Political Science

This paper I had neglected, now it is time to remedy that.  The authors are Francisco J. Buera, Alexander Monge-Narajo, and Giorgio E. Primiceri, and it was published in Econometrica 2011:

We study the evolution of market-oriented policies over time and across countries. We consider a model in which own and neighbors’ past experiences influence policy choices through their effect on policymakers’ beliefs. We estimate the model using a large panel of countries and find that it fits a large fraction of the policy choices observed in the postwar data, including the slow adoption of liberal policies. Our model also predicts that there would be reversals to state intervention if nowadays the world was hit by a shock of the size of the Great Depression.

I don’t find that abstract so informative, this paper has a few main results:

1. Policymakers have priors about how good the market economy is, and they revise those views — and thus revise policy — as they observe their own growth results and those of their neighbors.  Success for market economies tends to breed greater reliance on markets.

2. A simple learning model predicts about 97% of the policy choices observed in the data.  Perhaps more importantly, the model accounts for more than 77% of the observed policy switches over a three-year time window.

3. Evolving beliefs — and not just the fixed demographic characteristics of countries — are critical for understanding policy decisions.

4. It was probably the growth collapse of the late 1970s for interventionist countries which led to a greater reliance on markets.

5. Adjustment toward better-performing policies is often quite slow.  In part this is because policymakers attribute the superior performance of other countries to heterogeneity rather than policy per se.

6. A global Great Depression would lead to a significant switch back to state interventionism.

7. If I understand the model correctly (and I am making a bit of a leap in interpretation here), it implies a Chinese growth slowdown will lead to greater state intervention in China, not greater liberalization.

The pointer to this paper is from Luis Garicano.

That is the topic of my latest column for The Upshot at The New York Times, here is an excerpt:

Unfortunately, regions with rapidly growing populations, like Africa and South Asia, often have lower living standards. In our likely global future, these regions will have more people than they can comfortably support, while many countries in the West and in East Asia will have too few young people for prosperous economies.

As an economist, I see an obvious solution: Relatively underpopulated and highly developed countries could profitably take in young Africans and South Asians — and both sides would gain. Yet it’s far from clear that all nations that could benefit from this policy would entertain it, partly because of persistent racial and cultural bias. There is also the legitimate question of how quickly immigrants can adjust to new environments, especially if they are arriving with weak educational backgrounds as the job market demands ever-stronger skills.

…If you’re not convinced that a declining population is a problem, consider Japan. In terms of real gross domestic product per hour worked, Japan has continued to have good performance, but it has a fundamental problem: The working-age population has been declining since about 1997. And Japan’s overall population has been growing older, so with fewer workers supporting so many retirees, national savings will dwindle and resources will be diverted from urgent tasks like revitalizing companies and otherwise invigorating the economy. Japan has already gone from being a miracle exporter to a country that runs steady trade deficits. Perhaps there is simply no narrowly economic recipe to keep its economy growing; Edward Hugh made this argument in his recent ebook, “The A B E of Economics.”

I am extremely pessimistic that we will manage to achieve any more than a small amount of workable population transfers.  Furthermore potential underpopulation is one of the most serious and underrated problems today, as Robin Hanson argued a few years ago.

There is also this bit, the first sentence of which may remind you of Steve Sailer:

France, Israel and Singapore are three countries where population issues are being discussed quite frankly; all have explicit public policies to encourage more births. And more countries will probably go down this route. Encouraging people to have more children, and generally bidding for human talent, may characterize the economic policies of the future, just as cities and states today bid for football stadiums and factories.

By the way, recent reports indicate that the relaxation of China’s one-child policy have led to many fewer births than were expected.  And this new paper (pdf) indicate that immigrant inflows raise the birth rates of native women by making child care more affordable.

The excellent Akos Lada, a graduate student at Harvard, has a new paper on why countries sometimes invade their neighbors, it is called “The Dark Side of Attraction,” the abstract is here:

I argue that the diffusion of domestic political institutions is a source of wars. In the presence of an inspiring foreign regime, repressive elites fear that their citizens emulate the foreign example and revolt. As a result, a dictator starts a war against an attractive foreign regime, seeking to destroy this alternative model. Such wars are particularly likely when there are strong religious, ethnic or cultural ties between the dictator’s opposition and the inspiring country – connections that allow citizens to draw easy comparisons. My posited mechanism explains three case studies. The first describes the Russian invasion of Hungary in 1849. The second case study analyzes the origins of the First World War (1914-8), where Austria-Hungary invaded Serbia. The final case study discusses the Iran-Iraq War (1980-8). In all three cases, a dictator started a war in order to extinguish the foreign flame that fueled his domestic opposition.

Akos occasionally writes blog posts here.  Here is our previous coverage of Akos Lada — he stands a good chance of being one of the significant new “big picture” thinkers in economics.

Scott Sumner directs us to this passage from Michele Martinez Campbell:

A fascinating new national poll from Quinnipiac University shows that men and women disagree markedly on the question of marijuana legalization.  While men surveyed strongly favor legalization by a margin of 59 to 36 percent, women oppose it by a clear majority of 52-44 percent.  This 15-point gender gap in support for marijuana legalization –let’s call it the “pot gender gap” — is not quite as large as the 20-point gender gap in support for President Obama in the 2012 presidential election, but it is striking.  What’s most interesting, though, is how it confounds the expectations set by the voting gender gap.  In voting, women trend more liberal and Democratic, while men trend more conservative and Republican.  Yet with the pot gender gap, we see women taking the more conservative, law-and-order approach.

The article is here, Scott’s post, with commentary, is here.

Philip Bump reports:

Note the big swing in the Asian voting bloc, too. In 2012, strong support for the president among Asian-American voters was a surprise. Asian voters preferred the president by 47 points. In 2014, the (low turnout) group split about evenly. It was a 46-point swing.

The full account is here, via Megan McArdle.

It is hard to know what to say — Gordon was a colleague of ours for many years and we all were very fond of him.  He was one of the most creative thinkers of his time.  His contributions include not just the seminal chapters of Calculus of Consent, but a wide range of ideas ranging from law and economics to monetary theory to the economics of insect societies.  Many of Gordon’s best ideas remain somewhat unmined, such as his analyses of jury trials, or his question why there is so little money in politics, relative to what is at stake.  Almost everything Gordon wrote was worth reading and he was also a wonderful critic of the work of others.  He knew a remarkable amount about history, including Chinese history, and was one of the quickest people I ever have met.  Just about everyone has his or her favorite Gordon Tullock story.  Gordon, by the way, took only one class in economics in his life, from Henry Simons, he was otherwise entirely self-taught.

Religion in China.  That was the topic of a recent excellent Economist article.  Here is one good excerpt:

It is hard even to guess at the number of Christians in China. Official surveys seek to play down the figures, ignoring the large number who worship in house churches. By contrast, overseas Christian groups often inflate them. There were perhaps 3m Catholics and 1m Protestants when the party came to power in 1949. Officials now say there are between 23m and 40m, all told. In 2010 the Pew Research Centre, an American polling organisation, estimated there were 58m Protestants and 9m Catholics. Many experts, foreign and Chinese, now accept that there are probably more Christians than there are members of the 87m-strong Communist Party. Most are evangelical Protestants.

Predicting Christianity’s growth is even harder. Yang Fenggang of Purdue University, in Indiana, says the Christian church in China has grown by an average of 10% a year since 1980. He reckons that on current trends there will be 250m Christians by around 2030, making China’s Christian population the largest in the world. Mr Yang says this speed of growth is similar to that seen in fourth-century Rome just before the conversion of Constantine, which paved the way for Christianity to become the religion of his empire.

In the 1980s the faith grew most quickly in the countryside, stimulated by the collapse of local health care and a belief that Christianity could heal instead. In recent years it has been burgeoning in cities.

Read the whole thing.  You will note that when individuals engage in a “portfolio” approach to religion, social evolution can occur much more rapidly.  Not everyone has to fully convert to Christianity, or to embrace Confucianism wholeheartedly, for those approaches to suddenly acquire much more influence.

Sendhil Mullainathan writes:

…we compared the polarization of 19- and 20-year-olds in an election year. Both age groups were eligible to vote, but only the 20-year-olds were able to vote in the previous election — and thus had a chance to formally commit themselves to candidates and ideologies.

We found that the 20-year-olds held stronger and more uniform views than the 19-year-olds. That wasn’t just a result of aging: When we looked at more age groups, we found that 18- and 19-year-olds, both of whom were ineligible to vote in the previous election, were similarly polarized; there were also no polarization differences between 20- and 21-year-olds, both of whom were able to vote previously. This and other evidence led us to conclude that exposure to the voting process more effectively committed people to a candidate or party…

A combination of neutrality and persistent voting would be ideal. But our psychologies are complicated. If they override our narrow self-interest and lead us to vote instead of free-riding, the very act of voting may make us more partisan. Sporadic voters can provide an antidote: Their previous lack of engagement may serve as a counter to partisanship.

There is a line between apathy and neutrality. People who sit out all elections provide little value to a democracy. People who sit out some elections, jumping in at crucial times, serve an important role as a reserve army of the uncommitted.

I once argued to Ashok Rao that public intellectuals and other influential persons should not vote at all for this reason.  By not voting, they will keep the quality of their influence higher.

From Diana Carew at the Progressive Policy Institute:

…the number of ‘restrictions’ on drug companies increased by 767, or 40% since 2000. This represents a substantial rise in the overall regulatory burden of pharmaceutical companies, which must allocate resources to ensure regulatory compliance. The word “restriction” refers to command clauses such as “shall” and “must,” as contained in sections of the Code of Federal Regulations related to the FDA.

The full study is here (pdf).

There is a new paper (pdf) by Nicola Gennaioli and Hans-Joachim Voth, forthcoming in The Review of Economic Studies:

Powerful, centralized states controlling a large share of national income only begin to appear in Europe after 1500. We build a model that explains their emergence in response to the increasing importance of money for military success. When fiscal resources are not crucial for winning wars, the threat of external conflict stifles state building. As finance becomes critical, internally cohesive states invest in state capacity while divided states rationally drop out of the competition, causing divergence. We emphasize the role of the “Military Revolution”, a sequence of technological innovations that transformed armed conflict. Using data from 374 battles, we investigate empirically both the importance of money for military success and patterns of state building in early modern Europe. The evidence is consistent with the predictions of our model.

The pointer is from Mark Koyama.

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 of life 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.

Most secessionist movements want independence. But a small group in Sardinia, the beautiful island off Italy’s coast has another idea for secession.

sardinie2Angered 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.

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.

 Sicily, for instance, employs 28,000 forestry police — more than Canada — and has 950 ambulance drivers who have no ambulances to drive.

More here on the general state of decline in Italy.

Jason Weeden and Robert Kurzban report:

Despite occasional statements to the contrary, most political scientists have long known — going back at least to Philip Converse’s work in the 1960s, and probably farther to Walter Lippmann’s in the 1910s/1920s — that many Americans do not in fact show substantial ideological consistency across policy views, except among limited groups…The 20% of the adult population who are white voters with bachelor’s degrees show some degree of coherence when it comes to views on same-sex marriage and income redistribution.  But, when it comes to the 40% of the adult public who have one or none of these characteristics — including, for example, African Americans and Latinos without bachelor’s degrees and nonvoting whites without bachelor’s degrees — there is no tendency whatsoever for people who lean in a given direction on one of these issues to lean in the same direction on the other.  For the remaining 40% of the adult public, who have two but not three of these features (e.g., white voters without bachelor’s degrees), ideological coherence is barely measurable.

That is from their new book The Hidden Agenda of the Political Mind: How Self-Interest Shapes Our Opinions and Why We Won’t Admit It, interesting throughout.