Worthwhile Canadian Initiative (really)

by on November 17, 2015 at 3:41 am in Economics, Law | Permalink

Canada recently became the first country in the world to legislate a cap on regulation. The Red Tape Reduction Act, which became law on April 23, 2015, requires the federal government to eliminate at least one regulation for every new one introduced. Remarkably, the legislation received near-unanimous support across the political spectrum: 245 votes in favor of the bill and 1 opposed. This policy development has not gone unnoticed outside Canada’s borders.

Canada’s federal government has captured headlines, but its approach was borrowed from the province of British Columbia (BC) where controlling red tape has been a priority for more than a decade. BC’s regulatory reform dates back to 2001 when a newly elected government put in place policies to make good on its ambitious election promise to reduce the regulatory burden by one-third in three years. The results have been impressive. The government has reduced regulatory requirements by 43 percent relative to when the initiative started. During this time period, the province went from being one of the poorest-performing economies in the country to being among the best. While there were other factors at play in the BC’s economic turnaround, members of the business community widely credit red tape reduction with playing a critical role.

That is from a study of Canadian regulation by Laura Jones.

The paper is by David Hugh-Jones, and this is from the research summary:

The study examined whether people from different countries were more or less honest and how this related to a country’s economic development. More than 1500 participants from 15 countries took part in an online survey involving two incentivised experiments, designed to measure honest behaviour.

Firstly, they were asked to flip a coin and state whether it landed on ‘heads’ or ‘tails’. They knew if they reported that it landed on heads, they would be rewarded with $3 or $5. If the proportion reporting heads was more than 50 per cent in a given country, this indicated that people were being dishonest…

The countries studied – Brazil, China, Greece, Japan, Russia, Switzerland, Turkey, the United States, Argentina, Denmark, the United Kingdom, India, Portugal, South Africa, and South Korea – were chosen to provide a mix of regions, levels of development and levels of social trust.

The study’s author Dr David Hugh-Jones, of UEA’s School of Economics, found evidence for dishonesty in all the countries, but that levels varied significantly across them. For example, estimated dishonesty in the coin flip ranged from 3.4 per cent in the UK to 70 per cent in China. In the quiz, respondents in Japan were the most honest, followed by the UK, while those in Turkey were the least truthful. Participants were also asked to predict the average honesty of those from other countries by guessing how many respondents out of 100 from a particular country would report heads in the coin flip test. However, participants’ beliefs about other countries’ honesty did not reflect reality.

This is interesting:

“Differences in honesty were found between countries, but this did not necessarily correspond to what people expected,” he said. “Beliefs about honesty seem to be driven by psychological features, such as self-projection. Surprisingly, people were more pessimistic about the honesty of people in their own country than of people in other countries.

And consider this from Hugh Jones:

“I suggest that the relationship between honesty and economic growth has been weaker over the past 60 years and there is little evidence for a link between current growth and honesty,” said Dr Hugh-Jones. “One explanation is that when institutions and technology are underdeveloped, honesty is important as a substitute for formal contract enforcement. Countries that develop cultures putting a high value on honesty are able to reap economic gains. Later, this economic growth itself improves institutions and technology, making contracts easier to monitor and enforce, so that a culture of honesty is no longer necessary for further growth.”

The research paper is here, and for the pointers I thank Charles Klingman and Samir Varma.

Jones, by the way, makes it clear there are a variety of kinds of honesty, and inferences from any single test should be limited.  For Japan in particular the measured level of honesty depends critically on which test is applied.  The real lesson of the study may simply be that most groups are dishonest, and people are not even honest with themselves about their views of the dishonesty of others.  Honesty depends a good deal on context too.  On some of these questions, see some skeptical comments from Kevin Drum.

If you are looking for simple correlations: “…at individual level, there is no evidence that religious adherence is associated with honesty.”  How about having a Ph.d.?

That is the title of an Arnold Kling blog post, it runs like this (I am not adding an extra layer of indentation):

“With this:

Speaking this week at the EmTech conference in Cambridge, Massachusetts, Editas CEO Katrine Bosley said the company hopes to start a clinical trial in 2017 to treat a rare form of blindness using CRISPR, a groundbreaking gene-editing technology.

…The condition Editas is targeting affects only about 600 people in the U.S., says Jean Bennet, director of advanced retinal and ocular therapeutics at the University of Pennsylvania’s medical school.

I don’t think that the FDA is prepared for what is coming.”

Questions that are rarely asked

by on November 16, 2015 at 12:59 pm in Current Affairs, Economics | Permalink

Suppose we were back in the 1990s, and unemployment was 5.0%.  But now suppose the economy was growing slowly due to slow growth in the working age population and slow growth in productivity.  A “Pop Keynesian” says that we can solve this problem with fiscal stimulus.  What do the smart 1990s Keynesians say in reply?

What do they say today?

That is from Scott Sumner.  And in these articles you can read about “Japan” and “labor shortage,” two topics which fit well together these days.

U.S. counterterrorism officials reported in February that more than 20,000 foreign fighters have joined the fray in Syria to fight with the rebels, with most going to help the Islamic State. Of these, 150 or so are from the United States and over 3,000 are from the West.

According to British scholar Peter Neumann, the Syria conflict has generated more foreign fighters than Afghanistan, post-2003 Iraq, Somalia, Mali and other fields of jihad combined.

That is from Daniel Byman at Monkey Cage, with other points at the link.

Sang Yoon Lee, Yongseok Shin, and Donghoon Lee have a new NBER paper:

Going to college is a risky investment in human capital. However, we highlight two options inherently embedded in college education that mitigate this risk: (i) college students can quit without completing four-year degrees after learning about their post-graduation wages and (ii) college graduates can take jobs that do not require four-year degrees (i.e., underemployment). These options reduce the chances of falling in the lower end of the wage distribution as a college graduate, rendering standard mean-variance calculations misleading. We show that the interaction between these options and the rising wage dispersion, especially among college graduates, is key to understanding the muted response of college enrollment and graduation rates to the substantial increase in the college wage premium in the United States since 1980. Furthermore, we find that subsidies inducing marginal students to attend colleges will have a negligible net benefit: Such students are far more likely to drop out of college or become underemployed even with a four-year degree, implying only small wage gains from college education.

This is a very important result…Bryan Caplan, telephone!

Ungated versions of the paper are here.

Monday assorted links

by on November 16, 2015 at 2:51 am in Uncategorized | Permalink

1. English departments are better than you think.

2. Angus Deaton on stuff, including what TV he watches (good taste).

3. More Alesina, on fiscal adjustments.

4. The Iranian film “About Elly” is one of the best movies to come out this year.  It is by the director of “A Separation,” and it will take you forty-five minutes to start realizing how good it is.

5. Michael Specter CRISPR article from The New Yorker, very interesting, more than just the usual.

Virginia Woolf on Shakespeare

by on November 16, 2015 at 12:12 am in Books, History, The Arts | Permalink

From the Diaries, April 13th, 1930:

I read Shakespeare directly I have finished writing.  When my mind is agape and red-hot.  Then it is astonishing.  I never yet knew how amazing his stretch and speed and word coining power is, until I felt it utterly outpace and outrace my own, seeming to start equal and then I see him draw ahead and do things I could not in my wildest tumult and utmost press of mind imagine.  Even the less known plays are written at a speed that is quicker than anybody else’s quickest; and the words drop so fast one can’t pick them up.  Look at this.  “Upon a gather’d lily almost wither’d.”  (That is a pure accident.  I happen to light on it.)  Evidently the pliancy of his mind was so complete that he could furbish out any train of thought; and, relaxing, let fall a shower of such unregarded flowers.  Why then should anyone else attempt to write?  This is not “writing” at all.  Indeed, I could say that Shakespeare surpasses literature altogether, if I knew what I meant.

By the way, she notes that Keynes’s favorite novel of hers was The Years, which he preferred over the harder to understand The Waves.

London Scout poses for her mother, Sai De Silva, in Dumbo for her Instagram account.  The 4-year-old has more than 100,000 followers.

That is the photo caption to this NYT story.  And just so you are not confused, “London Scout” is a name, and “Dumbo” is a part of New York City.

Sunday assorted links

by on November 15, 2015 at 1:15 pm in Uncategorized | Permalink

1. Ultrasonic tracking of…you.

2. Modeling the ISIS attack.

3. Robert Craft has passed away (NYT).

4. On France, social media mistakes.

5. How uncertain is the natural rate of interest?

How smart are CEOs anyway?

by on November 15, 2015 at 2:14 am in Data Source, Economics, Education | Permalink

Here is a new paper by Wai and Rindermann.  It seems to be saying that CEOs are quite smart, but perhaps not as smart as…journalists.  Hm..perhaps this may get some media pick-up, here is the abstract:

The path to becoming a CEO (and performance on the job) can be viewed as a difficult cognitive challenge. One way to examine this idea is to see how highly selected CEOs are in terms of education and cognitive ability. The extent to which Fortune 500 CEOs were selected on education and cognitive ability at an earlier age was retrospectively assessed at four time points that spanned 1996 to 2014 (Total N = 1991). Across the last 19 years, between 37.5% and 41.0% of these CEOs were found to attend an elite school which likely placed them in the top 1% of cognitive ability. People in the top 1% of ability, therefore, were likely overrepresented among these CEOs, at about 37 to 41 times the base rate. Even within each of the four samples, higher CEO education and cognitive ability was associated with higher gross revenue of the CEO’s company. Although Fortune 500 CEOs were highly selected on education and cognitive ability, when placed in the context of a broader array of occupations in the extreme right tail of achievement (e.g., politicians, judges, billionaires, journalists, academics, powerful people, and other business elites), CEOs were not at the top. This showed the wide cognitive ability range (and mental test difficulty) across various occupations that compose the U.S. elite. That Fortune 500 CEOs had similar education and cognitive ability selectivity over time shows that the CEO (and perhaps business) occupational and filtering structure has remained relatively unchanged across the last two decades.

I would gladly read more papers on this topic…

Robert Pears of the NYT writes:

Obama administration officials, urging people to sign up for health insurance under the Affordable Care Act, have trumpeted the low premiums available on the law’s new marketplaces.

But for many consumers, the sticker shock is coming not on the front end, when they purchase the plans, but on the back end when they get sick: sky-high deductibles that are leaving some newly insured feeling nearly as vulnerable as they were before they had coverage.

“The deductible, $3,000 a year, makes it impossible to actually go to the doctor,” said David R. Reines, 60, of Jefferson Township, N.J., a former hardware salesman with chronic knee pain. “We have insurance, but can’t afford to use it.”

In many states, more than half the plans offered for sale through HealthCare.gov, the federal online marketplace, have a deductible of $3,000 or more, a New York Times review has found. Those deductibles are causing concern among Democrats — and some Republican detractors of the health law, who once pushed high-deductible health plans in the belief that consumers would be more cost-conscious if they had more of a financial stake or skin in the game.

My previous column on related issues, “Obamacare not as egalitarian as it appears,” is here.

I am afraid I rather severely failed this test, as proposed by the British magazine Country Life.  I cannot “train a rose,” nor did I even know what that meant.  I also don’t own a tweed suit, nor do I tip my “gamekeeper in the shooting field.”  “Sings lustily in church” is yet another fail, though I am punctual and do not own a chihuahua, nor would I, as is stipulated.

I was puzzled by a response to this quiz in a recent David Tang FT column.  He answered:

32. Would not go to Puerto Rico

Been there once already — ghastly.

I am pleased to have gone twice, from which I can only conclude that at least one of us does not know what a gentleman is.  I might have defined the concept as someone who is kind, tolerant, strong as required, and respectful of social mores when appropriate.

Further Saturday assorted links

by on November 14, 2015 at 2:42 pm in Uncategorized | Permalink

1. The battle to save Silicon Valley’s oldest trailer park.

2. Pearlstein reviews Rodrik.

3. On “masculinised” appearance.

4. I enjoyed the way in which I understood nothing in this NYT David Mitchell review.

5. Conversations with North Koreans.

Saturday assorted links

by on November 14, 2015 at 8:38 am in Uncategorized | Permalink

1. Who is Jeffrey Flier?

2. Integrating the disabled in Vermont.

3. Cop pulls over Google driverless car for driving too slowly.  And Dubai firemen to get jetpacks?  More here.

4. How to spend $48.5 million, without consuming $48.5 million in real resources.

5. The most googled diets by city.

6. Good Noah Smith post on the assimilation of black immigrants.

7. Arnold Kling’s macroeconomic frameworkRyan Avent’s macroeconomic framework, he believes in the Phillips Curve (and the Lucas supply function?) more than I do.