Year: 2016

Very good indeed awesome sentences about economic method

by  Tyler Cowen in

At the end of the day, the great benefit of field experiments to economics and political scientists is that it’s forced some of the best social scientists to try to get complicated things done in unfamiliar places, and deal with all the constraints, bureaucrats, logistics, and impediments to reform you can imagine.

Arguably, the tacit knowledge these academics have developed about development and reform will be more influential to their long run work and world view than the experiments themselves.

That is from Chris Blattman.  He concludes:

We are all Albert Hirschman now.

The Declining Dominance of Lawyers in U.S. Federal Politics

by  Tyler Cowen in

From Nick Robinson at Harvard Law:

Abstract:
While the ubiquity of lawyers in U.S. electoral politics has frequently been noted, there has been almost no research on how their prevalence has changed over time, why these changes might have occurred, or the consequences of any such shift. This working paper helps fill this gap by using a unique data set that extends over two hundred years to chart the occupational background of members of the U.S. Congress. It finds that lawyers’ dominance in Congress is in slow, but steady, retreat. In the mid-19th century almost 80% of members of Congress were lawyers. By the 1960s this had dropped to a bit under 60%, and by 2015 it was slightly under 40%. The working paper also details variation of the prevalence of lawyers in Congress on the basis of geographic region, gender, race, and political party. It puts forward a set of arguments about why lawyers have traditionally had such success in U.S. federal electoral politics, including the politicization of the US justice system and the comparative advantage lawyers have over other occupations in terms of access to resources and career flexibility. It then claims that lawyers’ electoral decline may be the result of changes within the legal profession, as well as the emergence of a competing full-time professionalized political class, comprised of political aides and members of civil society, who have made politics a career. It ends by briefly exploring some of the potential ramifications of this decline on the legal profession.

File under…”division of labor is limited by the extent of the market.”

Hat tip goes to www.bookforum.com.

Shout it from the rooftops

by  Tyler Cowen in

…the idea that China services, which are already a large share of output, can and will just take up the slack as industry shrinks overlooks that most services are directly tied to the weakening sectors of property and industry. As George Magnus notes, the tertiary sector is concentrated in finance, property, and wholesale and transport distribution, not in business, IT, professional, health and education services. Despite its large services sector, China is much less diversified than the
Bull-narrative surmises.

And this:

Furthermore, absent new forex controls, if the PBOC broadly holds the band and runs down reserves without sterilizing, any PBOC interest rate cuts would be China-demand-contractionary. So alongside interest rate cuts, the PBOC would have to fully sterilize just to maintain the demand status quo, let alone to stimulate. Alternatively, if it lets the Yuan really float (down), it will be disorderly for lack of a policy framework to back a float, and it will set off major global currency shocks.

That is from Peter Doyle (pdf), with further points of interest, via Dani Rodrik.

How much of the math gender gap is due to culture?

by  Tyler Cowen in

Natalia Nollenberger, Núria Rodríguez-Planas, and Almudena Sevilla have a paper on this topic (click on the AEAweb pdf), presented at this year’s AEA meetings, the core result is this:

This paper investigates the effect of gender-related culture on the math gender gap by analysing math test scores of second-generation immigrants, who are all exposed to a common set of host country laws and institutions. We find that immigrant girls whose parents come from more gender-equal countries perform better (relative to similar boys) than immigrant girls whose parents come from less gender-equal countries, suggesting an important role of cultural beliefs on the role of women in society on the math gender gap. The transmission of cultural beliefs accounts for at least two thirds of the overall contribution of gender-related factors [emphasis added by TC].

I believe we will learn more yet when women stop improving, relative to men, at chess.  But so far that has not yet happened.

Why did the British surpass China in matters military?

by  Tyler Cowen in

Here is an excerpt from the now published Tonio Andrade book, The Gunpowder Age: China, Military Innovation, and the Rise of the West in World History:

Part of the answer of course has to do with industrialization.  Steamships destroyed warjunks, towed long trains of traditional vessels into position, reconnoitered shallows and narrows, and, equally importantly, decreased communication times, allowing for minute, systematic coordination of the war effort.  Similarly, industrial ironworks made strong, supple metal for muskets and cannons, and steam power was used to bore cannons and mix, crumble, and sort gunpowder.

But industrialization isn’t the only answer.  Many of the innovations that most helped the British weren’t about steam power or the division of labor or mechanized factories.  They stemmed, rather, from the application of seventeenth- and eighteenth-century experimental science to warfare.  During the mid-1700s, new scientific discoveries enabled Europeans to measure the speed of projectiles, understand the effects of wind resistance, model trajectories, make better and more consistent gunpowder, develop deadly airborne missiles, and master the use of explosive shells.  These innovations as much as the use of steamship and industrial manufacturing techniques underlay the British edge in the Opium War.

Here is my previous coverage of the book.

For all the talk about recent advances in economics, you don’t hear much about one of the very biggest: how rapidly researchers are filling in the contours of Chinese economic history.

Thursday assorted links

by  Tyler Cowen

1. The Straussian Mao statue in Henan.

2. A negative report on Louisiana vouchers.

3. Bitcoin and lex mercatoria.

4. The best space photos of 2015.

5. An Australian design class.

6. Guess who can bring out the real Donald Trump?  So says I.

7. “You know darn well a dog is not going to leave that thing alone,” he said. “Amazon is going to lose a drone, or a dog is going to lose a snout.”

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

by  Tyler Cowen in

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?

by  Tyler Cowen in

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.