Month: May 2019
We examine the stability of preferences over time using panel data from Kenya on fertility intentions,realizations, and recall of intentions. We find that desired fertility is very unstable, but that most people perceive their desires to be stable. Under hypothetical scenarios, few expect their desired fertility to increase over time. Moreover, when asked to recall past intentions, most respondents report previously wanting exactly as many children as they desire today. Biased recall of preferences over a major life decision could have important implications for measuring excess fertility, the evolution of norms,and the perceived need for family planning programs.
That is from a new NBER working paper by Maximilian W. Mueller, Joan Hamory Hicks, Jennifer Johnson-Hanks, and Edward Miguel.
And when I say recent, I mean in the last few weeks. That is the topic of my recent Bloomberg column, here is one bit:
The populist “New Right” isn’t going away anytime soon, and the rise of the “New Left” is exaggerated.
Start with Australia, where Prime Minister Scott Morrison won a surprising victory last week. Before the election, polls had almost uniformly indicated that his Liberal-National Coalition would have to step down, but voters were of another mind. With their support of Morrison, an evangelical Christian who has expressed support for President Donald Trump, Australians also showed a relative lack of interest in doing more about climate change. And this result is no fluke of low turnout: Due to compulsory voting, most Australians do turn out for elections.
Hard Brexit is alive and well, the European Parliament elections later this week could be a disaster, and Modi seems to be on the upswing in the Indian election. But perhaps most importantly there is this:
One scarcely noticed factor in all of this has been the rising perception of China as a threat to Western interests. The American public is very aware that the U.S. is now in a trade war with China, a conflict that is likely to provoke an increase in nationalism. That is a sentiment that has not historically been very helpful to left-wing movements. China has been one of Trump’s signature causes for years, and he seems to be delighting in having it on center stage.
The Democratic Party is not well-positioned to make China a core issue. Democrats have been criticizing Trump’s tariffs for a while now, and it may be hard for them to adjust their message from “Tariffs Are Bad” to “Tariffs Are Bad But China Tariffs Are OK.” Their lukewarm support for free trade agreements — especially the Trans Pacific Partnership, which could have served as a kind of alternative China trade policy — also complicates matters. The net result is that Republicans will probably be able to use the China issue to their advantage for years to come.
Nor did Obama stand up to China on the militarization of the South China Sea. Do read the whole thing.
“Their economic fundamentals are fundamentally different,” said Christopher Kurz, an economist at the Federal Reserve.
Mr. Kurz and his colleagues last year analyzed income, debt, asset and consumption data to figure out how millennials compared at similar ages with Generation X, people born between 1965 and 1980, as well as baby boomers, those born from 1946 to 1964.
They found that millennial households had an average net worth of about $92,000 in 2016, nearly 40% less than Gen X households in 2001, adjusted for inflation, and about 20% less than baby boomer households in 1989.
Wages didn’t look much better. At the same ages, Gen X men working full time and who were heads of households earned 18% more than their millennial counterparts, and baby boomer men earned 27% more, when adjusting for inflation, age and other socioeconomic variables.
Among women, incomes were 12% higher for Gen Xers and 24% higher for baby boomers than for millennials, using the same measures.
That is from Janet Adamy and Paul Overberg at the WSJ. Note this too:
Millennials, as a group, are better educated than any generation before them. About four in 10 ages 25 to 37 hold at least a bachelor’s degree compared with about a quarter of baby boomers, and three in 10 Gen Xers when they were the same age.
You can see the problem, yes? Here is the original paper by Christopher Kurz, Geng Li, and Daniel J. Vine.
2. Elba insurance markets in everything: “Guests receive a refund for one night if it rains for more than two hours on any given day during their stay.” (NYT)
5. “A proposal before the D.C. Council would allow up to 80 regular citizens, 10 in each ward, to issue tickets to vehicles parked where they aren’t allowed — blocking crosswalks, in bike lanes, in front of bus stops.”
7. AEA now has an ombudsperson (a good idea).
Donohue and Levitt (2001) presented evidence that the legalization of abortion in the early 1970s played an important role in the crime drop of the 1990s. That paper concluded with a strong out-of-sample prediction regarding the next two decades: “When a steady state is reached roughly twenty years from now, the impact of abortion will be roughly twice as great as the impact felt so far. Our results suggest that all else equal, legalized abortion will account for persistent declines of 1 percent a year in crime over the next two decades.” Estimating parallel specifications to the original paper, but using the seventeen years of data generated after that paper was written, we find strong support for the prediction. The estimated coefficient on legalized abortion is actually larger in the latter period than it was in the initial dataset in almost all specifications. We estimate that crime fell roughly 20% between 1997 and 2014 due to legalized abortion. The cumulative impact of legalized abortion on crime is roughly 45%, accounting for a very substantial portion of the roughly 50-55% overall decline from the peak of crime in the early 1990s.
A rose painted by another name would cost more. In a new paper*, four academics show that art made by women sells for lower prices at auction than men’s, and suggest that this discount has nothing to do with talent or thematic choices. It is solely because the artists are female.
The authors used a sample of 1.9m transactions in art auctions across 49 countries in the period from 1970 to 2016. They found that art made by women sold at an average discount of 42% compared with works by men. However, auction prices can be distorted by a few famous artists whose output is perceived as extremely valuable. If transactions above $1m are excluded, then the discount falls to 19%.
…the researchers used a computer programme to generate paintings and randomly assign the results to artists with male or female names. They then asked participants to rate the paintings and ascribe a value. The experiment found that affluent individuals (those most likely to bid at auctions) attributed a lower value to works which the programme assigned to a woman. Clearly, this gap was unrelated to the artistic merit of the picture.
I don’t quite think that shows (non-statistical) discrimination, perhaps more convincing is this:
The average discount applied to the work of a given female artist was lowest in countries where women were more equal. (There are some exceptions to the rule, such as Brazil, where women’s art was highly rated.)
The good news is that the female discount has fallen over time. For transactions under $1m, the study calculated, the discount has dropped from 33% in the 1970s to 8% after 2010.
If you not wealthy and wish to collect art, buy textiles, they are much cheaper and very often the creators are women rather than men. They are not as a whole less aesthetically valuable than paintings, except perhaps for paintings at the very very highest levels. But within painting, prices for Gwen John vs. Augustus John have been in parity for some while now, same with Frida Kahlo and her male contemporaries, or Natalia Goncharova vs. her peers, the latter I check on a regular basis in fact I was just perusing them today.
Here is The Economist source piece. Here is the original research., “Is gender in the eye of the beholder? Identifying cultural attitudes with art auction prices”, by Renée Adams, Roman Kräussl, Marco Navone and Patrick Verwijmeren.
3. Jeff Koons is underrated (NYT).
6. Newark schools have in fact turned around (The Economist, and I’d like to see a separate piece on whether Mark Zuckerberg deserves any credit for this.)
Socialism is bad. I need no convincing. But the collapse of Venezuela is much worse than anyone would have predicted from socialism alone:
NYTimes: ….the drop in Venezuela’s economic output under Mr. Maduro has undergone the steepest decline by any country not at war since at least 1975.
By year’s end, Venezuela’s gross domestic product will have shrunk by 62 percent since the beginning of the recession in 2013.
Venezuela has lost a tenth of its population in the past two years as people fled, even trekking across mountains, setting off Latin America’s biggest ever refugee crisis.
Venezuela’s hyperinflation, expected to reach 10 million percent this year according to the I.M.F., is on track to become the longest period of runaway price rises since that in the Democratic Republic of Congo in the 1990s.
“This is essentially a total collapse in consumption,” said Sergi Lanau, deputy chief economist at the Institute of International Finance…
So what is causing the tremendous drop in economic activity? Ironically, it’s not too much government but too little. Outside of the capital, the government has practically abandoned its most basic responsibility of providing law and order. The result has been widespread looting. Ordinary theft is about stealing money or valuable “final” goods like diamonds or art works. In theory, the thief receives more or less what the owner loses. Looting, however, is a special kind of theft. Looting is theft plus destruction. The person who steals a candy bar is a thief. The person who breaks a store front window and steals a candy bar is a looter. Looters destroy intermediate goods and infrastructure and gain far less than owners lose. Looting is the worst kind of theft.
He said he lost his job at a hotel when looters ransacked it in March, ripping out even window frames and cable wiring. He now collects wild plums to sell for a few cents in the city’s parks. Most of his community’s diet now consists of wild fruits, fried corn pastries and bone broth, residents said.
Farther from the state capital, conditions are worse.
…The four stone quarries that are the island’s only industry have been idle since robbers stole all power cables connecting them to the grid last year. Local opposition activists estimate up to a third of the residents have emigrated from the island in the past two years.
“It used to be a paradise,” said Arturo Flores, the local municipality’s security coordinator, who sells a fermented corn drink from a bucket to local fishermen to round up his salary, which is equivalent to $4 a month. “Now, everyone is fleeing.”
On the other side of Zulia state, in the ranching town of Machiques, the economic collapse has decimated the meat and dairy industries that had supplied the country.
Power cuts have idled the local slaughterhouse, once one of the largest in Latin America. Armed gangs extort and rustle cattle from the surviving ranchers.
“You can’t produce if there’s no law,” said Rómulo Romero, a local rancher.
…“There’s no local, regional or national government here,” said José Espina, a motorbike taxi driver there. “We’re on our own.”
To say that socialism is better than anarchy is not to defend the rotten Chavez-Maduro regime. Instead I am pointing to the relevance of Mancur’s Olson’s model of the roving and stationary bandit. Olson explained why roving bandits evolve into stationary bandits:
Under anarchy, uncoordinated competitive theft by “roving bandits” destroys the incentive to invest and produce, leaving little for either the population or the bandits. Both can be better off if a bandit sets himself up as a dictator-a “stationary bandit” who monopolizes and rationalizes theft in the form of taxes. A secure autocrat has an encompassing interest in his domain that leads him to provide a peaceful order and other public goods that increase productivity.
The process is working in reverse in Venezuela. In Venezuela, the stationary bandit regime is collapsing and it is being replaced by a regime of roving bandits.
The incentives Olson identifies will eventually result in a new stationary bandit or, if Venezuela is lucky, maybe even less banditry and better institutions. The process is already underway. Consider this:
Local shopkeepers have pulled together to repair power lines and keep telecom towers running, to feed public workers, and to procure diesel for backup generators.
“We have practically taken on the functions of the state,” said Juan Carlos Perrota, a butcher who runs Machiques’ chamber of commerce.
Local shopkeepers are repairing power lines, feeding public workers and taking over the power of the state. Awesome! ¡Viva la maquinaria de la libertad!
The process of rebuilding governance, however, is slow and the destruction of wealth and human life costly. Indeed, it’s a surprise that Venezuela has gone so far down this path. Stationary bandits are usually replaced by other stationary bandits. Juan Guaidó seems far superior to Maduro on every score but the real puzzle is how Maduro has held off the generals even as anarchy looms. Don’t the generals see that that the goose is dying?
The current grant opportunities for starting a new independent research career in academia have not only become increasingly unavailable to young scientists and engineers, but are also disastrously risk-averse. At the NIH, the proportion of all grant funds awarded to scientists under the age of 36 fell from 5.6% in 1980 to 1.5% in 2017. One might ask the rhetorical question: How successful would Silicon Valley be if nearly 99% of all investments were awarded to scientists and engineers age 36 years or older, along with a strong bias toward funding only safe, nonrisky projects? Similarly, at the U.S. Department of Energy and its National Laboratories, high-risk, high-reward research and development has been severely limited by extreme volatility in research funding and by very limited discretionary funding at the laboratory level.
That is by Bruce Alberts and Ventakesh Narayanamurti, via Larry Summers.
Just watched your recent interesting exchange with Professor Wu on whether the Standard Oil divestiture made public policy sense.
Wu asserted that the decision was good public policy. You said you were not so sure since the evidence (on competition and consumer welfare) prior to divestiture may have been ambiguous. Wu had a near heart attack at that suggestion which showed me, of course, that he has never read the case, has never read the trial record (it’s 11,000 pages long and the State of Connecticut library in Hartford actually had a copy when I was researching this case back in 1970) and has never read any economist (such as myself) that has done some of that work so that professors such as Wu can be marginally smarter in policy debates.
This is one of the most misunderstood cases in antitrust history. (Even Bork, who gets much of the revisionist case history correct, totally flinches on this case; he does nearly nothing with it.)
The first misunderstanding in almost all of the law texts is that this is the first “rule of reason” antitrust case. That implies that the SC must have sifted through all of the conflicting facts and arguments presented at court and determined that Standard had acted “unreasonably.” Totally False. A modified rule of reason approach was articulated in the case by Justice White in 1911 but, of course, was never applied to the specifics in Standard.
As any antitrust lawyer can tell you this is a job for a lower court anyway, not for the SC; but this case was never remanded. The SC simply decided that the many mergers by Standard prior to 1890 constituted an attempt to monopolize in violation of the Sherman Act and, notice, divestiture follows logically from that reasoning. But whether Standard ever “restrained trade” (as we now understand the meaning of that phrase, i.e. able to reduce industry output and raise industry price) was NEVER determined. Thus whether Standard missallocated resources, charged monopoly prices, repressed innovation, etc…was never decided by the SC or any other court.
Which leaves totally open the question of what was actually going on in the oil industry between say 1880 and 1907 (aside from the many mergers). I determined that this industry (crude oil, transportation, refining, marketing was all very small ( this is pre-gasoline after all); that there were few if any legal barriers to entry and that business organizations entered and left with some frequency, typical of a young and innovative industry; that Standard, despite mergers, always had many rivals in refining (Texaco, Pure Oil, Associated Oil and Gas, Sun Oil, Gulf and many many others) and, of course, there were hundreds of firms in crude oil production and marketing which were never “monopolized”; that costs and prices decreased throughout the period of alleged monopolization (even Ida Tarbell admits this. Indeed I got much of my cost and price information from her “History of the Standard Oil Company”; that Standard’s market share decreased in the 10 year period prior to the antitrust suit (1907); and that, as John McGee argued long ago, that Standard probably did not engage in predatory pricing. There is much much more to this story and I tell a good share of that in “Antitrust & Monopoly.”
Perhaps Wu can make the case that the divestiture in 1911 produced a better result (in terms of all of the things that economists measure) than what would have happened if nothing dramatic had been done. That’s counter-factual so good luck with that!! All I know is that his knowledge of the actual history of the oil industry is quite stunning and I fear for the life of his more curious students.
As I said in the Wu debate itself, I do not know enough about this case and I am agnostic on the question. Still, there is a perspective you don’t usually hear, and so I am passing it along.
Here is the review, it is very smart and elegant (even if I don’t agree with everything in it). My favorite phrase: “Business may not be the face that launched a thousand ships, but it built them…”
3. Anand G. on the new Jared Diamond book (NYT).
4. The other Nordic paradox (violence against women).
As gang wars drive Brazil’s homicide rate to historic highs, evangelical pastors — long revered in the nation’s slums and prisons — have come up with a new way to protect members looking for a way out.
Gang leaders say the only way to leave the business alive is to convert to Christianity. So Barros, a televangelist popular here in western Brazil, memorializes a gang member’s embrace of the ancient articles of faith using the most modern of tools: He records the conversion on his smartphone and posts the videos on YouTube, Facebook and WhatsApp. The converts gain immunity against retribution by rival gangs and their own.
Gang leaders and law enforcement officials say it works.
“We aren’t going to go against the will of God,” a local leader of the powerful Comando Vermelho, the gang that was pursuing Viera, told The Washington Post. “God comes first, above everything.”
And there is an enforcement mechanism:
When his attackers saw it [the deconversion video], they dropped their pursuit. But they monitored him for months, checking to see if he was going to church or had contact with his former leaders.
“If I do anything wrong, they will kill me,” Cunha said. “I have to take the video seriously. They don’t tolerate regressions.”
Here is more from Marina Lopes at The Washington Post, interesting throughout.
I hope your head doesn’t explode, but it seems to me that Harvard and Matt Yglesias are right about the dismissal of Sullivan from his Winthrop House post at Harvard. Matt explains:
Sullivan isn’t a public defender who’s simply taking the clients assigned to him. He’s not even a full-time criminal defense lawyer who just takes whichever clients happen to come through his door. He’s a busy guy who has classes to teach, a dorm to administer, and various other demands on his time. While it’s obviously true that all criminal defendants have a right to an attorney, it’s equally obvious that criminal defendants don’t have a particular right to Ronald Sullivan’s services.
Now, I don’t doubt that Harvard may have acted for what in part are the wrong reasons, namely asymmetric treatment of left-and right wing causes and cases. Still, it seems reasonable to me that Harvard insists that its faculty dorm administrators face a minimum of outside distractions, especially controversial distractions, without having to judge whose fault is the controversy (Sullivan’s fault? Harvard’s fault? the fault of the possibly “snowflaky” students?). Maybe Harvard would have been unfair and inconsistent had another, non-Weinstein defendant been involved, still that does not make Sullivan’s dismissal the wrong decision.
On top of that, having “snowflake” students in the dorm is still a reason to make Sullivan choose either the dorm or the legal case — complainers don’t always have to be correct for their wishes to have some validity. It really is about helping students focus on their studies, and sometimes that might mean removing distractions which distract for maybe not entirely rational reasons. Furthermore, in this case maybe the distraction was rational to some extent (I genuinely do not know on that one as I do not have direct information, Matt thinks yes but in my view leaps to quickly to that conclusion).
Let’s say I hired a TA for my Econ 101 class, and then I learned that TA would be defending Edward Snowden in his or her spare time. Probably I would ask for another TA! And that has nothing to do with my view of Snowden, one way or the other, or whether my students have rational views of Snowden or not (I genuinely do not know if they do).
With the Sullivan/Weinstein episode, it is not difficult to imagine the media becoming “too interested” in Winthrop House and Sullivan’s role, for media-prurient reasons, and to the detriment of student focus. It is not crazy for Harvard to choke this off before it gets started, with no animus required toward Sullivan or any particular defendant.
Note also this from Matt:
At least some of the heat around this topic stems from a measure of confusion among the general public as to what the job of faculty dean amounts to. It sounds like a lofty academic post but actually is closer to being a kind of glorified RA — though even this is arguably an overstatement of the role.
Overall, I don’t think this is the right cause for free speech advocates, opponents of PC in universities, etc. It seems to me like a private institution making an entirely defensible governance decision, on a matter which does quite genuinely fall under its governance purview.
5. Yonatan Berman: “We also find that absolute mobility decreases with income. Individuals and families occupying thelower ranks of the income distribution have a higher probability of increasing their income over short time periods than those occupying higher ranks. This also occurs during periods of in-creasing inequality. Our findings stem from the importance of the changes in the composition of income percentiles. These changes are over and above mechanical labor market dynamics and life cycle effects. We offer a simplified model to mathematically describe these findings.” More here.