves with smaller chunks of free time.

Might part of the problem be narcissism?:

“The reason is we think we won’t have fun because we’re worried about what other people will think,” said Ratner. “We end up staying at home instead of going out to do stuff because we’re afraid others will think they’re a loser.”

But other people, as it turns out, actually aren’t thinking about us quite as judgmentally or intensely as we tend to anticipate. Not nearly, in fact. There’s a long line of research that shows how consistently and regularly we overestimate others’ interest in our affairs.

There is more here.  For the pointer I thank Claire Morgan.

People search frequently for it, roughly as often as searches for “migraine(s),” “economist,” “sweater,” “Daily Show,” and “Lakers.”

That is from an interesting Wonkblog article, using Google searches, trying to estimate the most racist regions of America.  The rural Northeast and Midwest don’t do so well.

The pointers are from SV and AM.

A new Brookings study by Rothwell and Kulkarni attempts to do just that.  The list of ratings for two-year institutions puts NHTI’s-Concord Community College at the top, followed by a large number of institutions you mostly haven’t heard of.  For four-year institutions the list starts with:

1. Caltech

2. Colgate

3. MIT

4. Rose-Hulman Institute of Technology,

with other surprises to follow.  The Colorado School of Mines does better than Princeton, for instance.  Here is the report itself, here is a story on the report.  I am finding the web site for the rankings is still a little glitchy, let’s hope they fix that soon, or maybe it is just the current volume of traffic.