Taxes and innovation: shout it from the rooftops
We find that taxes matter for innovation: higher personal and corporate income taxes negatively affect the quantity, quality, and location of inventive activity at the macro and micro levels. At the macro level, cross-state spillovers or business-stealing from one state to another are important, but do not account for all of the effect. Agglomeration effects from local innovation clusters tend to weaken responsiveness to taxation. Corporate inventors respond more strongly to taxes than their non-corporate counterparts.
That is from a new NBER paper by Ufuk Akcigit, John Grigsby, Tom Nicholas, and Stefanie Stantcheva, via Adam Ozimek.
What is tragedy? (response to a query)
So what is tragedy?
“A work is a tragedy, Aristotle tells us, only if it arouses pity and fear. Why does he single out these two passions?” That seems wrong to me. For one thing, it is overly subjectivist. Why start with the passions of the audience? What do they know?
I think of a tragic story as embodying a few elements:
1. The downfall represents some kind of principle.
2. Some aspects of the downfall are, in advance, quite expected in the objective sense.
3. The actual story combines both inevitability and surprise in a somewhat contradictory manner. (I reintroduce the subjective ever so slightly here.)
4. The villain probably should have some sympathetic and/or charismatic qualities.
5. There should be a quite particular logic to how the actual events unfold, as they might be related to the above-mentioned principles in #1.
6. A confluence of aesthetic and metaphysical and personality-linked forces should “conspire” to bring about the final outcome. There should be a melding and a consilience to the evolution of the story.
Some near-perfect tragedies are Don Giovanni, The Empire Strikes Back, The Sopranos (evokes nostalgia in me rather than fear or pity), and King Lear, among other works of Shakespeare. Don’t forget Homer, Melville, and the Bible.
Just stay away from Aristotle on this one.
Monday assorted links
*Sick: A Memoir*, by Porochista Khakpour
I very much enjoyed this book, which is simultaneously an account of having Lyme disease (and not knowing for a long time), a tale of multiple substance abuses, a look into the mindset of somebody not at all like me, a second-generation Iranian-American memoir, and (unintended) the strongest case for social conservatism I have read in some time. Here is one excerpt, another application of the intersectionality concept:
It is no coincidence then that doctors and patients and the entire Lyme community report — anecdotally, of course, as there is still a frustrating scarcity of good data on anything Lyme-related — that women suffer the most from Lyme. They tend to advance into chronic and late-stage forms of the illness most because often it’s checked for last, as doctors often treat them as psychiatric cases first. the nebulous symptoms plus the fracturing of articulacy and cognitive fog can cause any Lyme patient to simply appear mentally ill and mentally ill only. This is why we hear that young women — again anecdotally — are dying of Lyme the fastest. This is also why we hear that chronic illness is a woman’s burden. Women simply aren’t allowed to be physically sick until they are mentally sick, too, and then it is by some miracle or accident that the two can be separated for proper diagnosis. In the end, every Lyme patient has some psychiatric diagnosis, too, if anything because of the hell it takes getting to a diagnosis.
And this bit:
I am a sick girl. I know sickness. I live with it. In some ways, I keep myself sick.
You can order the book here.
Rejection is Good for Citation (maybe)
A paper in Science covering over 80 thousand articles in 923 scientific journals finds that rejected papers are ultimately cited more than first acceptances.
We compared the number of times articles were cited (as of July 2011, i.e., 3 to 6 years after publication, from ISI Web of Science) depending on their being first-intents or resubmissions. We used methods robust to the skewed distribution of citation counts to ensure that a few highly cited articles were not driving the results. We controlled for year of publication, publishing journal (and thus impact factor), and their interaction. Resubmissions were significantly more cited than first-intents published the same year in the same journal.
The author’s argue that the most likely explanation is that peer review increases the quality of manuscripts. Rejection makes you stronger. That’s possible although the data are also consistent with peers being more likely to reject better papers!
Papers in economics are often too long but papers in Science are often too short. Consider the paragraph I quoted above. What is the next piece of information that you are expecting to learn? How many more citations does a resubmission receive! It’s bizarre that the paper never gives this number (as far as I can tell). Moreover, take a look at the figure (at right) that accompanies the discussion. The authors say the difference in citations is highly significant but on this figure (which is on log scale) the difference looks tiny! This figure is taking up a lot of space. What is it saying?
So what’s the number? Well if you go to the online materials section the authors still don’t state the number but from a table one can deduce that resubmissions receive approximately 7.5% more citations. That’s not bad but we never learn how many citations first acceptances receive so it could be less than 1 extra citation.
There’s something else which is odd. The authors say that about 75% of
published articles are first-submissions. But top journals like Science and Nature reject 93% or more of submissions. Those two numbers don’t necessarily contradict. If everyone submits to Science first or if everyone never resubmits to Science then 100% of papers published in Science will be a first submission. Nevertheless, the 93% of papers that are rejected at top journals (and lower ranked journals also have high rejectance rates) are going somewhere so for the system as whole 75% seems implausibly high.
Econ papers sometimes exhaust me with robustness tests long after I have been convinced of the basic result but Science papers often leave me puzzled about basic issues of context and interpretation. This is also puzzling. Shouldn’t more important papers be longer? Or is the value of time of scientists higher than economists so it’s optimal for scientists to both write and read shorter papers? The length of law review articles would suggest that lawyers have the lowest value of time except that doesn’t seem to be reflected in their consulting fees or wages. There is a dissertation to be written on the optimal length of scientific publications.
The elasticity of science
From Kyle Myers:
This paper estimates the degree to which scientists are willing to change the direction of their work in exchange for resources. Novel data from the National Institutes of Health is used to estimate an entry model that accounts for strategic interactions. Inducing a scientist to change their direction by 1 standard deviation, a qualitatively small difference, requires a four-fold increase in funds, an extra $1 million per year. But at current levels, the costs and benefits of directed versus undirected research appear to be quite similar.
Here is the paper, via the excellent Kevin Lewis.
Peer review is becoming tougher to achieve
Scientists in developed countries provide nearly three times as many peer reviews per paper submitted as researchers in emerging nations, according to the largest ever survey of the practice.
The report — which surveyed more than 11,000 researchers worldwide — also finds a growing “reviewer fatigue”, with editors having to invite more reviewers to get each review done. The number rose from 1.9 invitations in 2013 to 2.4 in 2017…
The report notes that finding peer reviewers is becoming harder, even as the overall volume of publications rises globally (see ‘Is reviewer fatigue setting in?’).
File under “the cost disease strikes back.” Furthermore, it seems increasingly obvious that a lot of lesser journals just don’t matter, and that may discourage prospective referees from putting in the effort. And note:
In 2013–17, the United States contributed nearly 33% of peer reviews, and published 25.4% of articles worldwide. By contrast, emerging nations did 19% of peer reviews, and published 29% of all articles.
China stood out — the country accounted for 13.8% of scientific articles during the period, but did only 8.8% of reviews.
That is from Inga Vesper in Nature, and for the pointer I thank Michelle Dawson.
American competitive democracy survives
Most elections in the United States are not close, which has raised concerns among social scientists and reform advocates about the vibrancy of American democracy. In this paper, we demonstrate that while individual elections are often uncompetitive, hierarchical, temporal, and geographic variation in the locus of competition results in most of the country regularly experiencing close elections. In the four-cycle period between 2006 and 2012, 89% of Americans were in a highly competitive jurisdiction for at least one office. Since 1914, about half the states have never gone more than four election cycles without a close statewide contest. More Americans witness competition than citizens of Canada or the UK, other nations with SMSP-based systems. The dispersed competition we find also results in nearly all Americans being represented by both political parties for different offices.
That is from Bernard L. Fraga, and Eitan D. Hersh, via the excellent Kevin Lewis.
Sunday assorted links
Does the “extractive institutions” hypothesis fail the empirical test?
The title of this paper is “Colonial Revenue Extraction and Modern Day Government Quality in the British Empire,” and it is by Rasmus Broms. Here goes:
The relationship between the extent of government revenue a government collects, primarily in the form of taxation, and its overall quality has increasingly been identified as a key factor for successful state building, good institutions, and—by extension—general development. Initially deriving from historical research on Western Europe, this process is expected to unfold slowly over time. This study tests the claim that more extensive revenue collection has long-lasting and positive consequences for government quality in a developmental setting. Using fiscal records from British colonies, results from cross-colony/country regression analyses reveal that higher colonial income-adjusted revenue levels during the early twentieth century can be linked to higher government quality today. This relationship is substantial and robust to several specifications of both colonial revenue and modern day government quality, and remains significant under control for a range of rivaling explanations. The results support the notion that the current institutional success of former colonies can be traced back to the extent of historical revenue extraction.
For the pointer I thank Forrest Gurowitz.
What I’ve been reading
1. Donna Zuckerberg, Not All Dead White Men: Classics and Misogyny in the Digital Age. Ten or fifteen years ago, would I have predicted that Harvard University Press would publish a serious academic argument claiming that on-line pick-up artists misread the classic texts they cite?
2. Cass R. Sunstein, The Cost-Benefit Revolution. One of the very best Cass Sunstein books, the product of decades of reflection, remarkably well thought out on every page to an extent which is rare these days.
3. William Taubman, Khrushchev: The Man and His Era. Winner of a Pulitzer, this remains one of the essential takes on mid-20th century Soviet history and is highly readable as well.
4. Maxwell King, The Good Neighbor: The Life and Work of Fred Rogers. Yes, that is Mister Rogers. If you’ve seen the movie, this book is the perfect complement. I hadn’t know that Mister Rogers was born into wealth, self-financed his early work, and consistently turned down opportunities to market “Mister Rogers toys” to kids for large sums of money. His email address by the way was zzz143@aol.com, with the triple z’s indicating he slept soundly every night, and the 143 referring to the constant weight he kept throughout his adult life.
Saturday assorted links
Open hiring
No résumé. No interview. No background check.
Some companies are choosing to ditch traditional hiring methods and instead hire anyone who applies on a first-come, first-served basis – no questions asked.
Greyston Bakery in Yonkers, New York, has trademarked the practice, calling it “Open Hiring.” The bakery and the policy were created 36 years ago by Bernie Glassman, according to Fast Company…
“The process is simple,” Brady told New York Business Journal. “You walk through the bakery, you put your name on a list and give us your phone number and email, and when we have a job available we call you up and say we’re ready for you to work.”
Here is the story, via the excellent Samir Varma. Is this a sign there is not much more room for labor market improvement?
The sixth and final volume of Knausgaard’s *My Struggle*
Remember when Ortega y Gasset wrote: “Within the novel almost anything fits…”? Well, Karl Ove Knausgaard has proven him right in this improbably wonderful conclusion to his ongoing semi-fictionalized autobiographical series My Struggle, the first two volumes of which stand as literary masterworks. It’s not every day that a 1153 pp. rant, outside the author’s main fields of expertise, turns out to be so compelling. But wait…I guess those are his main fields of expertise.
Maybe a third of this book is an intellectual biography of Hitler and an analysis of how the proper readings of Mein Kampf change over the years and decades. “Mein Kampf received terrible reviews,” writes K., and then we learn why they matter. I found that segment to be a masterful take on liberalism and its potential for decline, as Knausgaard tries harder than most to make us understand how Hitler got anywhere at all. Underneath it all is a Vico-esque message of all eras converging, and the past not being so far away from the present as it might seem.
Another third of the book covers various writers, including Dostoyevsky, Handke, Celan, Joyce, Hamsun, and Olav Duun, and why they matter to Knausgaard, and is interesting throughout. There are detailed brilliant takes on Herman Broch’s The Death of Virgil and Rene Girard on Hamlet and then desultory remarks on William Petty’s Political Arithmetick. For those sufficiently familiar with the underlying sources, it absolutely comes off.
The other third of the book, most prominent at the beginning, is a mostly failed and meandering fictional narrative of the author’s own life, unsatisfying if read “straight up” but in context a reminder that all thought processes degenerate, and an account of how and why they do so, and in that regard an ideal introduction to the rest of the work and a meta-move which ties together all six volumes of the series, including the often-unsatisfying volumes 3-5. But it will try your patience.
As for what went wrong with liberalism, here is one relevant bit:
Charisma is one of the two great transcendental forces in the social world: beauty is the other. They are forces seldom talked about, since both issue from the individual, neither may be learned or acquired, and in a democracy, where everyone is meant to be considered equal and where all relationships are meant to be just, such properties cannot be accorded value, though all of us are aware of them and of how much they mean…beauty eclipses everything, bedims all else, it is what we see first and what we consciously or unconsciously seek. Yet this phenomenon is shrouded in silence…driving it out instead by our social mechanisms of expulsion, calling it stupid, immature, or unsophisticated, perhaps even primitive, at the same time as we allow it to flourish in the commercial domain, where it quietly surrounds us whichever way we turn…
I do “get” why the reviews have been so mixed, but I think someone has to have the stones to stand up and call this a masterpiece and that someone is me. With it, Karl Ove Knausgaard has cemented his claim to have produced something truly creative and new, and now instructive as well.
You can pre-order it here, or if you were in a rush as I was, order from the UK.
The rise of the Swedish Democrats
There is a new research paper on this topic, from Ernesto Dal Bo, Frederico Finan, Olle Folke, Torsten Persson, and Johanna Rickne:
We study the rise of the Sweden Democrats, a radical-right party that rose from negligible size in 2002 to Sweden’s third largest party in 2014…We take a starting point in two key economic events: (i) a series of policy reforms in 2006-2011 that significantly widened the disposable-income gap between “insiders” and “outsiders” in the labor market, and (ii) the financial-crisis recession that doubled the job-loss risk for “vulnerable” vs “secure” insiders. On the supply side, the Sweden Democrats over-represent both losing groups relative to the population, whereas all other parties under-represent them, results which also hold when we disaggregate across time, subgroups, and municipalities. On the demand side, the local increase in the insider-outsider income gap, as well as the share of vulnerable insiders, are systematically associated with larger electoral gains for the Sweden Democrats. These findings can be given a citizen-candidate interpretation: economic losers (as we demonstrate) decrease their trust in established parties and institutions.
Is it being an economic loser that makes you support the Sweden Democrats, or simply observing a lot of economic losers around you, the latter having been the case for Donald Trump’s support? This Twitter thread gives some key pictures from the paper and summary of results.