We design an experiment to study gender differences in reactions to editorial decisions on submissions to top economics journals. Respondents read a hypothetical editor’s letter where the decision (e.g., revise and resubmit) is randomized across participants. Relative to an R&R, female assistant professors who receive a rejection perceive a significantly lower likelihood of subsequently publishing the paper in any leading journal than comparable male assistant professors. We do not find this gender difference among tenured professors. We consider several mechanisms, pointing to gender differences in attribution of negative feedback to ability and confidence under time constraints as likely explanations.
“Conservative” isn’t exactly the word I would use, but he chose it, so for now let’s just run with that. Here is an excerpt from Matt’s Substack (do subscribe!):
In terms of Tyler’s take, while I accept the logic of the view that it’s better to tax consumption than to tax investment, I just don’t buy into the idea that taxing investment is really bad. If I did, I would be a conservative like he is. But I don’t. I also think that, frankly, he always holds Democratic bills to a super-high standard of technocratic rigor while setting a much lower bar for Republican ones — to be generous, he maybe does that to counteract what he sees as a prevailing left bias of econ Twitter.
But to me, taxing investment with one hand while subsidizing investment with another is pretty good, especially paired with deficit reduction and permitting reforms.
Whether taxing investment at high rates is “bad,” or “really bad,” I am not sure. But it is at least one of those. Let me lay out a core, simple case for relatively low rates of taxation on capital income. One can slug it out with the models, but much of the case comes down to two core intuitions:
1. A lot of people are myopic. That encourages too much consumption relative to investment. Matt himself frequently cites examples of myopia, in this Substack post it is Doritos chips and also Instagram.
2. A lot of institutions, including corporations, are too risk-averse relative to social returns. This is the old Arrow-Lind argument. They won’t take enough chances, and that too stifles some investment. After all, consumption usually is safer than investment, at least if you know where to take your dinners. Furthermore, the bureaucratization of society, including much of the private sector, is proceeding apace, so the thrust of the Arrow argument is stronger than it used to be, even though it may be relying increasingly on non-Arrovian mechanisms.
If you favored Operation Warp Speed, chances are you buy into this argument for at least some kinds of investment.
We simply don’t want the tax system to make these biases worse. And those biases are pretty strong, close to ever present, and fairly universal.
You might add a third argument from time inconsistency:
3. Governments are often not credible, and short-sighted, so they have an excess tendency to tax or confiscate fixed capital investments, even when this is bad in the longer run.
To refer back to Matt’s post, I am not so keen on the general concept “raise the taxes on capital and make the subsidies for investment even bigger” as an approach If you wish to subsidize some kinds of investment, do so at the lowest (optimal) rate possible.- It is simpler, cheaper, involves less deadweight loss, and places less burden on the government to find and implement all of the right tax and subsidy offsets.
I used to favor a zero tax rate of capital, but I no longer hold that view. There are too many options for reclassifying labor income into capital income and thwarting the purposes of the tax system altogether. Nonetheless, subject to this constraint, I think taxes on capital should be as low as possible.
John Stuart Mill was considered a “socialist” in his time, but even he thought the tax rate on capital should be zero and governments should tax land and consumption, still a good formula.
I would make a few additional points:
a. You can favor a low rate of capital taxation without thinking the elasticity of savings is very high. If you tax Amazon less, they will have more money to invest, no matter how savings respond. Furthermore, capital can flow in from abroad, all the more as the world becomes wealthier (and less politically safe?).
b. Capital investment boosts wages, and the quantity/quality of capital invested per worker is a major long-run determinant of wages.
c. Capital investments produce goods and services, which create consumer surplus for everyone. If you are tempted to use the words “trickle down” in this discussion, you are not understanding #b or #c. You really do want to live in the economies with more capital investment per worker.
d. Plenty of Western European governments have relatively favorable taxation for capital income, and still achieve relatively egalitarian outcomes. I don’t myself put much stock in this point, but if it matters to you fine by me. A low tax rate on capital income is hardly “giving away the store.”
So Matt should be a conservative. It is fine if he in turn thinks the alternate views are “bad,” rather than “really bad.”
The Sikh Golden Temple is for me India’s best sight, far more appealing than the Taj Mahal. Would you rather see a mausoleum or a living, breathing site full of human joy? The buildings are remarkably well done and most beautiful at dusk. The site is clean and largely maintained by volunteers, a triumph of Sikh civil society. More people should come here!
The surrounding shops in the pedestrian zone are appealing, and the primary touristy element is directed at Sikh and Hindu pilgrims, not to Westerners.
The food is first-rate, even by Indian standards. Lentils, spinach, mustard leaves, and kulcha soaked with ghee are some of the local specialties. You can eat butter chicken as it was intended, or fish fry. The lassis and raitas are almost as good as those in neighboring Pakistan. Kesar da Dhaba would be my top pick for a restaurant.
And you can stay in a five-star hotel for about $100 a night, excellent swimming pool and restaurant to boot.
Rankings in which Canada is now last among advanced economies:
-Most unaffordable housing
-Highest cellphone bills
-Most COVID debt as % of GDP (public & private)
-Most-delayed airport (Pearson)
-3rd most inefficient port (Vancouver)
— Jon Hartley (@Jon_Hartley_) August 12, 2022
5. “Fund managers who run marathons deliver higher risk-adjusted returns.” (speculative)
6. What would Cole Porter say? “My Favorite Things,” or rather yours?
Card et al. study the selection of fellows to the prestigious Econometrics Society showing essentially that prior to about 1980 there was modest discrimination against women. Between 1980 and 2005 about equal access but since 2005 a large bias towards women. Not surprising but citation metrics give us a way of comparing selection with achievement.
The key result can be seen in the raw data–compare the green line of at least 3 top-5s with the red line of selection as an ES fellow.
Here is the abstract to the paper with more details.
We study the selection of Fellows of the Econometric Society, using a new data set of publications and citations for over 40,000 actively publishing economists since the early 1900s. Conditional on achievement, we document a large negative gap in the probability that women were selected as Fellows in the 1933-1979 period. This gap became positive (though not statistically significant) from 1980 to 2010, and in the past decade has become large and highly significant, with over a 100% increase in the probability of selection for female authors relative to males with similar publications and citations. The positive boost affects highly qualified female candidates (in the top 10% of authors) with no effect for the bottom 90%. Using nomination data for the past 30 years, we find a key proximate role for the Society’s Nominating Committee in this shift. Since 2012 the Committee has had an explicit mandate to nominate highly qualified women, and its nominees enjoy above-average election success (controlling for achievement). Looking beyond gender, we document similar shifts in the premium for geographic diversity: in the mid-2000s, both the Fellows and the Nominating Committee became significantly more likely to nominate and elect candidates from outside the US. Finally, we examine gender gaps in several other major awards for US economists. We show that the gaps in the probability of selection of new fellows of the American Academy of Arts and Sciences and the National Academy of Sciences closely parallel those of the Econometric Society, with historically negative penalties for women turning to positive premiums in recent years.
I saw your post on the new bill, and I actually think the healthcare components of it might be worse than the rest of it.The bill has a provision that allows the government to “negotiate” prices for drugs that are among the top 10-20 by spend in Medicare Part B (physician administered, usually IV infusions) and Part D. Since drugs that are selected in one year are not eligible for inclusion in subsequent years, this will capture more and more drugs over time. The negotiation of course happens with a gun to the head—the bill sets statutory minimum discounts of anywhere between 25-60%, depending how long the drug in question has been on market. The biggest issue with the bill is that it makes small molecule drugs eligible 9 years after approval, while biologic drugs are eligible after 13 years. This is based on some silly misconception that small molecule drugs are quicker and cheaper to develop and therefore have shorter payback periods. That may have been true when we were tackling relatively low-hanging fruit like high cholesterol, but small molecule drugs that tackle unmet needs today are nothing less than miracles. An oral pill that treats cystic fibrosis, like Vertex’s Trikafta, or sickle-cell disease, like Global Blood Therapeutics’ Oxbryta, is incredibly challenging to develop. This is going to hurt returns for small molecule drugs and skew R&D efforts away from them to biologics. Biologics like monoclonal antibodies are great, but many of them carry substantial administration costs or suffer from worse compliance/adherence because they are IV infusions that require patients to go into a care setting periodically to receive their next dose. But the real issue is they do not go generic the way small-molecule drugs do. Generics for small-molecule drugs are relatively cheap to develop, benefit from a streamlined approval process, and can be substituted for the branded drug at the pharmacy counter even if the doctor prescribes the brand, and as a result, drive 90% discounts to the brand price. Biologics, as the name suggests, are derived from living cells and thus cannot be easily proven to be equivalent to the brand—clinical trials are required and the overall expense of developing a biosimilar is 10x that of a small-molecule generic ($20M vs $200M). Between the higher development cost, lack of automatic substitution, and doctor and patient reluctance to believe these biosimilars are identical to the brand, biosimilars discount the brand price less and take a smaller share of the market, resulting in smaller savings to the system. It gets worse—many drugs these days are a “pipeline in a product,” targeting a biological mechanism that is implicated in many diseases. The most famous example might be Humira, which began as a rheumatoid arthritis drug and added psoriasis, psoriatic arthritis, ulcerative colitis, Crohn’s disease, ankylosing spondylitis, and hidradenitis suppurative over time, running trials to prove efficacy in each. Humira is a complex example—patent evergreening extended its lifetime and justified the investment in expanding its approved indications, and on a societal basis, it’s hard to know whether that’s good or bad, but hopefully we can agree that the solution to an IP issue is not to create an artificial time of expiry that discourages investment in science. The bill also includes an exemption through 2028 for orphan drugs that are approved in only one indication—these are drugs that target very rare diseases and generally charge extremely high prices to be financially viable. Some of these drugs are eventually tested in and expand to other smaller indications—but this exemption would discourage that and create an incentive to only try the drug in the largest indication and not expand the label to maintain the exemption and maximize its lifespan. Moreover, small companies that derive at least 80% of their revenue from one drug get a partial exemption from this, rendering them unacquirable by a larger drug company, since the drug is worth more as a standalone asset. This is again a failure of incentive design—it forces replication of corporate and commercial infrastructure that would otherwise have been a source of cost synergies for an acquirer. An example of the orphan disease issue is a drug called mavacamten, that Bristol-Myers acquired for $13.1B (it was the main asset of a company called Myokardia). The development plan was to first test the drug in an orphan indication, obstructive hypertrophic cardiomyopathy (oHCM), then expand to non-obstructive HCM, and eventually to a broader non-orphan heart failure market. This is a small-molecule drug, so negotiation eligibility is 9 years after launch in oHCM, or 2031–this would leave only 5-6 years for commercial launch in the heart failure market. While it probably makes sense for BMS to go ahead and test this molecule in heart failure at this point, the NPV of the molecule would be materially lower assuming a 25% discount to Medicare prices at year 9. The investment bank Jefferies estimates it at a 19% haircut—$10.6B from $13.1B. If the discount is deeper and/or spills over to commercial reimbursement, the haircut gets steeper and steeper—this overhang will reduce the number of drugs developed and/or force ever-higher launch prices since more of the value of the molecule has to be generated from the first indication. Lastly, this encourages even more gaming of the system. In theory, authorizing a generic competitor at a small discount at 9 or 13 years would protect the branded drug, as drugs with generic/biosimilar competition are exempt from negotiation. Handing the rights to produce a 10% cheaper version of your drug to Teva or Sandoz could therefore be less costly than the government’s proposed price cuts. This is sadly the story of our entire HC system—poor incentive structures layered on top of each other in an increasingly wobbly manner rendering the whole system unfit for purpose and on the verge of collapse. I should note here that this also targets one of the few industries where the US is still the undisputed global leader—can we really afford to do that? Especially when pharmaceuticals are less than a fifth of US HC spend, and the real drivers of out-of-control healthcare spending are guilds like the AMA and local monopolies (hospital systems that have consolidated heavily and are the largest employers in many congressional districts and even states, giving them both outsize negotiating power against insurers and lobbying clout in Congress).
That is from Anonymous!
For much of the midterm campaign, Democrats have grappled with how to define their message, weighing slogans like “Democrats deliver” and “Build back better,” and issuing warnings against “ultra-MAGA” Republicans.
Now, a coalition of progressive organizations has settled on what its leaders hope will be a unified pitch from the left. This November, they plan to argue, Americans must vote to protect the fundamental freedoms that “Trump Republicans” are trying to take away.
That pitch is the product of a monthslong midterms messaging project called the “Protect Our Freedoms” initiative, fueled by polling and ad testing.
The move is the latest evidence that Democrats at every level of the party and of varying ideological stripes — including President Biden, abortion rights activists in Kansas and, now, a constellation of left-leaning groups — are increasingly seeking to reclaim language about freedom and personal liberty from Republicans. It is a dynamic that grew out of the overturning of Roe v. Wade in June, and one that is intensifying as more states navigate abortion bans while Republicans nominate election deniers for high office.
Here is more from The New York Times.
4. Place-based policies in the CHIPS and Science Act (don’t they usually fail? Why are investing so much in them?).
Three volumes, $281.57, totally worth it. Picture books! Asia only, the vanishing part of course. Very wide coverage of various regions, including parts of western Asia such as Georgia. And yes this is the same Kevin Kelly who is a Hayekian, tech commentator, and much more. It is thus one of the most conceptual picture books, noting the text is minimal and descriptive.
And it is not just the usual stuff, such as amazing old buildings or vistas of rice paddies and brightly colored festivals. Kelly is not afraid to hit you with 40 door photos in a row, all lined up in neat little rows.
Might this be one of the very best picture books? Based on 9,000 photographs and 50 years of travel, 40 of them spent taking photos, and none of it was paid for by other parties. They don’t make ’em like this any more. Recommended.
p.s. One trick of the book is that a lot of this stuff hasn’t vanished at all. Note the gerund!
Here is the audio, video, and transcript. Here is part of the summary:
William joined Tyler to discuss why the movement [Effective Altruism] has gained so much traction and more, including his favorite inefficient charity, what form of utilitarianism should apply to the care of animals, the limits of expected value, whether effective altruists should be anti-abortion, whether he’d would side with aliens over humans, whether he should give up having kids, why donating to a university isn’t so bad, whether we are living in “hingey” times, why buildering is overrated, the sociology of the effective altruism movement, why cultural innovation matters, and whether starting a new university might be next on his slate.
And an excerpt:
COWEN: Of all the inefficient things, which is the one you love most?
COWEN: If we’re assessing the well-being of nonhuman animals, should we use preference utilitarianism or hedonistic utilitarianism? Because it will make a big difference. We’re not sure all these animals are happy. They may live lives of terror, but we’re pretty sure they want to stay alive.
MACASKILL: It makes a huge difference. I think the arguments for hedonism as a theory of well-being, where that saying that well-being consists only in conscious experiences — positive ones contribute positively, negative conscious experiences contribute negatively — I think the arguments for that as a theory of well-being and the theory of what’s good are very strong. It does mean that when you look to the lives of animals in the wild, my view is it’s just very nonobvious whether those lives are good or not.
That’s me being a little bit more optimistic than other people that have looked into this, but the optimism is mainly drawing from just lack of — I think we know very little about the conscious lives of fish, let alone invertebrates. But yes, if you have a preference satisfaction view, then I think the world looks a lot better because beings, in general, want to keep living.
Actually, when we look to the future as well, I think if you assess how good is the future going to be on a hedonist view, well, maybe it’s quite fragile. You could imagine lots of future ways that civilization could go, where they just don’t care about consciousness at all, or perhaps the beings that will, are not conscious. But probably, beings in the future will have preferences, and those preferences will be being satisfied. So, in general, moral reality looks a lot more rosy, I think, if you’re a preference satisfactionist.
COWEN: But it’s possible, say, in your view, that human beings should spend a lot of their time and resources going around destroying nature, since it might have negative net expected utility value.
MACASKILL: I think it’s a possible implication. I think it’d be very unlikely to be the best thing we could be doing because once —
COWEN: But there’s a lot of nature. We have very effective bombs, weapons. We could develop animal-killing weapons if we set our minds to it.
And from me:
COWEN: I worry a bit this is verging into the absurd, and I’m aware that word is a bit question-begging. But if we think about the individual level — like what do you, Will, value? — you value, in part, the inefficient. It’s very hard to give people just pure utilitarian advice, because they’re necessarily partial.
At the big macro level — like the whole world of nature versus humans, ethics of the infinite, and so on — it also seems to me utilitarianism doesn’t perform that well. The utilitarian part of our calculations — isn’t that only a mid-scale theory? You can ask, does rent control work? Are tariffs good? Utilitarianism is fine there, but otherwise, it just doesn’t make sense.
Fascinating throughout. Don’t forget Will’s excellent new book What We Owe the Future.
That is the theme of my latest Bloomberg column, here is one excerpt:
When people are forced to adjust, as happened during peak pandemic times, they learn new things. What many Americans and Westerners have learned is that they enjoy “comfort travel” as much if not more than “challenge travel.” A lot of the new habits are going to stick. Especially with group travel, the preferences of comfort travelers will tend to win out in choosing a destination.
One slightly sorry truth is that many people do not very much enjoy challenge travel, which can be stressful and almost like work. When the social and group pressures to do it are removed or lessened, challenge travel is likely to decline, although the hardcore challenge travelers will remain and perhaps even expand their ambitions.
The future for challenge travel, then, may be that it becomes both less popular and more intense. In this sense it may harken back to an earlier era of travel, where risk and difficulty were ever present and surprises were frequent.
I am posting this from Ahmedabad and headed next to Udaipur…