Month: May 2018

Does housing wealth make people more complacent?

It seems so:

I propose the status quo bias hypothesis, which predicts that housing wealth increases preference for status quo arrangements with respect to Social Security. I contrast the status quo bias hypothesis with the claim that housing wealth reduces support for social insurance, and test the hypothesis in two empirical studies. A survey experiment finds that homeowners informed about high historical home price appreciation (HPA) are about 8 percentage points more likely to prefer existing Social Security arrangements to privatized retirement accounts, compared to those informed about low historical HPA. Observational data from the 2000-2004 ANES panel show that homeowners who experience higher HPA are about 11 percentage points more likely to prefer status quo levels of spending on Social Security than those in the bottom HPA quartile. No significant HPA effects are observed among renters, and for other domains of social insurance among homeowners. The evidence suggests that housing wealth’s conservatizing effect should be interpreted as a status quo preference, rather than opposition to redistributive social policies.

That is from Weihuang Wong, via the excellent Kevin Lewis.

The Cultural Divide

That is the title of a new and very important paper by Klaus Desmet and Romain Wacziarg, here is the abstract:

This paper conducts a systematic quantitative study of cultural convergence and divergence in the United States over time. Using the General Social Survey (1972-2016), we assess whether cultural values have grown more or less heterogeneous, both overall and between groups. Groups are defined according to 11 identity cleavages such as gender, religion, ethnic origin, family income quintiles, geographic region, education levels, etc. We find some evidence of greater overall heterogeneity after 1993 when averaging over all available values, yet on many issues heterogeneity changes little. The level of between-group heterogeneity is extremely small: the United States is very pluralistic in terms of cultural attitudes and values, but this diversity is not primarily the result of cultural divides between groups. On average across cleavages and values, we find evidence of falling between-group heterogeneity from 1972 to the late 1990s, and growing divides thereafter…

This, from the paper, is also illuminating:

For some questions, such as several questions on sexual behavior and public policies, there is growing social consensus. For others, such as questions on gun laws and confidence in some civic institutions, we find growing disagreements. Some of these dynamics can be understood as transitions from one end of the belief spectrum to the other. For instance, on the issue of marijuana legalization, attitudes have moved from generalized disagreement to majority agreement, so heterogeneity rose and is now falling. Overall, we find some evidence of a systematic tendency toward greater heterogeneity after 1993 when averaging over all available memes, yet on many issues heterogeneity changes little.

By the way, “urbanicity” shows “declining levels of cultural fixation,” contrary to what you often read.

Overall I take this to be an optimistic set of results.

Is Amharic the most Straussian language?

Amharic is susceptible of ambiguity to a remarkable degree, and Amharas have a tradition of writing clever, short poems, with an overt meaning and a hidden meaning, referred to as “wax and gold.”

That is from Sarah Howard’s Ethiopia: Culture Smart!: The Essential Guide to Customs & Culture.  An Ethiopian I had dinner with told me that Amharic is “eighty percent implication.”  Here is a research paper about ambiguity in Amharic.

Tuesday assorted links

Streetcars, Subways and Segregation

In the NBER reporter, Allison Shertzer and Randall P. Walsh summarize some of the recent research on urban segregation. As a cause of early 20th century segregation, Shertzer and Walsh put somewhat more weight on white flight and local land use regulations and somewhat less on redlining and discrimination by the Federal government (although all causes were important).

One point which I had not previously considered is that technology interacted in important but unintended ways with preferences for segregation:

We hypothesize that public transportation was critical for the acceleration of white flight because streetcars and subways significantly reduced the cost of living further away from employment centers. Household preferences for racial composition could have interacted with municipal infrastructure investments to increase residential segregation. Such a finding would further underscore the lesson that policies that were race-neutral on their face likely contributed to the development of segregated cities.

*Accounting for Capitalism: The World the Clerk Made*

That is the title of a new and excellent book by Michael Zakim.  Here is one bit:

A single block fronting Wall Street in 1850 was thus home to seventeen separate banking firms, as well as fifty-seven law offices, twenty-one brokerage houses, eleven insurance companies, and an assortment of notaries, agents, importers, commission merchants, and, of course, stationers.  A rental market for office “suites” developed apace “fitted up with gas and every other convenience,” which also included newly invented “acoustic tubes” that allowed managing partners to communicate with porters in the basement and clerks in the salesroom without ever having to leave their desks…

All this office activity spurred a flurry of technological spillovers that included single standing desks and double-counter desks, sitting desks featuring nine or, alternately, fifteen pigeonholes, and drawers that could or could not be locked.  “Office chairs capable of swiveling and tilting became available as well, together with less costly “counting house stools” that lacked any upholstery.  Paperweights, check cutters, pen wipers (the woolen variety being preferable to silk or cotton, which tended to leave fibers on the nib), pencil sharpeners, rulers, copying brushes, dampening bowls, blotting paper (less important for absorbing excess ink than for protecting the page from soiled hands), wastepaper baskets, sealing wax (including small sticks coated with a combustible material ignited by friction and designed to be discarded after a single use), seal presses, paper fasteners, letter clips (for holding checks while entering them into the daybook), writing pads, billhead and envelope cases, business cards, receiving boxes for papers and letters, various trays (for storing pins, wafers, pencils, and pens), and “counting room calendars” spanning twelve- or sixteen-month cycles — all became standard business tools.  So did the expanding inventory of “square inkstands,” “library inkstands,” and “banker inkstands” designed with narrow necks which prevented evaporation and shallow bodies that kept the upper part of the pen from becoming covered in ink, thus avoiding blackened fingers and smudged documents.

There is then a whole other paragraph about the different kinds of paper that developed and their importance for clerical work.  This is perhaps the most thorough book I know on the importance of “small” innovations, and it is also a useful book on the history of accounting.

Legalize pot, but don’t normalize it

That is the topic of my latest Bloomberg column.  Here is one bit:

You might wonder why we should be so worried about public marijuana use. To put it bluntly, I see intelligence as one of the ultimate scarcities when it comes to making the world a better place, and smoking marijuana does not make people smarter. Even if you think there is no long-term damage, right after smoking a person is less able to perform most IQ-intensive tasks (with improvisational jazz as a possible exception). By having city streets filled with pot, pot stores and the odor of pot, we are sending a signal that our society isn’t so oriented toward the intellect or bourgeois values. Even if that signal is reflecting a good bit of truth, it would be better not to acknowledge it too openly, just as most advocates of legalized prostitution don’t want to allow brothels on Main Street.

Basically I want full legality, but in some locales (California, Colorado) stronger restrictions on its place in the public sphere.  Do read the whole thing.

The economics of Ethiopian floriculture

Most cut flowers have a high value-weight ratio, and are very perishable.  Flowers are consumed throughout the year, and must respond to varying consumer requirements through time.  Thus, the industry depends on air transport and cold-chain logistics throughout the value chain.  Air transport fees account for more than half the total cost of the product…and combined with marketing account for up to 75 percent of total costs.  Frequency and timeliness of flights and other logistical arrangements are of utmost importance in meeting orders on time and ensuring that flowers arrive fresh to maximize vase time.  The strategic and role of EAL [Ethiopian Air Lines] becomes clear from this perspective.

That is from Arkebe Oqubay’s Made in Africa: Industrial Policy in Ethiopia.  In Ethiopia, they sell this book for less than half of its Amazon list price.

Monday assorted links

1. Are people in the suburbs happier?  You don’t need to click on this one to know the answer.

2. “Our newest royal bride, meanwhile, has already shut down her blog and deleted her Twitter, Facebook and Instagram accounts. From now on, even as her image becomes increasingly ubiquitous, her voice will be heard less and less. Like Blanche of Lancaster before her, Meghan Markle appears to know exactly what she’s letting herself in for, and all the indications are that she will do her job in the royal “Firm” with style and grace. We can wish her well and at the same time question the job description: the recent prominence of royal women might make for splendid pageantry, but when it comes to the story of gender and power, it’s the antithesis of real change.” NYT link here.

3. The coolest restaurant in Ethiopia?

4. Why is the replication crisis centered on social psychology?

5. The Royal Wedding cellist (short video).

Dematerialization: Humanity’s Biggest Surprise

Andrew McAfee argues that the Earth Day environmentalists correctly diagnosed the problem, a worsening environment, but were wrong about the solution, degrowth. In fact, the drive to reduce costs by making better use of resources has led to a dramatic decrease in resource use even as production has increased, a dematerialization. Poverty not prosperity is the enemy of the environment.

I love this talk for many reasons not the least of which is that Andrew has put all his data online.


Kenneth Arrow, weather officer

Following the U.S. declaration of war on December 8, 1941, Arrow, who was certain to be drafted, enlisted in the hope of securing an officer’s commission in the U.S. Army Corps where he believed he would have a chance to use his mathematical and statistical training.  He was quickly approved to attend an aviation training program at New York University in October 1942, taking “active duty” breaks from classes for rifle drill, which he and his colleagues thought rather silly.   Nonetheless, he came out of that program in September 1943 commissioned as a weather officer with the rank of second lieutenant and was assigned to a weather research facility in Asheville, North Carolina; in July 1945 he was transferred to the weather division headquarters of the Army Air Force.  It was during that time in Asheville that he wrote a memorandum that later, in 1949, became his first professional paper (“On the Use of Winds in Flight Planning” in the Journal of Meteorology).  That paper presented an algorithm for taking advantage of winds aloft to save fuel on North Atlantic air crossings, an idea that was not acted upon by the military at that time but became the canonical practice for North Atlantic flight paths in the postwar period.

That is from the new, excellent, and consistently interesting Finding Equilibrium: Arrow, Debreu, McKenzie and the Problem of Scientific Credit, by Till Düppe and E. Roy Weintraub.  Unlike many history of economic thought books, this one tells you “what actually happened,” such as how an Econometrica editor (Robert Strotz) decided to publish the McKenzie paper before the Arrow-Debreu paper, when he had both in hand.

*Unfabling the East*

That is the new and noteworthy book by Jürgen Osterhammel, and the subtitle is The Enlightenment’s Encounter with Asia.  Here is one good bit of many:

For Alexander Hamilton, there was nothing more acoustically disturbing on his extensive travels in Asia than the bells that tolled through the night in Portuguese Goa.  Asian cities are quieter than European ones because they have hardly any paved roads and there are few, if any, carriages with iron fittings.  Festive banquets are marked by an absence of polite conversation because the hosts are too busy tucking into their food to bother with such niceties.  Court ceremonies generally unfold in an atmosphere that strikes Europeans as eerily hushed.  Few words are exchanged during Siamese and Tibetan audiences.  All is calm around the Chinese emperor too, as courtiers and mandarins glide to and fro in felt-lined slippers.

Definitely recommended.  Here is the book’s home page.