Consider China, which has extremely rapid productivity growth, and hence very rapid nominal wage growth, despite an inflation rate that’s fairly similar to the US. Because the trend growth in nominal wages is so high in China, you’d expect downward wage inflexibility to be much less of a problem in China than in the US. I frequently argue that NGDP growth is often the best proxy for the welfare costs and benefits of inflation, better than inflation itself. This is one more such example, as NGDP growth is strongly correlated with productivity growth plus inflation.

That is from Scott Sumner, the rest of the post is interesting too,mostly about stickiness.  That is one reason why the Chinese (but not everyone) can “wait out” recessionary pressures with fiscal policy.  By the time the fiscal policy runs out, the underlying rate of productivity growth has helped solve the wage stickiness problem, and time has validated the demands of at least some of those stubborn workers.

Steven Quartz writes:

…our current Gilded Age has been greeted with relative complacency. Despite soaring inequality, worsened by the Great Recession, and recent grumbling about the 1 percent, Americans remain fairly happy. All of the wage gains since the downturn ended in 2009 have essentially gone to the top 1 percent, yet the proportion of Americans who say they are “thriving” has actually increased. So-called happiness inequality — the proportion of Americans who are either especially miserable or especially joyful — hit a 40-year low in 2010 by some measures. Men have historically been less happy than women, but that gap has disappeared. Whites have historically been happier than nonwhites, but that gap has narrowed, too.

In fact, American happiness has not only stayed steady, but converged, since wages began stagnating in the mid-1970s. This is puzzling. It does not conform with economic theories that compare happiness to envy, and emphasize the impact of relative income for happiness — how we compare with the Joneses.

Here is part of the answer, consistent with what I argued in my book What Price Fame?:

…social status, which was once hierarchical and zero-sum, has become more fragmented, pluralistic and subjective. The relationship between relative income and relative status, which used to be straightforward, has gotten much more complex.

…A new generation of ethnographers has discovered an explosion of consumer lifestyles and product diversification in recent decades. From evangelical Christian Harley-Davidson owners, who huddle together around a motorcycle’s radio listening to a service on Sunday mornings, to lifestyles organized around musical tastes, from the solidarity of punk rockers to yoga gatherings, from meditation retreats to book clubs, we use products to create and experience community. These communities often represent a consumer micro-culture, a “brand community,” or tribe, with its own values and norms about status.

The article is very interesting throughout, hat tip goes to Claire Morgan.

Note that the closing bit of this piece is…this: “Money may not buy happiness in the long run, but consumer choice has gone a long way in keeping most Americans reasonably content, even if they shouldn’t be.”

Sunday assorted links

by on April 12, 2015 at 1:48 pm in Uncategorized | Permalink

1. How to grow your own furniture.

2. Paul Krugman on Apple Watch.

3. The growing influence of Raj Chetty.

4. Photographing all 947 towns in Iowa.

5. Profile of David Brooks and his new, forthcoming bookProfile of Charles Lloyd.

6. Hidden agendas in Yemen, a good piece by Graham Fuller, recommended.

Barbara Bergmann, a pioneer in the study of gender in the economy who herself overcame barriers to women in the world of academic economics, died on April 5 at her home in Bethesda, Md. She was 87.

…Ms. Bergmann was an emeritus professor at both American University and the University of Maryland, and she continued to research, publish and consult until very recently.

The rest of the NYT obituary is here.  When Bergmann went to Harvard for her doctorate in the 1950s, women took exams separately from men.  She feared that automation would decimate the jobs held by women (it seems the opposite has been true, but kudos to her for considering the issue), and she once wrote this:

“Will high-status people be willing to type their own documents in the future?” she asked. “Though the stigma runs deep, the spreading use of the computer for tasks other than word processing may succeed in removing the stain from the activity of typing on the job.”

Here is a 2014 segment on why Bergmann did not favor a guaranteed annual income.  Here is Bergmann on  Here is her Wikipedia entry, she also was an early proponent of computer-simulated economies.

Where do pickpockets strike?

by on April 12, 2015 at 3:19 am in Education, Law, Science | Permalink

Kevin Beirne reports from an FT chat with James Freedman and tells us:

I ask if there are certain hotspots where pickpockets strike. Tourist spots, Freedman tells me, especially places such as Big Ben and the Eiffel Tower, where people’s attention is directed upwards and away from their belongings. He says that many pickpockets also operate near signs warning us to beware of pickpockets. The irony is that when people read the signs, they check their pockets or bag, thus alerting the lurking pickpocket to where their valuables are.

File under “Law of Unintended Consequences.”  And if you can get through the gate, the piece is interesting more generally.

This sprawling comic novel cum history is likely to go down as one of the books of the year.  I thought Lawrence D. Mass’s review was excellent, here is one excerpt:

Conversely, is The American People the War and Peace or Gone With The Wind of LGBT history? The American People is so many disparate things that comparisons will inevitably fall short. It’s a Swiftian journey through an America we never knew; a Voltairean satire of American life and ways; a literary offspring of Gore Vidal’s Lincoln and Myra Brenckenridge; a pornographic American history through the eyes of a Henry Miller; a Robin Cook medical mystery. It’s a Sinclairean expose of American industrial and corporate skulduggery, and otherwise breathtakingly testimonial to the art of muckraking. It’s a treasure trove of historical findings, especially of the history of sex in America — of prostitution, communal living, of STD ‘s, of medicine and infectious diseases, of sanitation and health care, of medical and historical institutions, research, opinion, publications, figureheads and testimony. It’s an ultimate coming together (pun intended) of the personal with the political. And it’s the grandest telling yet of Kramer’s own story.

But as you can see from the above description, a significant chunk of readers will reject the book’s premise, language, and topics altogether.  I think it is very, very good, you can order it here.

“There are individual US pilots that have had more carrier landings than the whole of the Chinese military,” says Mr Midgley. Gary Li, an independent defence analyst on Beijing, adds that having an aircraft carrier “does not equate to knowing how to use it. They are years away from being able to conduct carrier operations.”

I am not sure however that this is true:

The army will eventually have to get rid of troupes of dancers, opera singers and drivers who are more representative of a former era when ideological concerns were more pressing.

The FT article is interesting throughout.

Saturday assorted links

by on April 11, 2015 at 12:23 pm in Uncategorized | Permalink

1. What predicts relationship success?

2. What is it like to use a 1997 tourist guide to visit NYC?

3. New Michael Clemens paper on failed replications.

4. What to do about those p values?  (Humorous too)

5. Are disability standards too lax?

6. John McGinnis on compensating differentials and income inequality.

In a recently published article, Clucas, Rabotyagov, and Marzluff report:

Human-wildlife interactions in urban areas, both positive and negative, often involve people and birds. We assess the economic value placed on interactions with common native songbirds in two different urban areas (Berlin, Germany and Seattle, Washington, USA) by combining a revealed preference (recalled expenditures on bird feed) and a stated preference approach (determining willingness to pay for conservation or reduction of birds). Residents in both cities purchase bird food, engage in a range of bird-supporting activities and are generally willing to pay a small amount for native songbird conservation. Demographic, cultural and socio-economic factors, as well as specific attitudes towards birds and general attitudes about conservation were found to influence these decisions. This study presents the first attempt at estimating the economic value of enjoying common native urban songbirds and estimates the lower bound to be about 120 million USD/year in Seattle and 70 million USD/year in Berlin.

There is some media coverage here, and for the pointer I thank Charles Klingman.

Producer prices deflated for a 37th consecutive month in March, falling 4.6 per cent, versus a 4.8 per cent fall in February.

That is the longest period of factory gate deflation in China on record.

“The current bout of goods deflation in China and South Korea is the longest in postwar East Asia outside of Japan in the 1990s,” said Rodney Jones, Beijing-based principal of Wigram Capital.

Producer prices in South Korea have also fallen for 39 consecutive months.

The producer price index, often regarded as a leading indicator for consumer prices, has been mired in deflation thanks to sliding domestic demand and chronic overcapacity in many sectors.

That is from McGee and Anderlini at the FT.

By the way, here is the FT citing Deutsche Bank:

Bubble watchers point out median earnings multiples for Chinese technology stocks are twice US peer valuations at their peak. More worrying perhaps is a health-goods-from-deer-antlers producer on 70 times, the seamless underwear manufacturer on 90 times or those school uniform and ketchup makers on 330 times!

Last week there were 1.67 million new brokerage accounts.

Walmart critics embrace two moral standards: in the first, morality requires payment of high wages to 1.2 million people. In the second, morality can be achieved without employing anyone at all–that is, by paying zero wages. Most of us have chosen to live by the second standard, and from our lofty moral position we can criticize Walmart for not meeting the first standard. How convenient!
There is more here, from Ryan Decker, via Ben Southwood.

Karkarmar: It was clear that shoppers who brought their own bags were more likely to replace nonorganic versions of goods like milk with organic versions. So one green action led to another. But those same people were also more likely to buy foods like ice cream, chips, candy bars, and cookies. They weren’t replacing other items with junk food, as they did with organic food. They were just adding it to their carts.

The full story is here, via Peter Metrinko.

Friday assorted links

by on April 10, 2015 at 11:22 am in Uncategorized | Permalink

1. “Why isn’t Chongqing more famous?  There is no reason for it to be famous, really.”

2. A blog on what we can learn from TV anachronisms.

3. The Old Boys’ Club.

4. Beware the comments (scroll down a bit to find it, but actually the whole link is interesting).

5. The jumping dad culture that is Japan.  And none of it as good as Bryan Caplan.

6. New Cato monetary blog with George Selgin.

Mayor of a city or town – 9.3% are willing to consider

Member of Congress – 8.8%

President – 6.4%

That is from Jennifer L. Lawless and Richard L. Fox, Running From Office: Why Young Americans Are Turned Off to Politics, a fascinating and also readable book.

The author is Andrej Svorenčík and he has produced the definitive account of the history of experimental economics.  The SSRN paper is here, but it is more accurate to think of this as a monograph at 248 pp. of text.  I hope a major publisher is interested, but do note it starts off a bit slow.  Once it gets going it never lets up and I learned a great deal from it.  Here is just one excerpt:

When Austin C. Hoggatt died on April 29, 2009, at the age of seventy-nine the experimental economics community lost a low profile yet very influential figure.  Hoggatt was the first to build a computerized laboratory for controlled experimentation in economics or, more broadly, in the social, behavioral, and decision science — the Management Science Laboratory at the Center for Research in Management Science at UC Berkeley in 1964.

If you think you might be interested you will be.  The paper/monograph is strong on recognizing the need for an integrated approach to experiments, involving software, support staff, programmers, and researchers, and tracing how all this came together, or in some cases did not.  You really get the inside story from Svorenčík.