Month: March 2016

Claims about candidates

The Trump sector allocation: POSITIVE for consumer discretionary, energy, industrials, information technology (IT), materials, and telecom services; NEGATIVE for consumer staples and healthcare; and NEUTRAL for financial services and utilities. The Clinton sector allocation: POSITIVE for industrials, IT, materials, and utilities; NEGATIVE for consumer discretionary, energy, and telecom services; and NEUTRAL for consumer staples, financials and healthcare. The sectors that benefit regardless: industrials, IT, and materials.

That is from Chris Krueger of Guggenheim Partners, via Politico, via the excellent Kevin Lewis.  Caveat emptor, this strikes me as silly rather than instructive, I’ll add that Trump might be good for the media sector if nothing else.  Kevin also refers us to this interesting paper by Marty Wattenberg:

This article examines sixty years of data from the American National Election Studies, and finds that the electorate’s focus on candidate attributes has declined substantially. Whereas 80% of respondents had mentioned personal attributes in the past, in recent elections only about 60% have done so. Furthermore, such comments are now more tied to partisan identification and have less of an independent impact on voting behavior. The chances of presidential image makers successfully making a difference by emphasizing a president’s personal character are now much less than in the era of Johnson, Nixon, and Reagan.

Here is the gated link.

*Dante: The Story of His Life*

…Dante’s fame as a necromancer is also in a certain sense documented.

Such notoriety shouldn’t be surprising. For one thing, he had a reputation as an expert in astrology, and we know that this discipline could easily spill over into magical and necromantic practices.  And then, above all, he was famous after the publication of Inferno for having descended live into the realms of the afterlife and for having encountered devils there, the souls of the damned, and having spoken to them.  It must have been a rumor widely spread and also disturbing.  It seems, according to Boccaccio, that the women who used to pass him in the street would say to each other: Look, “he who goes into Hell, and returns whenever he likes, and brings back news of those who are down there…”

That is from the new Dante biography by Marco Santagata, Belknap Press at Harvard, definitely recommended, it will make my best non-fiction of the year list for sure.

What is statistically the most improbable thing that has happened to you?

That is a question posed by Robert H. Frank in his forthcoming book Success and Luck: Good Fortune and the Myth of Meritocracy.  The main point of this book is to illuminate the major role which luck plays in our lives and then to flesh out the social and policy implications of that fact.

My view is more Straussian than Bob’s: I think we have to believe in a concept of meritocracy whether it is justified or not.  (Do note that Bob covers a version of this point in one of his chapters, where he argues that reminding people of their good fortune makes them more generous; I still think society requires strong feelings of desert, and generosity often follows from a kind of false magnanimity about one’s good fortune.)  But as always with Bob, this is a deep and stimulating book, well written too.  You also learn a great deal about Bob’s highly interesting life, such as how he survived his heart attack, pulled out Cornell tenure at the last moment, and decided to track down his birth parents.

Here is the book’s home page.  Here is chapter one, which starts with the heart attack story.

Anyway, the comment section is open: what is statistically the most improbably thing that has happened to you?

Banning credit checks harms African-Americans

But a new study from Robert Clifford, an economist at the Boston Fed, and Daniel Shoag, an assistant professor at Harvard’s Kennedy School, finds that when employers are prohibited from looking into people’s financial history, something perverse happens: African-Americans become more likely to be unemployed relative to others.

…What’s surprising is how that redistribution happened. In states that passed credit-check bans, it  became easier for people with bad credit histories to compete for employment. But disproportionately, they seem to have elbowed aside black job-seekers.

I can’t say that mechanism makes me feel better about the world, but there you go. Consider this:

A powerful study published last year in the Review of Economics and Statistics shows something of the opposite happening: When employers began to require drug tests for job applicants, they started hiring more African-Americans.

“The likely explanation for these findings is that prior to drug testing, employers overestimated African-Americans’ drug use relative to whites,” the study’s author explained in an op-ed. Drug tests allowed black job applicants to disprove the incorrect perception that they were addicts.

It’s possible that credit checks were playing a similar role to drug tests, offering a counterbalance to inherent biases or assumptions about black job-seekers.

Here is the Jeff Guo Wonkblog piece, here is one version of the original study.  Here is related earlier work by Daniel Klein.

Time consistency and the economics of Russian oil

The status quo ex ante seems to be unraveling:

“The oil companies are not investing at all in exploration of new deposits because profits on these projects will only come in 10 years. Nobody will invest in these projects.”

Of course the Russian government may end up resorting to an expropriation.  So why invest? But that seems to make the need for an expropriation all the more urgent:

There is little doubt that Russia needs the money now, and that the oil companies provide an enticing target. Because they are paid in dollars but conduct their domestic business in the battered ruble, Russia’s oil majors have lots of cash. While globally most oil companies are deep in the red, cash reserves industrywide in Russia remain at an estimated $90 billion, a deep and tempting pool for the strapped Kremlin.

Yet this is exactly the worst time for trust to collapse:

…oil deposits discovered and developed in Soviet times are nearing depletion. The country’s oil future, like that of the United States, lies in offshore and shale projects that are more expensive to develop.

Do not expect a stellar outcome:

A study leaked from the Ministry of Energy, seen as allied with the oil industry, and published last week in the business daily Vedomosti, presented a doomsday scenario. Russia, the analysis predicted, could cease to be an oil power, with output plummeting to half the current level by 2035.

It is always interesting to look at past history:

It would not be the first time oil entered a spiral of declining volumes and rising demands from the state. Short of cash in an oil price downturn in the late Soviet period, the Kremlin squeezed the oil industry. It was deprived of capital, at the time, for such things as imported machines.

Output in what is today the Russian Federation fell to about 8.8 barrels in 1991 from about 11 million barrels a day in 1988…

Here is the NYT piece by Andrew E. Kramer.

Another look at why the refugee deal does not involve incentive-compatible trades

Under the one in, one out policy, an undefined number of member-states have committed themselves to resettling 72,000 Syrian refugees from Turkey. But the EU’s record in resettling and relocating people is less than impressive: in September 2015, EU member-states agreed to relocate 160,000 asylum-seekers from Greece and Italy (the so-called quota system). So far, they have relocated around 890. Some 600 cases are being held up because of security concerns, in part because of how difficult it is to perform background checks on asylum seekers. Even if the Turkish deal reduces the number of people making the perilous journey from Turkey to Greece, EU member-states would still need to resettle large numbers of Syrians. It is unclear why they would be more willing to do so now, when they have not fulfilled the promises they made six months ago.

That is from Camino Mortera-Martinez, the article has other points of interest.

Angolan arbitrage

Wikimedia and Facebook have given Angolans free access to their websites, but not to the rest of the internet. So, naturally, Angolans have started hiding pirated movies and music in Wikipedia articles and linking to them on closed Facebook groups, creating a totally free and clandestine file sharing network in a country where mobile internet data is extremely expensive.

Here is more, via Kevin Burke.

Thursday assorted links

Russia Bans Queue

Kolejka (queue) is a Polish board game based on life under communism.

The players line up their pawns in front of the shops without knowing which shop will have a delivery. Tension mounts as the product delivery cards are uncovered and it turns out that there will be enough product cards only for the lucky few standing closest to the door of a store. Since everyone wants to be first, the queue starts to push up against the door. To get ahead, the people in the queue use a range of queuing cards, such as “Mother carrying small child”, “This is not your place, sir”, or “Under-the-counter goods”. But they have to watch out for “Closed for stocktaking”, “Delivery error”, and for the black pawns – the speculators – standing in the queue. Only those players who make the best use of the queuing cards in their hand will come home with full shopping bags.

…In this realistic game you really have to be savvy to get the goods.

The game was initially developed by Poland’s Institute for National Remembrance to teach about life under communism but the game became an unexpected hit and has since been translated into English, French, Japanese and Russian among other languages.

The Russian government, however, is not amused and have banned the game.

IPN reported that Russia’s consumer watchdog Rospotrebnadzor warned that the game is perceived as “anti-Russian” and excessively critical of the Soviet system. Russian authorities asked Trefl, the company who bought the game’s license from IPN, to either remove the direct historical references from it or risk getting the product banned.

“IPN did not agree to the implementation of these changes and that is why Kolejka is no longer in Russian shops,” a statement by IPN reads.

I imagine the Russians wouldn’t like Kremlin either.

Addendum: A lot of Americans could use some reminders about price controls and socialism, fortunately you can download and print Kolejka in English here (scroll down).

My favorite things Belgian

No, I am not there but think of this as an act of homage from a distance.  Here goes:

1. Novelist: There is Simenon, Yourcenar, and Amelie Nothomb.  I like them all but do not love them.  Can I pick Julio Cortázar, who was born in Belgium even if he did not come of age there and essentially was Argentinian?  As for a fictional character, how about Hercule Poirot?

2. Playwright: Maurice Maeterlinck, read especially Blue Bird.

3. Composer: César Franck is the obvious modern pick.  There is also Henri Pousseur, and a variety of Renaissance composers, including Heinrich Isaac, Guillaume Dufay, Johannes Ockeghem, and Josquin des Prez.  I’ll pick the violin works of Eugène Ysaÿe, as the Renaissance music is arguably more Burgundian or “Franco-Flemish” than culturally Belgian as it relates to the modern nation.

4. Jazz musician: Django Reinhardt, that one is easy, try this cut.  Toots Thielmans, the jazz harmonica player, is perhaps runner up.

5. Economist: Jacques H. Drèze and Robert Triffin would be the obvious picks.   A dark horse choice would be Jean Drèze, son of Jacques, for his obsessive data work in India.  He still awaits a much-deserved major profile.  Gustav de Molinari, who first wrote about private protection agencies and arguably was the first modern libertarian anarchist.

6. Painter: This has to be the strong suit.  Magritte is an obvious choice, but there is also Gerard David, Hans Memling, Peter Paul Rubens, Anthony van Dyck, Adriaen Brouwer, Luc Tuymans, Jacob Jordaens, Paul Delvaux, Petrus Christus, Robert Campin, and Pierre Alechinsky, among others.  Jan van Eyck is one of the greater painters ever, but for sheer Belgianness I will opt for James Ensor, see the image below.

7. Sculpture: Marcel Broodthaers.  Right now there is a nice retrospective of his work on at MOMA.

7. Historian: Henri Pirenne, way ahead of his time.

9. NBA point guard: Tony Parker was born there, to American and Dutch parents, that counts for something.

10. Anthropologist: Claude Levi-Strauss.  Tristes Tropiques remains a beautiful book to be read by all.

11. Movie: I cannot think of one I really like, can you help?  And I can’t easily digest the works of Chantal Akerman.

11b. Movie, set in: In Bruges, a fun dark comedy.

12. Violinist: Arthur Grumiaux, but with competition from Sigiswald Kuijken.


The bottom line: Once you get into the period where Belgium is a modern nation, it’s all so wonderfully offbeat.

Assorted Wednesday links

Humiliation, the soda tax, and deadweight loss

Catherine Rampell’s excellent column considers the case for a soda tax in Britain.  Here is one bit:

Why not just target the output, rather than some random subset of inputs? We could tax obesity if we wanted to. Or if we want to seem less punitive, we could award tax credits to obese people who lose weight. A tax directly pegged to reduced obesity would certainly be a much more efficient way to achieve the stated policy goal of reducing obesity.

Of course, “fat taxes,” even when framed as weight-loss tax credits, seem pretty loathsome. Why is . . . unclear.

We tax soda instead, even though that is less effective, for instance because soda drinkers may substitute into other sugary beverages.  We are unwilling to humiliate the obese by taxing them directly, and so our chosen policies do less to help…the obese.  (That’s assuming that attempting to shift their consumption behavior helps them at all, which is debatable.)  As Robin Hanson has told us many times, politics isn’t about policy…

Does signaling also help you to do better?

That is the conclusion from a new paper by Rebecca Diamond and Peta Persson (pdf), on Swedish data, here is part of the abstract:

Despite the fact that test score manipulation [by teachers] does not, per se, raise human capital, it has far-reaching consequences for the beneficiaries, raising their grades in future classes, high school graduation rates, and college initiation rates; lowering teen birth rates; and raising earnings at age 23. The mechanism at play suggests important dynamic complementarities: Getting a higher grade on the test serves as an immediate signaling mechanism within the educational system, motivating students and potentially teachers; this, in turn, raises human capital; and the combination of higher effort and higher human capital ultimately generates substantial labor market gains. This highlights that a higher grade may not primarily have a signaling value in the labor market, but within the educational system itself.

Again, the result is that “encouragement effects,” or alternatively “writing off effects,” are stronger than many of us might think.  Tell people enough times that they are a certain way, and eventually they will start to believe you.  I would say this is evidence for my “beasts into men” theory of education, though other interpretations are not ruled out.

For the pointer I thank Ben Southwood.