Month: November 2019

The one-child policy and Chinese child trafficking

In the past 40 years, a large number of children have been abandoned by their families or have been abducted in China. We argue that the implementation of the one-child policy has significantly increased both child abandonment and child abduction and that, furthermore, the cultural preference for sons in China has shaped unique gender-based patterns whereby a majority of the children who are abandoned are girls and a majority of the children who are abducted are boys. We provide empirical evidence for the following findings: (1) Stricter one-child policy implementation leads to more child abandonment locally and more child abduction in neighboring regions; (2) A stronger son-preference bias in a given region intensifies both the local effects and spatial spillover effects of the region’s one-child policy on child abandonment and abduction; and (3) With the gradual relaxation of the one-child policy after 2002, both child abandonment and child abduction have dropped significantly. This paper is the first to provide empirical evidence on the unintended consequences of the one-child policy in terms of child trafficking in China.

That is the abstract of a new paper by Xiaojia Bao, Sebastian Galiani, Kai Li, and Cheryl Xiaoning Long.

Does identity affect labor supply?

Does identity—one’s concept of self—influence economic behavior in the labor market? I investigate this question in rural India, focusing on the effect of caste identity on labor supply. In a field experiment, casual laborers belonging to different castes choose whether to take up various real job offers. All offers involve working on a default manufacturing task and an additional task. The additional task changes across offers, is performed in private, and differs in its association with specific castes. Workers’ average take-up rate of offers is 23 percentage points lower if offers involve working on tasks that are associated with castes other than their own. This gap increases to 47 pp if the castes associated with the relevant offers rank lower than workers’ own in the caste hierarchy. Responses to job offers are invariant to whether or not workers’ choices are publicized, suggesting that the role of identity itself—rather than social image—is paramount. Using a supplementary experiment, I show that 43% of workers refuse to spend ten minutes working on tasks associated with other castes, even when offered ten times their daily wage. This paper’s findings indicate that identity may be an important constraint on labor supply, contributing to misallocation of talent in the economy.

The bold emphasis is added by me.  That is from a job market paper by Suanna Oh, who is on the job market from Columbia.

Via Shruti.

Tuesday assorted links

1. “Ancient coin designs encoded increasing amounts of economic information over centuries.

2. “Powell will serve 10 years in prison, Davies will do 8½ years and Wicks will spend five years behind bars for failing to report Viking treasure.”  Also coins!

3. Ed Conard on Philippon and monopoly.

4. When are women willing to lead?

5. Telepresence.

6. Suite Judy Blue Eyes (NYT).

William Shatner on mortgages

 

I am once again reminded how expected returns is a critical concept in macroeconomics.  Circa 1985, you could expect to earn much higher returns putting money in a certificate of deposit, thus increasing the opportunity of buying a house back then.  No, you would not earn 12% on your money, but still we need to reckon with the higher opportunity cost of funds to calculate the true home purchase/mortgage cost at that time.

Wealth by Generation and Age

Kurt Andersen made the following arresting tweet

Fraction of all US wealth owned by Boomers & Gen-Xers when the average member of each was age 35:

Boomers, 1989 21%
GenX, 2008 8%
The average Millennial turns 35 in 2023. Right now they own 3%.

There will surely be political implications.

Definitions: Baby Boomer=born 1946-1964, Gen X=born 1965-1980, and Millennial=born 1981-1996.

You can’t take it with you, so this will change eventually but perhaps too late. Think of this as the Prince Charles effect. Prince Charles hasn’t offed his mother and led a revolution yet but in an earlier age he probably would have and surely he has thought about it. Similarly, perhaps the demand among some Gen-Xers and Millennials for wealth redistribution can be understood as a demand to get their share of the pot before they are old and tired.

The data, which are from the Federal Reserve are here.

NIMBY build for the homeless solve for the equilibrium

At an average cost of $531,373 per unit – with many apartments costing more than $600,000 each –  building costs of many of the homeless units will exceed the median sale price of a market-rate condominium. In the city of Los Angeles, the median price for a condo is $546,000, and a single-family home in Los Angeles County has a median price of $627,690, the study states.

Here is further information, via Rob Moore.

Medicare for all is not entirely efficient

There is increasing interest in expanding Medicare health insurance coverage in the U.S., but it is not clear whether the current program is the right foundation on which to build. Traditional Medicare covers a uniform set of benefits for all income groups and provides more generous access to providers and new treatments than public programs in other developed countries. We develop an economic framework to assess the efficiency and equity tradeoffs involved with reforming this generous, uniform structure.We argue that three major shifts make a uniform design less efficient today than when Medicare began in 1965. First, rising income inequality makes it more difficult to design a single plan that serves the needs of both higher- and lower-income people. Second, the dramatic expansion of expensive medical technology means that a generous program increasingly crowds out other public programs valued by the poor and middle class. Finally, as medical spending rises, the tax-financing of the system creates mounting economic costs and increasingly untenable policy constraints. These forces motivate reforms that shift towards a more basic public benefit that individuals can “top-up” with private spending.If combined with an increase in other progressive transfers, such a reform could improve efficiency and reduce public spending while benefiting low income populations.

That is from a new NBER working paper by Mark Shepard, Katherine Baicker, and Jonathan S. Skinner.

My Conversation with Mark Zuckerberg and Patrick Collison

Facebook tweets:.

@patrickc, CEO of Stripe, and @tylercowen, economist at George Mason University, sit down with our CEO, Mark Zuckerberg to discuss how to accelerate progress.

Video, audio, and transcript here, part of Mark’s personal challenge for the year, an excellent event all around.  This will also end up as part of CWT.

Genes and health insurance coverage

We provide the first investigation into whether and how much genes explain having health insurance coverage or not and possible mechanisms for genetic variation. Using a twin-design that compares identical and non-identical twins from a national sample of US twins from the National Survey of Midlife Development in the United States, we find that genetic effects explain over 40% of the variation in whether a person has any health coverage versus not, and nearly 50% of the variation in whether individuals younger than 65 have private coverage versus whether they have no coverage at all. Nearly one third of the genetic variation in being uninsured versus having private coverage is explained by employment industry, self-employment status, and income, and together with education, they explain over 40% of the genetic influence. Marital status, number of children, and available measures of health status, risk preferences, and prevention effort do not appear to be important channels for genetic effects. That genes have meaningful effects on the insurance status suggests an important source of heterogeneity in insurance take up.

That is from a paper by George L. Wehby and Dan Shane.  Via the excellent Kevin Lewis.  We do need to know more, but one possibility is that the adverse selection model of health insurance is much overrated, and advantageous selection into health insurance is a live possibility.

Conscientiousness vs. working hard

South Korea ranks second to last in terms of conscientiousness but also ranks first in the number of hours worked.  South Korea is not an anomaly.  Country-level reports of Big Five conscientiousness are unrelated to the number of hours worked.  The rank correlation between hours worked and conscientiousness across countries is negative, though statistically insignificant.

That is from “Some Contributions of Economics to the Study of Personality,” a new working paper by James J. Heckman, Tomas Jagelka, and Timothy D. Kautz.  How do you interpret these numbers?  That the notion of conscientiousness is poorly measured?  Or that “susceptibility to manipulation by incentives” is a separate quality, highly valued in a workforce, but not well correlated with “conscientiousness as we know it”?

Best non-fiction books of 2019

It was a very strong year for non-fiction, these were the best books, more or less in the order I read them:

Toby Green, Fistful of Shells: West Africa from the Rise of the Slave Trade to the Age of Revolution.

Alain Bertaud, Order Without Design: How Markets Shape Cities.

Eric Kaufmann, Whiteshift: Populism, Immigration, and the Future of White Majorities.

James W. Cortada, IBM: The Fall and Reinvention of a Global Icon.

Joanna Lillis, Dark Shadows: Inside the Secret World of Kazakhstan.

T.C.A. Raghavan, The People Next Door: The Curious History of India’s Relations with Pakistan.

Julia Lovell, Maoism: A Global History.

Ana Fifield, The Great Successor: The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un.

Charles Fishman, One Giant Leap: The Impossible Mission that Flew us to the Moon.

Bryan Caplan and Zach Weinersmith, Open Borders: The Science and Ethics of Immigration.

Bruce Cannon Gibney, The Nonsense Factory: The Making and Breaking of the American Legal System.

Ben Westhoff, Fentanyl, Inc.

Ben Lewis, The Last Leonardo: The Secret Lives of the World’s Most Expensive Painting.

Judith Grisel, Never Enough: the neuroscience and experience of addiction.

David Sorkin, Jewish Emancipation: A History of Five Centuries.

Matthew Gale and Natalia Sidlina, Natalia Goncharova.

Lydia Davis, Essays One.

Fuchsia Dunlop, The Food of Sichuan.

Frederic Martel, In the Closet of the Vatican: Power, Homosexuality, Hypocrisy.

Alan Galley, Walter Ralegh: Architect of Empire.

Robert Alter, translator, The Hebrew Bible: A Translation with Commentary (or should that go under “fiction”?).

Pekka Hämäläinen, Lakota America: A New History of Indigenous Power, more here.

And which book takes the very top prize for best of the year?  You can’t compare the Alter to the others, so I will opt for Eric Kaufmann’s Whiteshift and also Pekka Hämäläinen’s Lakota America, with Julia Lovell on Maoism and Alain Bertaud on cities as the runner-ups.  But again a strong year all around.

Of course the year is not over yet, this list is for your holiday shopping, I’ll post an update toward the very end of December.

In the meantime, apologies to those I missed or forgot…

Why is labor mobility slowing in America?

There is a new and quite interesting paper on this topic, by Kyle Mangum and Patrick Coate:

This paper offers an explanation for declining internal migration in the United States motivated by a new empirical fact: the mobility decline is driven by locations with typically high rates of population turnover. These “fast” locations were the Sunbelt centers of population growth during the twentieth century. The paper presents evidence that as spatial population growth converged, residents of fast locations were subject to rising levels of preference for home. Using a novel measure of home attachment, the paper develops and estimates a structural model of migration that distinguishes moving frictions from home utility. Simulations quantify the role of multiple explanations of the mobility decline. Rising home attachment accounts for nearly half of the decline, roughly as large as the effect of an aging population, and is consistent with the spatial pattern. The implication is recent declining migration is a long run result of population shifts of the twentieth century.

For the pointer I thank the excellent Tyler Ransom.

Learning about the Roots of Progress from the History of Smallpox Eradication

The excellent Jason Crawford at the Roots of Progress has a long-form read on the history of smallpox eradication. It’s an important and insightful piece especially because Jason is interested not just in what happened but why it happened when and where it did and what the lessons are for today:

In 1720, inoculation had been a folk practice in many parts of the world for hundreds of years, but smallpox was still endemic almost everywhere. The disease had existed for at least 1,400 and probably over 3,000 years. Just over 250 years later—it was gone.

Why did it take so long, and how did it then happen so fast? Why wasn’t inoculation practiced more widely in China, India, or the Middle East, when it had been known there for centuries? Why, when it reached the West, did it spread faster and wider than ever before—enough to significantly reduce and ultimately eliminate the disease?

The same questions apply to many other technologies. China famously had the compass, gunpowder, and cast iron all before the West, but it was Europe that charted the oceans, blasted tunnels through mountains, and created the Industrial Revolution. In smallpox we see the same pattern. [Why?]

  • The idea of progress. In Europe by 1700 there was a widespread belief, the legacy of Bacon, that useful knowledge could be discovered that would lead to improvements in life. People were on the lookout for such knowledge and improvements and were eager to discover and communicate them. Those who advocated for inoculation in 1720s England did so in part on the grounds of a general idea of progress in medicine, and they pointed to recent advances, such as using Cinchona bark (quinine) to treat malaria, as evidence that such progress was possible. The idea of medical progress drove the Suttons to make incremental improvements to inoculation, Watson to run his clinical trial, and Jenner to perfect his vaccine.
  • Secularism/humanism. To believe in progress requires believing in human agency and caring about human life (in this world, not the next). Although England learned about inoculation from the Ottoman Empire, it was reported that Muslims there avoided the practice because it interfered with divine providence—the same argument Reverend Massey used. In that sermon, Massey said in his conclusion, “Let them Inoculate, and be Inoculated, whose Hope is only in, and for this Life!” A primary concern with salvation of the immortal soul precludes concerns of the flesh. Fortunately, Christianity had by then absorbed enough of the Enlightenment that other moral leaders, such as Cotton Mather, could give a humanistic opinion on inoculation.
  • Communication. In China, variolation may have been introduced as early as the 10th century AD, but it was a secret rite until the 16th century, when it became more publicly documented. In contrast, in 18th-century Europe, part of the Baconian program was the dissemination of useful knowledge, and there were networks and institutions expressly for that purpose. The Royal Society acted as an information hub, taking in interesting reports and broadcasting the most important ones. Prestige and acclaim came to those who announced useful discoveries, so the mechanism of social credit broke secrets open, rather than burying them. Similar communication networks spread the knowledge of cowpox to from Fewster to Jenner, and gave Jenner a channel to broadcast his vaccination experiments.
  • Science. I’m not sure how inoculation was viewed globally, but it was controversial in the West, so it was probably controversial elsewhere as well. The West, however, had the scientific method. We didn’t just argue, we got the data, and the case was ultimately proved by the numbers. If people didn’t believe it at first, they had to a century later, when the effects of vaccination showed up in national mortality statistics. The method of meticulous, systematic observation and record-keeping also helped the Suttons improve inoculation methods, Haygarth discover his Rules of Prevention, and Fewster and Jenner learn the effects of cowpox. The germ theory, developed several decades after Jenner, could only have helped, putting to rest “miasma” theories and dispelling any idea that one could prevent contagious diseases through diet and fresh air.
  • Capitalism. Inoculation was a business, which motivated inoculators to make their services widely available. The practice required little skill, and it was not licensed, so there was plenty of competition, which drove down prices and sent inoculators searching for new markets. The Suttons applied good business sense to inoculation, opening multiple houses and then an international franchise. They provided their services to both rich and poor by charging higher prices for better room and board during the multiple weeks of quarantine: everyone got the same medical procedure, but the rich paid more for comfort and convenience, an excellent example of price differentiation without compromising the quality of health care. Business means advertising, and advertising at its best is a form of education, helping people throughout the countryside learn about the benefits of inoculation and how easy and painless it could be.
  • The momentum of progress. The Industrial Revolution was a massive feedback loop: progress begets progress; science, technology, infrastructure, and surplus all reinforce each other. By the 20th century, it’s clear how much progress against smallpox depended on previous progress, both specific technologies and the general environment. Think of Leslie Collier, in a lab at the Lister Institute, performing a series of experiments to determine the best means of preserving vaccines—and how the solution he found, freeze-drying, was an advanced technology, only developed decades before, which itself depended on the science of chemistry and on technologies such as refrigeration. Or consider the WHO eradication effort: electronic communication networks let doctors be alerted of new cases almost immediately; airplanes and motor vehicles got them and their supplies to the site of an epidemic, often within hours; mass manufacturing allowed cheap production at scale of needles and vaccines; refrigeration and freeze-drying allowed vaccines to be preserved for storage and transport; and all of it was guided by the science of infectious diseases—which itself was by that time supported by advanced techniques from X-ray crystallography to electron microscopes.

Read the whole thing and follow the roots of progress.

*Lakota America: A New History of Indigenous Power*

That is the new wonderful and stunning book by Pekka Hämäläinen, here is one excerpt from the opening section:

Two centuries earlier, in the middle years of the seventeenth century, the Lakotas h ad been an obscure tribe of hunters and gatherers at the edge of a bustling new world of Native Americans and European colonists that had emerged in the Eastern Woodlands of North America.  They had no guns and no metal weapons, and they carried little political clout, all of which spelled danger: the odds of survival were slim for people who lacked access to Europeans and their new technologies of killing.  That crisis set off what may be the most improbably expansion in American history.  Lakotas left their ancient homelands and reinvented themselves as horse people in the continental grasslands that stretched seemingly forever into the horizon.  This was the genesis of what I call Lakota America, an expansive, constantly transmuting Indigenous regime that pulled numerous groups into its orbit, marginal and dispossessed its rivals — both Native and colonial — and commanded the political, social, and economic life in the North American interior for generations.  Just as there was Spanish, French, British, and the United States of America, there was Lakota America, the sovereign domain of the Lakota people and their kin and allies, a domain they would protect and, if necessary, expand.  A century later, the Lakotas had shifted the center of their world three hundred miles west into the Missouri Valley, where they began to transform into a dominant power.  Another century later they were the most powerful Indigenous nation in the Americas, controlling a massive domain stretching across the northern Great Plains into the Rocky Mountains and Canada.

…Yet they never numbered more than fifteen thousand people.

I will blog this book a bit more, for now I’ll just say it is very much in the running for very best book of the year.  It brings Native American history to life in a conceptual manner better than any other book I know.  You can buy it here, I found every section gripping and highly instructive and fun to read as well.  Here is a very good and accurate Parul Sehgal NYT review.