Why the coronavirus might boost Trump’s reelection prospects

That is the topic of my latest Bloomberg column, here is one excerpt:

The first and perhaps most important effect will be to make Trump’s nationalism seem ordinary, even understated. Hundreds of flights to China have already been canceled, countries are refusing to receive (or deciding to quarantine) Chinese nationals or visitors from China, and China itself is severely limiting travel within the country. Whether or not these prove effective measures, the idea of travel bans and restrictions no longer seems extreme or unconstitutional. Even if voters are confusing normal times with times of pandemic, on this issue Trump’s instincts now seem almost prescient.

When the flight of Americans returning from Wuhan was sent to Alaska last week instead of San Francisco, and subject to quarantine, very few political complaints were heard, including from leading Democrats. There might still be arguments about whether that was a justified violation of civil liberties, but the notion that a pandemic requires the federal government to take such measures, without a congressional vote, is not seriously contested.

That is going to help any incumbent president who believes in the strong exercise of executive power, as does Trump.

There is much more at the link.

Monday assorted links

1. New book on Never Trumpers by Robert Saldin and Steve Teles.  And should a Fields medalist be mayor of Paris? (NYT)

2. A dollarized and somewhat deregulated Caracas is booming, sort of, at least relative to the immediate past (NYT).

3. Jennifer Doleac on Thomas Sowell.

4. Interns: “A résumé audit study with more than 11,500 applications reveals that employers are more likely to respond positively when internship applicants have previous internship experience. Employers are also less likely to respond to applicants with black-sounding names and when the applicant is more distant from the firm.”

5. “The criminal activity around avocados bears striking similarities to “conflict minerals” such as tantalum, tin, tungsten and gold…

6. Solve for the equilibrium.

The Zoning Straight-Jacket

In a new paper, Robert Ellickson makes a simple but important point: local land-use zoning freezes land use into place preventing land from moving from low-value to high-value uses even over many decades.

Recall the neighborhood where you spent your childhood. For most Americans, it would have been a neighborhood of detached single-family houses.My thesis in this Article is simple: if you were to visit that same neighborhood decades from now, it would remain virtually unchanged. One reason is economic: structures typically are built to last. But a second reason, and my focus here, is the impact of law. The politics of local zoning, a form of public land use regulation that has become ubiquitous in the United States during the past century, almost invariably works to freeze land uses in a neighborhood of houses.

…The zoning strait-jacket binds a large majority of urban land in the United States. Los Angeles and Chicago, two of the nation’s densest central cities, permit the building of only a detached house on, respectively, 75% and 79% of the areas they zone for residential use. In suburban areas, the percentage typically is far higher. In a companion study of zoning practices of thirty-seven suburbs in Silicon Valley, Greater New Haven, and Greater Austin, I found that, in the aggregate, these municipalities had set aside 91% of their residentially zoned land (71% of their total land area) exclusively for detached houses.

…Absent overly strict regulation, suppliers of goods in a market economy are able to adapt to changes in supply and demand conditions. The freezing of land uses in a broad swath of urban America prevents housing developers from responding to changes in consumer tastes about where and how to live.

I’m in India and they have similar problem, except in India it’s agricultural land that is frozen in place and made difficult to transform to new uses (in the process depriving farmers of the true value of one of their only assets and creating opportunities for regulatory arbitrage that politically-connected special interests exploit by buying at the farm price, obtaining approvals to convert that other cannot obtain and then selling at the much higher post-conversion price.)

Freezing agricultural land in place seems backward because ubanization is clearly India’s future but it’s no less backward than what has happened in the United States. In both cases, an important right in the land bundle was expropriated and collectivized and the market process of creative destruction impeded.

What is the best way to tax food?

We analyze how a sales tax levied on all food products impacts the consumption of healthy food, unhealthy food, and obesity. The sales tax can stimulate the consumption of healthy meals by lowering the time costs of food preparation. Moreover, the sales tax lowers obesity under more general conditions than a tax on unhealthy food (fat tax) and a subsidy on healthy food (thin subsidy). We calibrate the model using recent consumption and time use data from the US. The thin subsidy is counterproductive and increases weight. While both the sales tax and the fat tax mitigate obesity, the former imposes a lower excess burden on consumers.

It seems that if you try to tax fat directly, individuals can readily substitutes into other foodstuffs that are bad for them, or bad for their weight.  If you place a sales tax on food in general, individuals substitute into eating more at home, and there the food is healthier in the first place and furthermore the time-intensiveness of production will limit the number of dishes prepared and thus quantity and in turn obesity.

Here is the article by Zarko Kalamov, via the excellent Kevin Lewis.

The private school experiment in Liberia

In 2016, the Liberian government delegated management of 93 randomly selected public schools to private providers. Providers received US$50 per pupil, on top of US$50 per pupil annual expenditure in control schools. After one academic year, students in out-sourced schools scored 0.18 σ higher in English and mathematics. We do not find heterogeneity in learning gains or enrollment by student characteristics, but there is significant heterogeneity across providers. While outsourcing appears to be a cost-effective way to use new resources to improve test scores, some providers engaged in unforeseen and potentially harmful behavior, complicating any assessment of welfare gains.

That is by Mauricio Romero, Justin Sandefur, and Wayne Aaron Sandholtz in the new AER.  The gains are real, and not the result of student selection.  That said costs are higher with the private contracting.  Better partner selection would have improved the program greatly, though the authors note that some of the most promising partners ex ante ended up being the biggest troublemakers ex post.  Some of the schools, for instance, allowed a possibly unacceptable degree of sexual abuse of the students.  There is perhaps potential for dynamic reoptimization of permissible partners to yield very real gains, though this may or may not be supported by the available political economy incentives.

The authors suggest, by the way, that outsourcing or contracting out to the private sector often does better when quality is relatively simple, such as with water services, food distribution, and simple forms of primary health care, such as immunization.  In their view, for advanced health care and prisons, contracting is less effective, due to the vaguer nature of product quality.

This is in any case a very important paper, likely to be one of the best and most significant of the year.

Pigouvian in-kind time horn tax in Mumbai

For the Mumbai’s perpetual honkers, who love to blare the horns of their vehicles even when the traffic signal is red, the Mumbai Traffic Police has quietly come up with an unique initiative to discipline them in order to curb the alarming rise in the noise pollution levels in the country’s commercial capital.

From Friday (January 31, 2020), it has installed decibel meters at certain select but heavy traffic signals to deter the habitual honkers through a campaign named ‘The Punishing Signal’.

Joint Police Commissioner (Traffic) Madhukar Pandey said that the decibel monitors are connected to traffic signals around the island city, and when the cacophony exceeds the dangerous 85-decibel mark due to needless honking, the signal timer resets, entailing a double waiting time for all vehicles.

Here is the full story, and for the pointers I thank Sheel Mohnot and CL.  Here is a relevant ad for the policy.  Here is Alex on honking as signaling.

Sunday assorted links

*A Treatise on Northern Ireland*, by Brendan O’Leary

This three-volume set is quite the remarkable achievement, and it would have made my best books of 2019 list (add-ons here) had I known about it earlier.  It starts with “An audit of violence after 1966,” and then goes back to the seventeenth century to begin to dig out what happened.  It has more detail than almost anyone needs to know, yet at the same time it remains unfailingly conceptual and relies on theoretical social science as well, rather than merely reciting names and dates. How about this?:

The breakdown of hegemonic control in Northern Ireland [mid- to late 1960s] exemplifies Tocqueville’s thesis that, when a bad government seeks to reform itself, it is in its greatest danger.

Here is an excerpt from volume II:

The thesis advanced here is that hegemonic control was established between 1920 and 1925 by the UUP, and, aside from a few exceptional moments, exercised successfully until 1966.  After 1925 opportunities for effective opposition, dissent, disobedience, or usurpation of power were minimal.  The major possibilities of disruption came from the outside, from independent Ireland or from Great Britain, from geopolitics, or the world economy.  Eventually, when external forces of disruption combined with major endogenous changes, hegemonic control would be contested, and would shatter.  But at no juncture did Northern nationalists or Irish Catholics in the North internalize the UUP’s rhetoric, or become significantly British by cultural designation.  When the civil-rights movement learned to exploit the claim to be British citizens entitled to British rights, the regime’s days were numbered.

I will continue to spend time with these volumes, which will not be surpassed anytime soon.  Unlike in so many history books, O’Leary is always trying to explain what happened, or what did not.  You can order them here.

As a side note, I find it shocking (and I suppose deplorable) that no American major media outlet has reviewed these books, or put them on its best of the year list, as far as I can tell.  We are failing at something, though I suppose you can debate what.  And I apologize to O’Leary for missing them the first time around.

Is it harder to become a top economist?

Mathis Lohaus writes to me:

Thanks for doing the Conversations. I greatly enjoyed Acemoglu, Duflo, and Banerjee in short succession after the Christmas break. Your question about “top-5 journals” and the bits about graduate training reminded of something I’ve had on my mind for a while now:

For the average PhD student, how hard is it to become a tenured economist — compared to 10, 20, 30, 40 … years ago? (And how about someone in the top 10% of talent/grit?)

Publication requirements have clearly become tougher in absolute terms. But how difficult is it to write a few “very good” papers in the first place? On twitter, people will sometimes say things like “oh, it must have been nice to get tenure back in 1997 based on 1 top article, which in turn was based on a simple regression with n = 60”. I wonder if that criticism is fair, because I imagine the learning curve for quantitative methods must have been challenging. And what about the formal models etc.? Surely those were always hard. (I vaguely remember a photo showing difficult comp exam questions…)

More broadly, early career scholars now have tons of data and inspiring research at their fingertips all the time. Also, nepotism and discrimination might be less powerful than in earlier decades…? On the other hand, you have to take into account that many more PhDs are awarded than ever before. I suspect that alone is a huge factor, but perhaps less acute if we focus only on people who “really, really want to stay in academia”.

A different way to ask the question: When would have been the best point in time to try to become an econ professor (in the USA)?

I would love to hear about your thoughts, and/or input from MR readers.

I always enjoy questions that somewhat answer themselves.  I would add these points:

1. The skills of networking and finding new data sets are increasingly important, all-important you might say, at least for those in the top tier of ability/effort.

2. Fundraising matters more too, because the project might cost a lot, RCTs being the extreme case here.

3. Managing your research team matters much more, and the average size of research team for influential work is much larger.  Once upon a time, three authors on a paper was considered slightly weird (the claim was one of them virtually always did nothing), now four is quite normal and the background research support is much higher as well.

Recently I was speaking to someone on the job market, wondering if he should be an academic.  I said: “In the old days you spent a higher percentage of your time doing economics.  Nowadays, you spend a higher percentage of your time managing a research team doing economics.  You hardly do economics at all.  So if you are mainly going to be a manager, why not manage for the higher rather than the lower salary?”

That was tongue in cheek of course.

On the bright side, learning today through the internet is so much easier.  For instance, I find YouTube a good way to learn/refresh on new ideas in econometrics, easier than just trying to crack the final published paper.

What else?

Saturday assorted links

The dynamics of motivated beliefs

A key question in the literature on motivated reasoning and self-deception is how motivated beliefs are sustained in the presence of feedback. In this paper, we explore dynamic motivated belief patterns after feedback. We establish that positive feedback has a persistent effect on beliefs. Negative feedback, instead, influences beliefs in the short run, but this effect fades over time. We investigate the mechanisms of this dynamic pattern, and provide evidence for an asymmetry in the recall of feedback. Finally, we establish that, in line with theoretical accounts, incentives for belief accuracy mitigate the role of motivated reasoning.

That is from the new AER by Florian Zimmerman.  And from the paper proper:

We find that negative feedback is indeed recalled with significantly lower accuracy, compared to positive feedback, which suggests that the dynamic belief pattern we have identified is indeed driven by the selective recall of information. Next, we make use of additional outcome variables and a placebo condition to delve into how selective recall operates. In a nutshell, the following patterns emerge. Our results suggest that participants are able to suppress the recall of unwanted memories. Furthermore, participants appear to suppress the recall of not only negative feedback but also the IQ test more broadly. Our results lend direct support to key modeling assumptions in Bénabou and Tirole (2002, 2004). From a policy perspective, our findings suggest that policy interventions aimed at correcting self-servingly biased misperceptions via information or feedback are unlikely to be effective in the long run due to people’s ability to forget or suppress information that threatens their desired views.

The paper also shows that incentives matter and can improve the problem.  For instance, if you tell people that they will have to recall the information at some point in the future, and will receive a monetary reward for accuracy, there is considerably less selective forgetting.

The smart phone as pacifier

In light of consumers’ growing dependence on their smartphones, this article investigates the nature of the relationship that consumers form with their smartphone and its underlying mechanisms. We propose that in addition to obvious functional benefits, consumers in fact derive emotional benefits from their smartphone, in particular, feelings of psychological comfort and, if needed, actual stress relief. In other words, in a sense, smartphones are not unlike “adult pacifiers.” This psychological comfort arises from a unique combination of properties that turn smartphones into a reassuring presence for their owners: the portability of the device, its personal nature, the subjective sense of privacy experienced while on the device, and the haptic gratification it affords. Results from one large-scale field study and three laboratory experiments support the proposed underlying mechanisms and document downstream consequences of the psychological comfort that smartphones provide. The findings show, for example, that (a) in moments of stress, consumers exhibit a greater tendency to seek out their smartphone (study 2); and (b) engaging with one’s smartphone provides greater stress relief than engaging in the same activity with a comparable device such as one’s laptop (study 3) or a similar smartphone belonging to someone else (study 4).

That is by Shiri Melumad and Michel Tuan Pham, via the excellent Kevin Lewis.

CEO ages at hire

This is a profound trend. The average age of incoming CEOs for S&P 500 companies has increased about 14 years over the last 14 years.

From 1980 to 2001 the average age of a CEO dropped four years and then from 2005 to 2019 the averare incoming age of new CEOs increased 14 years!

This means that the average birth year of a CEO has not budged since 2005. The best predictor of becoming a CEO of our most successful modern institutions?

Being a baby boomer.

Here is more from Paul Millerd.

Friday assorted links

1. Pee-Wee Herman comeback in the works.  And building a modern Congressional Technology Assessment Office.

2. Keeping a business running during a pandemic.

3. NBA loses possibly $100 million or more in China revenue.  And: “Our findings suggest that nationalist propaganda can manipulate emotions and anti-foreign sentiment, but does not necessarily divert attention from domestic political grievances.

4. 25 greatest classical pianists of all time?  A good list, except for Rachmaninov at #1, and I am pleased to have heard virtually all of the moderns in concert.  I would add Leif Andsnes and take off Lang Lang and Clara Haskil. And come on people — Pollini has to be top ten (he is not on the list at all), in spite of his recent age-related decline.  And Grosvenor is a fine pianist, but I wouldn’t quite put him in this exalted territory, replace with Rudolf or even Peter Serkin?  And if you are looking for peaks, Michelangeli surely belongs as well.  Solomon?

5. Ryan Bourne on state capacity libertarianism.  I will note that a possible coronavirus pandemic would likely boost the plausibility of state capacity libertarianism.

6. “…we construct counterfactual growth paths of Puerto Rico, Cuba, the Philippines and Greenland in the scenario where they joined the USA at times in history where this might have been a (remote) possibility.

7. John Cochrane on woke academia, recommended, and horrifying.