Month: October 2019

The Long-Term Effects of California’s 2004 Paid Family Leave Act on Women’s Careers

It is not obviously a winner policy, at least not from the point of view of boosting women’s labor market opportunities.  In fact it seems to harm them:

This paper uses IRS tax data to evaluate the short- and long-term effects of California’s 2004 Paid Family Leave Act (PFLA) on women’s careers. Our research design exploits the increased availability of paid leave for women giving birth in the third quarter of 2004 (just after PFLA was implemented). These mothers were 18 percentage points more likely to use paid leave but otherwise identical to multiple comparison groups in pre-birth demographic, marital, and work characteristics. We find little evidence that PFLA increased women’s employment, wage earnings, or attachment to employers. For new mothers, taking up PFLA reduced employment by 7 percent and lowered annual wages by 8 percent six to ten years after giving birth. Overall, PFLA tended to reduce the number of children born and, by decreasing mothers’ time at work, increase time spent with children.

That is from a new NBER working paper by Martha J. Bailey, Tanya S. Byker, Elena Patel, and Shanthi Ramnath.  And are you wondering why the number of children falls as a response?  Because the mother ends up staying home with them?  Or do mothers invest more in child quality, thereby lower quantity, as in a Becker model?  In any case a good question.

The Mexican drug war and its intensification

Event study estimates suggest that cartel presence increases substantially after 2010 in municipalities well suited to grow opium poppy. Homicide rates increase along with the number of active cartels per municipality, with higher increases when a second, third, fourth and fifth cartel become active in the territory. These results suggest that some of the increase in violence that Mexico experienced in the last fifteen years could be attribute to criminal groups fighting for market shares of heroin and not only to changes in government enforcement.

That is from a recent job market paper by Fernanda Sobrino of Princeton University.

Why are Jamaicans the fastest runners in the world?

That is one chapter in Orlando Patterson’s new and excellent The Confounding Island: Jamaica and the Postcolonial Predicament.  One thing I like so much about this book is that it tries to answer actual questions you might have about Jamaica (astonishingly, hardly any other books have that aim, whether for Jamaica or for other countries).  So what about this question and this puzzle?

Well, in terms of per capita Olympic medals, Jamaica is #1 in the world, doing 3.75 times better by that metric than Russia at #2.  This is mostly because of running, not bobsled teams.  Yet why is Jamaica as a nation so strong in running?

Patterson suggests it is not genetic predisposition, as neither Nigeria nor Brazil, both homes of large numbers of ethnically comparable individuals, have no real success in running competitions.  Nor do Jamaicans, for that matter, do so well in most team sports, including those demanding extreme athleticism.  Patterson also cites the work of researcher Yannis Pitsiladism, who collected DNA samples from top runners and did not find the expected correlations.

Patterson instead cites the interaction of a number of social factors behind the excellence of Jamaican running, including:

1. Preexisting role models.

2. The annual Inter-Scholastic Athletic Championship, also known as Champs, which provides a major boost to running excellence.

3. Proximity and cultural ties with the United States, which give athletically talented Jamaicans the chance to access better training and resources.

4. The Jamaican diet and a number of good public health programs, contributing to the strength of potential Jamaican runners (James C. Riley: “Between 1920 and 1950, Jamaicans added life expectancy at one of the most rapid paces attained in any country.”)

5. The low costs of running, and running practice, combined with the “combative individualism” of Jamaican culture, which pulls the most talented Jamaican athletes into individual rather than team sports.  (That same culture is supposed to be responsible for dancehall battles and the like as well.)

Whether or not you agree, those are indeed answers.  The book also considers “Why Has Jamaica Trailed Barbados on the Path to Sustained Growth?”, “Why is Democratic Jamaica so Violent?”, and a number of questions about poverty.  Amazing!  Those are indeed the questions I have about Jamaica, among others.

Recommended, you can pre-order here.

The McConnell-Trump impeachment game

That is the topic of my latest Bloomberg column, here is one key excerpt:

A second factor, however, pushes in the opposite direction. If Trump is viewed as too corrupt, too poisonous or too unreliable by swing voters, some of these senators also run the risk of losing their jobs. These senators therefore wish to rein in Trump, if only for selfish reasons. Trump and his policies are not very popular, as illustrated by numerous polls. And some senators might decide that loyalty to country, and to the future of the world, also argues for constraining Trump.

Reining in Trump does not have to mean forcing the leopard to change its spots, which is probably impossible anyway. But it could mean nudging Trump to be less outrageous: Don’t respond to the Ukraine accusations by encouraging China to investigate Joe Biden’s son, for example. Be more careful in your dealings with Turkey and the Kurds. Refrain from calling Never Trump Republicans “human scum.”

OK, so now to take the next step: How can these senators possibly check Trump? The threat of impeachment is their most potent weapon…

The upshot is that McConnell’s power over the president is growing. These are exactly the kinds of wrist slaps Trump notices.

The question, of course, is how Trump will respond to critical signals from Republican senators. My guess is that he will not play a cooperative “tit for tat” strategy, trading signals in a rational manner to keep senators in line and proceeding toward an orderly resolution of the impeachment judgment from the House. Rather, the signals sent his way might enrage him or raise his stress level to the point where he behaves less rationally than usual. Then the Senate will have to work all the harder to constrain Trump, thereby upping the stakes — and the stress — once again.

We will see.

Sunday assorted links

The economics of California power blackouts

Once again there is a risk of fire so they are turning off the power in many parts of dry and windy northern California, for 2.7 million people.  From The New York Times:

“When you turn the lights out on 3 million people because you have to keep the power lines safe then there’s no reason you should be allowed to continue,” Mr. Court said.

Michael Lewis, PG&E’s senior vice president of electric operations, said the issue was safety.

“We would only take this decision for one reason — to help reduce catastrophic wildfire risk to our customers and communities,” Mr. Lewis said in a statement.

PG&E filed for bankruptcy in January after amassing tens of billions of dollars in liability related to two dozen wildfires in recent years. As speculation grew that its equipment might be the cause of the Kincade Fire, its stock price plummeted about 30 percent on Friday to $5.08, a small fraction of its 52-week high of $49.42.

I would think the market expectation is that if PG&E is allowed to continue, as is likely to be the case, that it slowly will claw its way back to profitability, given that this is a highly regulated sector with barriers to entry.  So the company is afraid of losing its expected remaining profit from further liability, and thus it plays it safe with power, too safe because they don’t suffer so much from the power blackouts.  Sadly, the retail customers do not have many other options.

One solution would be to remove the liability the company faces from the fires, or alternatively you could add a liability option of set of fines from power cuts (call them “breach of contract”).  Both changes would introduce greater symmetry into the liability equation, but of course the former would eliminate the incentives for fire safety and fire reduction and the latter might bankrupt the company or create unenforceable or undefinable legal obligations.  Still, it hardly seems the current arrangement can be first best.

How about raising rates?  And then spending more on capital improvements?  (do read the tweets behind that link):

And in those proceedings, there is an independent division of the CPUC (the ‘Office of Ratepayer Advocates’) that has typically argued against maintenance and safety expenditures, so that rates can be kept low

How about raising rates a lot?  But maybe it is too late for that.

Another option, which I do not feel I have enough information to assess, is to have the state government buy out the power company.  That is not usually a good idea but in this case there is at least a chance it could lead to superior incentives.  The resulting company would then be geared toward pleasing voters, hardly an ideal arrangement but possibly better than the current incentives toward excess safety and massive power cuts with no real chance of consumer backlash.  With government ownership, how would the state internalize the liability risk?  How much would state borrowing rates rise?

Have you seen good proposals for improving the incentives in this rather disastrous matter?

A theory of narrow thinking

I develop an approach, which I term narrow thinking, to break the decision-maker’s ability to perfectly coordinate her multiple decisions. For a narrow thinker, different decisions are based on different, non-nested, information. The narrow thinker then makes each decision with an imperfect understanding of the others. Formally, it is as if the decision-maker is a collection of multiple selves playing an incomplete-information game. The friction effectively attenuates the degree of interaction across decisions and can translate into either over- or under-reaction depending on the environment. Narrow thinking leads to a violation of the fungibility principle and a smooth model of mental accounting. Narrow thinking also reconciles other seemingly disparate phenomena in a unified framework, such as excess smoothness to taste shocks, the small wage elasticity of daily labor supply, and the label effect. Finally, I study an endogenous narrow thinking problem: the decision maker chooses optimally what information each decision is based upon, subject to a cognitive constraint.

That is the abstract of a new paper from Chen Lian, who is on the job market this year from MIT.  (That is not his job market paper but it does have a revise and resubmit from Review of Economic Studies.)

Assorted Saturday links

1. “Russian scientists tracking migrating eagles ran out of money after some of the birds flew to Iran and Pakistan and their SMS transmitters drew huge data roaming charges.

2. The success rate of protests is plummeting (NYT).

3. The Gilded Age?: “New paper forthcoming in Cliometrica with Peter Lindert. In the paper we show that between 1800-1914, inequality in cost of living fell offsetting sizable share of increase in nominal income inequality”.

4. How bad is it to be “scooped” in science?  And how much do astronomers rely on lucky good weather?

5. Research in progress: “First, I document that opioid deaths and religiosity are strongly negatively correlated across counties. Then, I find that an 8% decrease in religious employment – equivalent to the decrease observed since the height of the Catholic sex abuse scandal – would increase opioid deaths by 4.8 per 100,000, approximately a third of the current opioid epidemic. The effects of religiosity are concentrated in areas with higher Catholic rates before the scandal. In contrast, I find no evidence that religiosity affects other drug deaths, suicides, or mortality due to alcoholic liver disease.”

More Sex is Safer Sex

I had forgotten that Steven Landsburg’s More Sex is Safer Sex (link to the 1997 NYTimes version, book here) was inspired by a paper by new Nobelist Michael Kremer. Here’s the recap:

You’ve read elsewhere about the sin of promiscuity. Let me tell you about the sin of self-restraint.

Consider Martin, a charming and generally prudent young man with a limited sexual history, who has been gently flirting with his coworker Joan. As last week’s office party approached, both Joan and Martin silently and separately entertained the prospect that they just might be going home together. Unfortunately, Fate, through its agents at the Centers for Disease Control, intervened. The morning of the party, Martin happened to notice one of those CDC-sponsored subway ads touting the virtues of abstinence. Chastened, he decided to stay home. In Martin’s absence, Joan hooked up with the equally charming but considerably less prudent Maxwell – and Joan got AIDS.

When the cautious Martin withdraws from the mating game, he makes it easier for the reckless Maxwell to prey on the hapless Joan. If those subway ads are more effective against Martin than against Maxwell, they are a threat to Joan’s safety. This is especially so when they displace Calvin Klein ads, which might have put Martin in a more socially beneficent mood.

If the Martins of the world would loosen up a little, we could slow the spread of AIDS. Of course, we wouldn’t want to push this too far: if Martin loosens up too much, he becomes as dangerous as Maxwell. But when sexual conservatives increase their activity by moderate amounts, they do the rest of us a lot of good. Harvard professor Michael Kremer estimates that the spread of AIDS in England could plausibly be retarded if everyone with fewer than about 2.25 partners per year were to take additional partners more frequently.

And here is Kremer’s original paper (with Charles Morcom). Landsburg suggests that a subsidy for condoms would be optimal in this situation. Read the whole thing.

Addendum: I later pointed out that the Kremer model appears to fit what happened in Thailand quite well.

Facts about YouTube

From a new and very important paper by Kevin Munger and Joseph Phillips from Penn State:

The most extreme branches of the AIN (the Alt-Right and Alt-Lite) have been in decline since mid-2017.

However, the Alt-Right’s remaining audience is more engaged than any other audience, in terms of likes and comments per view on their videos.

The bulk of the growth in terms of both video production and viewership over the past two years has come from the entry of mainstream conservatives into the YouTube marketplace.

…despite considerable energy, Ribeiro et al. (2019) fail to demonstrate that the algorithm has a noteworthy effect on the audience for Alt-Right content.  A random walk algorithm beginning at an Alt-Lite video and taking 5 steps randomly selecting one of the ten recommended videos will only be recommended a video from the Alt-Right approximately one out every 1,700 trips.  For a random walker beginning at a “control” video from the mainstream media, the probability is so small that it is difficult to see on the graph, but it is certainly no more common than one out of every 10,000 trips.

That authors suggest (p.24) that if anything the data suggest deradicalization as a more plausible baseline hypothesis.

Of course this is not the final word, but in the meantime so much of what you are reading about YouTube would appear to be wrong or at least off-base.

Simple truths about power

These are all people who are connected to the power of government.

Either physically, i.e. economically, or emotionally—power. The dream of sharing power. The gender studies professor not only gets her money eventually from government, but she dreams of being part of a world-transforming enterprise.

Here, I agree with you. There is a dream that unites progressives and bureaucrats and wealthy technologists. And where does that dream come from?

It’s a dream peculiar to this class. Other classes have been united by different dreams.

Is it a substitute for religion?

Yes.

Is that its primary emotional charge?

Well, I don’t know about primary. Look, the primary element is, as we Christians were taught, pride. That is the sin of sins. There is nothing that moves human beings quite so much as the desire to be on top of other human beings.

That is from an interview with Angelo Codevilla.

Friday assorted links

1. The French may be moving back toward nuclear power.

2. “In fact, it is the least selective schools that are driving the national gender gap in bachelor’s degrees. For example, at for-profit colleges, most of which have very low admissions standards, 63 percent of students are female.”  Link here.

3. “…students at Oxford University are to replace clapping at student union events with “silent jazz hands” amid fears that applause could trigger anxiety.”  Link here.

4. David Brooks calls for 20-30 percent tipping (30 percent for smaller bills, say below $25, NYT).

5. Predict science to improve science, by Stefano DellaVigna, Devin Pope, and Eva Vivalt.  And here is a beta version of the associated “predict social science” website.

6. Who deserves the Nobel for China’s economic development?

7. Charles Barkley opines.

Who’s a Russian Asset?

Mark Zuckerberg was once again pilloried in Congress. How many companies in the Libra association are headed by LGBTQ people? Isn’t it true that Libra is a project of white men? What are you doing for African Americans whose lives you have ruined? Do you discuss white supremacy at your far right dinner parties? And, of course, overlaying all of this was the idea of Russian interference.

Ironically, one of the goals of the Russians was to enhance US grievances and elevate identity politics. Most notably, some of the most successful Black Lives Matter memes and tweets were created by the Russians. As the NYTimes wrote:

“The most prolific I.R.A. efforts on Facebook and Instagram specifically targeted black American communities and appear to have been focused on developing black audiences and recruiting black Americans as assets,” the report says.…The report says that while “other distinct ethnic and religious groups were the focus of one or two Facebook Pages or Instagram accounts, the black community was targeted extensively with dozens.” In some cases, Facebook ads were targeted at users who had shown interest in particular topics, including black history, the Black Panther Party and Malcolm X. The most popular of the Russian Instagram accounts was @blackstagram, with 303,663 followers.

The Internet Research Agency also created a dozen websites disguised as African-American in origin, with names like blackmattersus.com, blacktivist.info, blacktolive.org and blacksoul.us. On YouTube, the largest share of Russian material covered the Black Lives Matter movement and police brutality, with channels called “Don’t Shoot” and “BlackToLive.”

…Of 81 Facebook pages created by the Internet Research Agency in the Senate’s data, 30 targeted African-American audiences, amassing 1.2 million followers.

The fact that Black Lives Matter was promoted by the Russians doesn’t detract from their legitimate goals. Nevertheless, one can imagine the Russians chortling at how successful their attacks have been. Mark Zuckerberg is one of America’s most successful entrepreneurs, the creator of Facebook, a world-dominant firm, a firm that the Russians and Chinese fear and instead of rejoicing in America’s success, America’s political class are seeking to take Facebook and its CEO down through the petty politics of identity.

Who’s a Russian asset?

Nathan Nunn’s recent talk on economic development

Here is one excerpt of many substantive points:

Numerous studies have formally tested for relationships between foreign aid and conflict,using a range of identification strategies to obtain credible causal estimates. Many studies find that foreign aid can increase conflict. Nunn and Qian (2014) find this to be the case for U.S. food aid. Their analysis uses an IV strategy where U.S. wheat production shocks, combined with a country’s tendency to receive wheat aid from the U.S. to obtain exogenous variation in U.S. food aid supply. Crost, Felter and Johnson (2014) use an RD strategy that exploits an eligibility cut-off for a World-Bank-funded development program in the Philippines to estimate the effects of the program on conflict. They find that eligibility to participate in the program is associated with more conflict, which appears to be due to an increase in insurgent attacks against government forces in an attempt to disrupt the program. Dube and Naidu (2015) estimate the effects of military aid in Colombia using a differences-in-differences identification strategy. They find that U.S. military aid leads to an increase in conflict and violence arising due to an increase in attacks by paramilitaries…

While there is evidence that foreign aid can increase conflict, it is not the case that it always leads to conflict. For example, Nunn and Qian (2014) show that among the countries in their sample without a recent history of past conflict, food aid does not increase conflict. In a follow-up study that studies a conditional cash transfer program also in the Philippines, Crost, Felter and Johnson(2016) find that this aid package actually decreased conflict. Trisko Darden (2020) finds that the effect of U.S. aid on state killings and repression of its citizens is weaker following the end of the Cold War.

Given the evidence that foreign aid can sometimes cause conflicts, but at other times have no effects or even reduce conflict, the natural next question is how we implement foreign aid projects in a manner that minimizes its harm, thus maximizing overall benefit.

That is from a recent and really quite excellent talk on development by Nathan Nunn.  He also has an especially interesting discussion of the geographic centralization of RCTs in economics among numerous other points of note.  Recommended.

Can you impose pecuniary externalities upon Korean squirrels?

Look out, squirrels of the world. It turns out acorns are good for humans, too.

Here in South Korea, the popularity of acorn noodles, jelly and powder has exploded in recent years, after researchers declared the nuts a healthy “superfood” that can help fight obesity and diabetes.

In the U.S., where some Native Americans once made acorns a staple of their diet, restaurants and health-conscious blogs are starting to explore recipes for acorn crackersacorn bread and acorn coffee.

That is bad news for squirrels and other animals that rely on oak trees for sustenance. In South Korea, where human foraging has multiplied, there are now fewer acorns on the ground, and the squirrel population has dwindled.

Is this a reductio ad absurdum of the idea that pecuniary externalities are irrelevant?  Ask your friendly neighborhood squirrel!  If you can find him, that is.  Then there is this:

Safeguarding acorns for squirrels is proving to be a tough nut to crack. That’s where the Acorn Rangers come in.

Formed at Seoul’s Yonsei University, the nascent Acorn Rangers group polices the bucolic campus, scaring off other humans from swiping squirrel food. Taking up the cause are students like Park Ji-eun, who skipped lunch on a recent day so a squirrel could eat this winter.

Strolling across campus, Ms. Park, a junior, sprung into action after spotting an acorn assailant: a woman in her early 60s, clutching a plastic bag stuffed with the tree nuts.

“The squirrels will starve!” barked Ms. Park, her voice booming so loudly that other acorn hunters—human ones—scurried away. The two argued for nearly an hour until Ms. Park emerged with the plastic bag in hand.

Here is the full WSJ story, by Dasl Yoon and Na-Young Kim, via the excellent Samir Varma.