Those are the topics of the job market paper (pdf) from Frank Schilbach of Harvard:

High levels of alcohol consumption are more common among the poor. This could have economic consequences beyond mere income effects because alcohol impairs mental processes and decision-making. Since alcohol is thought to induce myopia, this paper tests for impacts on self-control and on savings behavior. In a three-week field experiment with low-income workers in India, I provided 229 individuals with a high-return savings opportunity and randomized incentives for sobriety among them. The incentives significantly reduced daytime drinking as measured by decreased breathalyzer scores. This in turn increased savings by approximately 60 percent. No more than half of this effect is explained by changes in income net of alcohol expenditures. In addition, consistent with enhanced self-control due to lower inebriation levels, incentivizing sobriety reduced the impact of a savings commitment device. Finally, alcohol consumption itself is prone to self-control problems: over half of the study participants were willing to sacrifce money to receive incentives to be sober, exhibiting demand for commitment to increase their sobriety. These findings suggest that heavy alcohol consumption is not just a result of self-control problems, but also creates self-control problems in other areas, potentially even exacerbating poverty by reducing savings.

I saw the pointer from Sendhil Mullainathan on Twitter.

I think that if you look only at males in isolation, you will see this in the data. That is, men are working much less than they used to. For some men, this leisure is very welcome, but for others it is not. In that sense, I think that we should look at the [technological unemployment] fears of the early 1960s not as quaint errors but instead as fairly well borne out.

For women, the story since the 1960s is different. In the economy as a whole, the share of labor devoted to preparing food, washing clothes, and cleaning house has gone down. Also, a higher share of the remaining work in these areas is coming from the market, via restaurants and cleaning services, rather than from unpaid female labor. The upshot is that, from the 1960s to about 2000, we saw a continuation of the trend for women to increase their share of market work and reduce their non-market labor. So, while men were increasing their leisure, women were increasing their market work. Combining men and women, you would not see a decline in market work.

It seems that around 2000, the trend for more market work by women reached its peak, making the trend toward technological unemployment more visible. From now on, what was happening to men before will be what happens to the total labor force. That is, leisure will go up, and some of it will be less than voluntary.

That is from Arnold Kling.

Assorted links

by on December 2, 2014 at 12:34 pm in Uncategorized | Permalink

1. The political economy of Bitcoin.

2. Pizza Hut reads your mind.

3. Chris Rock won’t play colleges any more: “You can’t even be offensive on your way to being inoffensive.”

4. The economics of Seinfeld.

5. How much do different quintiles benefit from government?

6. Twitter-driven economic history reading list.  And more writers’ book picks from The Guardian.  And NYT’s 100 Notable Books of 2014.

7. “Watch two Japanese women fry shrimp with a “cooking detonation” cannon.”

8. Cochrane covers Deirdre McCloskey on Piketty.

9. Profile of Reihan Salam.

Our Guild-Ridden Labor Market

by on December 2, 2014 at 7:24 am in Books, Economics | Permalink

Could right and left unite in opposing occupational licensing? In an excellent primer Morris Kleiner makes the argument:

One unifying theme about the growth of occupational regulation has been the opposition from both the left and right of the political spectrum. Many on the left are concerned about the reduction in job opportunities, the increase in prices, and the diminished availability of services for those in or near poverty. On the right there is concern for economic liberty and access to the labor market and jobs. Many licensed professions are relatively low-skilled jobs, such as barbers, manicurists, nurse’s aides, and cosmetologists. The social costs of a bad haircut may be negligible, but the social costs of creating additional employment barriers for disadvantaged populations are not. Licensure laws often exclude ex-felons—defensible in many professions, but not in all, and such prohibitions make it extremely difficult for ex-offenders to find post-prison employment, thereby contributing to America’s high recidivism rate.

…If both the left and right oppose more occupational regulation, why is it growing? From the time of medieval guilds, service providers have had strong incentives to create barriers to entry for their professions in order to raise wages. In contrast, consumers who will be affected by the higher costs due to licensure are unorganized and arguably underrepresented in the political process.

Read the full post and Kleiner’s excellent book for many useful references. Here are previous MR posts on occupational licensing.

Questions from Brad DeLong

by on December 2, 2014 at 2:24 am in Economics | Permalink

Read them!  Here is one:

One Question for Ryan Avent: What are these local-area “institutional reforms” to overcome NIMBYism? In California, I know that every local elected official curses the Jarvis-Gann Proposition 13 as preventing them from recouping enough via property tax revenue to offset the costs of providing services to a new development, thus changing local governmental officials from reliable boosters for their town to grinches suspicious of every project. Are we looking for a federal government carrot to allocate funds county-by-county based on population growth? Or what?

Read them all.

I enjoyed this LRB piece, here is one excerpt:

All Jerusalemites pay taxes, but the proportion of the municipal budget allocated to the roughly 300,000 Palestinian residents of a city with a population of 815,000 doesn’t exceed 10 per cent. Service provision is grossly unequal. In the East, there are five benefit offices compared to the West’s 18; four health centres for mothers and babies compared to the West’s 25; and 11 mail carriers compared to the West’s 133. Roads are mostly in disrepair and often too narrow to accommodate garbage trucks, forcing Palestinians to burn rubbish outside their homes. A shortage of sewage pipes means that Palestinian residents have to use septic tanks which often overflow. Students are stuffed into overcrowded schools or converted apartments; 2200 additional classrooms are needed. More than three-quarters of the city’s Palestinians live below the poverty line.

Since 1967 no new Palestinian neighbourhoods have been established in the city, while Jewish settlements surrounding existing Palestinian areas have mushroomed. Restrictive zoning prevents Palestinians from building legally. Israel has designated 52 per cent of land in East Jerusalem as unavailable for development and 35 per cent for Jewish settlements, leaving the Palestinian population with only 13 per cent, most of which is already built on. Those with growing families are forced to choose between building illegally and leaving the city. Roughly a third of them decide to build, meaning that 93,000 residents are under constant threat of their homes being demolished.

And this:

The crucial difference between the mid-1980s and today is that Palestinian civil society is now much weaker, and so, too, is the likelihood of coherent political organisation of the kind that emerged soon after the First Intifada began. The groups that then channelled political activity have been supplanted, either by the institutions of a technocratic PA whose existence is premised on close co-operation with Israel, or by NGOs whose foreign funders make assistance conditional on the pursuit of apolitical development projects or vague peace-building strategies that explicitly rule out non-violent confrontation with Israel and any initiative likely to drive up the costs of military occupation. Palestinian society is afflicted with dependency, and it is dependent on forces that wish to preserve the status quo.

It is interesting (and controversial) throughout.

CapX

by on December 1, 2014 at 2:11 pm in Current Affairs, Economics, Weblogs | Permalink

A new website, for popular capitalism.  It looks nice, otherwise I am not well informed about it.

Assorted links

by on December 1, 2014 at 1:44 pm in Uncategorized | Permalink

1. Copper sheathing saved the lives of slaves.

2. Brad DeLong’s magic wand.

3. How sticky is the demand for health insurance?

4. Michael Mandel on improving regulation.

5. Bryan Caplan reads the Geneva Convention.

6.  FT profile of the new head of the Stockholm School of Economics.

7. NYC markets in cell phone storage.

Lotta Moberg, who does international, development, and macro, with a current focus on Special Economic Zones, and

Alexander Schibuola, who does macro, money, and capital theory.

I recommend them both very highly.  Of course I have more to say about them than that, so if you are interested either email me or request their letters of recommendation through normal channels.

Cato is holding a conference this Thursday (Dec. 4) on The Future of US Economic Growth. Speakers include Nobelist Edmund Phelps, Ed Glaeser, Dale Jorgenson, John Haltiwanger and Erik Brynjolfsson. I will speak in the afternoon on the topic of entrepreneurship and whether economic dynamism is in decline. I will have some surprising things to say about dynamism and regulation. More information at the link.

That is the title of a new paper (pdf) by Marion Fourcade, Etienne Ollion, and Yann Algan, here is the abstract:

In this essay, we investigate the dominant position of economics within the network of the social sciences in the United States.  We begin by documenting the relative insularity of economics, using bibliometric data.  Next we analyze the tight management of the field from the top down, which gives economics its characteristic hierarchical structure.  Economists also distinguish themselves from other social scientists through their much better material situation (many teach in business schools, have external consulting activities), their more individualist worldviews, and in the confidence they have in their discipline’s ability to fix the world’s problems.  Taken together, these traits constitute what we call the superiority of economists, where economists’ objective supremacy is intimately linked with their subjective sense of authority and entitlement.  While this superiority has certainly fueled economists’ practical involvement and their considerable influence over the economy, it has also exposed them to more conflicts of interest, political critique, even derision.

The paper has interesting bits throughout, such as:

…the top five sociology departments now [total] 35.4 percent in the American Journal of Sociology, but 45.4 percent in the Journal of Political Economy, and a sky-high 57.6 percent in the Quarterly Journal of Economics.

The section on the rise of finance starts on p.18, worth a read.  And here Paul Krugman adds extensive and very interesting comments.  My view is that economists are in fact the smartest of the social scientists (on average), but this also has led economics to degenerate somewhat into a game of signaling smarts, to the detriment of breadth and knowledge of facts about the world.

For the pointers I thank Gabriel Zucman and Claudia Sahm, who comments as well.

From an interesting 2003 review article by Jones, Leiby, and Paik (pdf):

The energy economics literature has noted the asymmetric responses of petroleum product prices to price changes for well over a decade, as observed by Balke, Brown, and Yücel (1998) in a review of previous studies.  Product prices rise more quickly in response to crude price increases than they decline in response to crude price reductions.  Using weekly data on crude prices and a variety of spot and whole gasoline prices, BBY (1998) find considerable support for asymmetry in the time pattern of downstream price changes to changes in upstream prices, although they find that different specifications of asymmetry yield different results.

Applied to the crude-product relationship, asymmetry has a different meaning than it does in the oil price-GDP relationship. In the crude-product relationship, the asymmetry is in the speed of the response, while in the oil price-GDP relationship, it is in the magnitude of the response. Competition will ensure that the magnitudes of the response of product prices to crude price changes are eventually equal. Otherwise profits in refining and distribution would grow without bound.

Here is a JSTOR link to a somewhat later Balke, Brown, and Yücel paper.  Here is their 2008 paper (pdf) on why the oil price/gdp link has weakened in the United States.  Here is a related 2010 paper (pdf).  Here is a recent James Hamilton blog post on oil gluts.  Here is Scott: “Focus on Q, not P.”

Is SMS a form of net non-neutrality?

by on November 30, 2014 at 4:58 pm in Economics, Law, Web/Tech | Permalink

People have wondered how an Internet without net neutrality would work. Net neutrality is more than just a debate, it’s not a hypothetical, and it’s real and alive today with SMS.

It is currently hypothetical that on an Internet without net neutrality, companies would need to “pay to play” and live by arbitrary, ISP-devised rules for accessing consumers who want and pay for their services. This is the so-called “fast lane.” While ISPs argue this is about network utilization and bandwidth costs, businesses worry that it’s far beyond that.

At stake is access to consumers, and ISPs monetizing their subscriber bases instead of providing the open pipe consumers pay for. While some companies think it’s just a problem for Netflix or other high-bandwidth applications like streaming video, it’s not. The very real potential is that if you don’t have the right relationships, abide by arbitrary rules or pay appropriately, your company doesn’t get slow access – it gets no access. We know because this is how SMS in the U.S. works today.

That is from Jeff Lawson, there is more here.  Here is Steven Pearlstein’s column on net neutrality.

Assorted links

by on November 30, 2014 at 1:40 pm in Uncategorized | Permalink

1. Driving the Haiti-D.R. border in only five days.

2. Spectator books of the year lists.  And Guardian writers pick best books of 2014.

3. Concussion lawsuits now start to hit high schools.

4. “The Hoxbys even had a decibel meter in their home to measure the racket…”  I am genuinely pleased to see leading economists active in the war against noise pollution.

5. The Birds [The Ducks], Newfoundland style.

6. And what might you find in a New Zealand shed?

Penguin

GiveDirectly

by on November 30, 2014 at 7:35 am in Economics | Permalink

Consider GiveDirectly this holiday season for your charitable giving. As you may recall, GiveDirectly was started by four economists and it gives money directly to the very poor in Kenya and Uganda. GiveDirectly is a top-rated charity by GiveWell. The founders are committed to providing independent, randomized controlled trials of its process. One RCT has already been conducted with positive results and 3 others are under way. GiveDirectly publicizes the trials of its process before the results are produced. Impressive–the drug companies had to be forced to do this. Check out their website, they even provides real-time performance data. Here’s a bit more on their process.

GiveDirectly