Month: January 2016

Thursday assorted links

How much did World War II boost post-war growth?

Petros Milionis and Tamas Vonyo have a new paper on this question (click through to the first pdf here), the effect was a major and long-lasting one, here is part of the abstract:

…this reconstruction process was an important driver of growth during the post-war decades, not only in Europe but globally, and its impact on growth rates lasted until the mid 1970s. Moreover, a counterfactual analysis suggests that in the absence of the reconstruction effect global growth rates from 1950 to 1975 would have been on average 40% lower and only slightly higher than those observed during the years from 1975 to 2000.

Here is Alex’s MRU video on the Solow growth model, part two here.

Are the disabled less loss averse?

Arbel, Ben-Shahar, and Gabriel have a newly published paper on this topic, here is the abstract:

Research findings show that disabled persons often develop physical and psychological mechanisms to compensate for disabilities. Coping mechanisms may not be limited to the psychophysiological domain and may extend to cognitive bias and loss aversion. In this study, we apply unique microdata from a natural policy experiment to assess the role of loss aversion in home purchase among nondisabled and disabled households. Results of survival analysis indicate that the physically disabled are substantially less loss averse in home purchase. Furthermore, loss aversion varies with other population characteristics and attenuates with degree of disability. Findings provide new evidence of diminished cognitive bias and more rational economic decision-making among the physically disabled.

There are alternative versions of the paper here.

For the pointer I thank the excellent Kevin Lewis.

Wednesday assorted links

China pessimists are China optimists, and vice versa

If you think a lot of China’s growth slowdown already has come, the rest should prove manageable, albeit painful.  That is true for both the global economy and for China.  And that is in fact my view.

But if you think China has been growing at six to seven percent over the last year…egads!  The roof will be falling in all at once, and what a long and steep way it has to tumble.  The previous China optimists, provided they are not asleep, should be really worried now.

If you take Australian prices as a kind of bellwether, arguably the Chinese slowdown started about four to five years ago.  (Five years ago, the Australian government was forecasting Australian growth rates of seven percent, now the growth rates are at about two percent.)

I call it the Soft Hard Landing.


Religion is good for the poor, installment #1437

From Jessica Shiwen Cheng and Fernando Lozano:

What is the role of religious institutions and religious workers in the racial earnings gap in the United States? In this paper we explore the relationship between childhood exposure to religious density, as measured with the number of religious workers at the state level, and the labor market outcomes of the worker thirty years later. We use data that spans over fifty years to identify changes in earnings due to early exposure to religion: our first source of identification uses changes in these two variables within states, and our second source of identification uses states’ differences by following workers who moved to a different state. Our results suggest that living in a state with a an extra clergy member for each 1,000 habitants increases the earnings of black workers by 1.7 to 3.6 percentage points relative to white workers.. In addition we show that this relationship is robust to different measures of exposure to religious density, and that these estimates increase to 7.6 percentage points when the change on religious density is defined exclusively increasing an extra black religious workers for each 1,000 habitants. Finally, we estimate a series of robustness tests that suggest that these results are not due to spatial sorting across states, nor to secular time trends associated with changes in labor market outcomes for black American workers.

You can find a copy of the paper if you dig through this link to the AEA program, look under Jan 03, 2016 12:30 pm, Hilton Union Square, Powell A & B, National Economic Association/American Society of Hispanic Economist.  The title of the paper is”Racial/Ethnic Differences in Self-Identification and Income Inequality,” but do any of you know a better, more direct link?

As I see things, to overgeneralize perhaps rather grossly, Democratic economists are more concerned with social and intellectual status, often in good ways, than are many conservatives.  The former group therefore is led to violate strictures of science through the omission of inconvenient truths, rather than through outright denialism or simply “making things up.”  The benefits of religion, including sometimes extreme religion, are one example of that.  On the Left, redistribution is a popular remedy for poverty, religion much less so.

That was then, this is now, part II

“Do I think they have the capacity to make a hydrogen bomb? I think that’s virtually impossible,” said Daniel Pinkston, an expert on North Korea’s nuclear weapons who is currently at Babes-Bolyai University in Romania.

…South Korean intelligence specialists also were skeptical and dismissed Kim’s words as rhetoric. “We don’t have any information that North Korea has developed an H-bomb,” Yonhap News Agency quoted an unidentified intelligence official as saying. “We do not believe that North Korea, which has not succeeded in miniaturizing nuclear bombs, has the technology to produce an H-bomb.”

That is from The Washington Post, December 10, 2015.  It remains to be seen, of course, whether the test actually was a hydrogen bomb.

Brookings fellowship

From my inbox:

We’re recruiting for our next Okun-Model fellow, which is a one-year visiting position at Brookings for early career economists. Previous fellows include Melissa Kearney, Jens Ludwig, and Amanda Kowalski. If you know of anyone interested for academic year 2016-2017, or anyone who might know someone interested, please pass along the link:
Ted [Gayer]

When can median income consumers afford the very best?

Raffi Melkonian asks:

A random Econ ? that pops into my head: are there any goods that a US median income maker can buy that are the best available?

I can think of quite a few:

iPhones and Kindle

mineral water (Gerolsteiner)

most vaccines and antibiotics

writing paper



basketballs and many other sporting goods


Coca-Cola, Mexican or otherwise

Google and Facebook

Raffi himself cites “razor blade” on Twitter.

What else?