Month: December 2019
Non-cognitive skills and earnings in Canada
This newly published paper (click on the first link here) by McLean, Bouaissa, Rainville, and Auger confirms some more general results, usually taken from American data:
Our results indicate that conscientiousness is positively associated with wages, while agreeableness, extraversion, and neuroticism are associated with negative returns, with higher magnitudes on agreeableness and conscientiousness for females. Cognitive ability has the highest estimated wage return so, while significant, non-cognitive skills do not seem to be the most important wage determinant.
The main difference seems to be that in Canada extraversion is correlated with lower earnings, but in the United States in general it is not. And note that a one standard deviation increase in agreeableness for women is associated with a 7.4-8.7% income penalty, but no corresponding income penalty for men. Finally, (p.112) that the rate of return on education is over seven percent, and after adjusting for cognitive level this falls by only 30 percent, relevant for the signaling model of education of course.
From the comments — on Paul Volcker
Tuesday assorted links
1. Vitalik on quadratic voting.
2. The erupting NZ volcano is privately owned.
3. New Keller Scholl and Robin Hanson paper on whether there was an automation revolution.
4. Marriage Story is an excellent film on many levels, including but not only L.A. vs. NYC, furthermore it offers running commentary on Bergman’s Scenes from a Marriage (my favorite movie ever?) and the Bergman/Ullmann story itself.
Paul Volcker’s Latin American legacy
That is the topic of my latest Bloomberg column, the history with Latin America is also a big part of the Volcker story, here is one bit:
Global banks raised their interest rates for lending and shortened their repayment periods. In the mid-’70s real lending rates to Latin America hovered in the range of zero, but by the early ’80s they were between 8% and 10%. Liquidity was cut off, and the underlying growth potential of the region’s economies was not strong enough to sustain the debt. This affected other parts of the world as well and became known as “the third world debt crisis.”
The crisis came to a head in 1982, when Mexico announced it would no longer be able to service its debt, sparking a financial crisis and currency collapse. Ultimately, 16 Latin American countries also were forced to reschedule their debt payments. This created problems for the banks too, since by 1982 the nine largest U.S. money-center banks had Latin American debts equal to 176% of their capital, a figure which rose to 290% when lesser developed countries elsewhere in the world were included. Eventually the U.S. led a bailout and debt-reduction program, with the participation of the International Monetary Fund.
But for Latin America, things would never be the same. Governments had to cut spending, which in turn led to further adjustment problems, akin to the eurozone crisis of more recent times. Poverty rates rose sharply, and the general mood turned pessimistic. By the end of the 1980s, Latin American per capita GDP had fallen from 112% of the world’s average to 98%, a stunning plunge and by some measures the worst financial disaster the world had ever seen, albeit a regionalized one.
And this:
Repercussions in the U.S. were more modest. The potential insolvency of some major U.S. banks, such as Citibank, was ignored amid forbearance and hope about their return to profitability. They did, eventually, but in retrospect one has to wonder if allowing so much non-transparent bank accounting — with the blessing of regulators, including Volcker’s Fed — was such a good idea.
That all said, I do not think Volcker had much operative choice on most of these matters, and the excess Latin American borrowing certainly was not his fault. Note: the inspiration for this column came from a tweet by Pseudoerasmus.
The Old Boys’ Club
It is real, at least in one Asian data set, as these new NBER working paper results are brought to us by Zoë Cullen and Ricardo Perez-Truglia:
We use an event study analysis of manager rotation to estimate the causal effect of managers’ gender on their employees’ career progression. We find that when male employees are assigned to male managers, they are promoted faster in the following years than they would have been if they were assigned to female managers. Female employees, on the contrary, have the same career progression regardless of the manager’s gender. These differences in career progression cannot be explained by differences in effort or output. This male-to-male advantage can explain a third of the gender gap in promotions. Moreover, we provide suggestive evidence that these manager effects are due to socialization between male employees and male managers.
There is more to the abstract, including a discussion of the benefits of smoking together. Here is an ungated copy.
USMCA the new NAFTA
The new agreement requires at least 70 percent of an automaker’s steel and aluminum to be bought in North America, which could help boost United States metal production. And 40 to 45 percent of a car’s content must be made by workers earning an average wage of $16 an hour. That $16 floor is an effort to force auto companies to either raise low wages in Mexico or hire more workers in the United States and Canada, an outcome Democrats have long supported.
It also rolls back a special system of arbitration for corporations that the Democratic presidential candidate Elizabeth Warren has criticized as allowing companies to bypass the American legal system and Trump administration officials describe as an incentive for companies to send their factories abroad.
The pact also includes, at least on paper, provisions that aim to do away with sham Mexican labor unions that have done little to help workers by requiring every company in Mexico to seek worker approval of collective bargaining agreements by secret ballot in the next four years.
That is from a week ago, supposedly the actual deal with be somewhat more interventionist and anti-trade than that. Here is more from Ana Swanson and Emily Cochrane of the NYT.
Monday assorted links
1. More on Magnus Carlsen and fantasy football. And his explanatory tweet.
2. Hard to believe this NYT defense of Cattelan and the banana (and written as one who loves Duchamp). I genuinely do not think it is parody.
5. Has America forgotten how to make H-bombs?
Addendum: See Vitalik in the comments on #3:
I read the article; very unconvinced. The key part is the bottom of page 11 where the article reveals its model for how costly attacks on proof of stake systems are. The paper seems to think that in a proof of stake system, you win by having a longer chain than the other chains, and slashing is only there to prevent literal double-signing. This completely ignores the entire set of recent developments in PoS literature around Tendermint, Casper CBC, Casper FFG, etc, which are the entire basis for claims about PoS’s greater security. These newer protocols use a form of slashing where it is provably impossible to revert a finalized block without slashing 1/3 of the validator set, so an attacker loses not just interest but also principal.
The section on permissioned chains completely fails to model the reputational losses (and possible legal consequences) that would be incurred by nodes on the chain if they misbehave.
The polarization of hurricane opinion?
A difference-in-differences analysis demonstrates that Trump/Clinton vote share strongly predicts evacuation rates, but only after the emergence of conservative-media dismissals of hurricane warnings in September 2017, just before Irma made landfall in Florida. Following this viral “hurricane trutherism”, we estimate that Trump-voting Florida residents were 10-11% less likely to evacuate Irma than Clinton-voters (34% vs. 45%) after controlling for key demographic and
geographic covariates, highlighting one consequence of political polarization.
Here is the full paper, by Elisa F. Long, M. Keith Chen, and Ryne Rohla. Via the excellent Kevin Lewis.
Willful Pencil Hurling
WSJ: The man who hurled pencils at 22-year-old Richard Robb went on to become a Nobel laureate.
It was 1982. Mr. Robb, a doctoral candidate in economics at the University of Chicago, was chalking out an idea on a blackboard. He was studying under the supervision of James Heckman, a pugnacious econometrician who won the Nobel Prize in economics 18 years later.
The two men had the room to themselves. As the chalk squeaked from Mr. Robb’s scratching, Mr. Heckman grew agitated. He thought Mr. Robb’s idea was wrong, that he was making grandiose claims. He threw a pencil—then a few more.
Ducking occasionally, Mr. Robb ignored the assault and continued writing on the blackboard. “I turned out to be right after all,” Mr. Robb, now 59, tells me, “even though my explanation was confusing. And we published it in a long paper titled ‘Alternative Methods for Evaluating the Impact of Interventions.’ ” He adds that pupil and maestro never discussed the incident again—until Mr. Robb emailed Mr. Heckman to ask if I could use the story in this article.
Mr. Robb is now CEO of a $5 billion hedge fund and a professor of professional practice in international and public affairs at Columbia.
Oddly the article goes on to explain how throwing pencils wasn’t really rational or irrational but an example of something that we do, or perhaps just Heckman does, “for itself”—an act that resulted “from the exercise of will rather than the pursuit of preferences.” Doing something from will rather than from preference is the heart of the idea in Robb’s new book Willful: How We Choose What We Do. Not sure I get it either, but I haven’t read the book. Maybe I will.
Hat tip: Frank McCormick.
Claims about polarization
…when it comes to moral issues, the prominent change is a partisan secular trend, in which both Democrats and Republicans are adopting more progressive views on moral issues, although at a different rate. While Democrats are early adopters of progressive views, Republicans adopt the same views at a slower pace. This secular change can be easily (mis)interpreted as a sign of polarization because, at the onset of the process, the gap between party supporters broadens due to faster pace at which Democrats adopt progressive views, and only toward the end, the gap between partisan supporters decreases.
That is from a new paper by Baldassari and Park, via Gaurav Sood.
Not your grandpa’s talent show
Hosted by Alibaba’s founder Jack Ma, the four-hour entrepreneurial talent show had all the production values of The Apprentice.
But the glitzy televised extravaganza, in which 10 contestants battled for $1m in prize money in front of a boisterous audience, took place neither in the US nor China. The action unfolded instead on a stage in Ghana, the first of what is set to be an Africa-wide annual contest as one of China’s best known businessmen scours the continent for younger versions of himself…
Mr Ma came up with the idea of the $1m prize — and the Africa Netpreneur television show to go with it — after meeting young Kenyan entrepreneurs on his first trip to the continent as a special adviser to the UN agency Unctad in 2017…
The Netpreneur show is due to be broadcast in mid-December on two channels with a pan-African presence, South Africa’s DStv and StarTimes, a Chinese media company. During the filming, Mr Ma sat on a raised dais next to three fellow judges: Strive Masiyiwa, the billionaire Zimbabwean founder of telecoms and media company Econet Wireless, Ibukun Awosika, chairman of First Bank of Nigeria, and Joe Tsai, executive vice-chairman of Alibaba.
Where are the Smothers Brothers? Here is the full David Pilling FT story.
My debate with Žižek
It was quite something, the proceedings did not disappoint, here is the YouTube:
I can’t fully access video from this airport location, but I believe the actual debate starts at around 1:06. After the debate proper, a particular highlight is the four video questions that were taped and sent in from humanities academics.
The Holberg people put on a great event.
Sunday assorted links
What I’ve been reading
Roderick Floud, An Economic History of the English Garden. Every page of this book does indeed have economics. It just does not have interesting economics. Which may mean that gardens are not so interesting from an economic point of view. Which in turn would make this a good book. But not an interesting book.
Ajantha Subramanian, The Caste of Merit: Engineering Education in India. A critique of casteism and growing inequality, this book also doubles as a fascinating history of IIT. Best read in Straussian fashion as a sympathetic story of origins.
Dana Thomas, Fashionopolis: The Price of Fast Fashion & The Future of Clothes. Some parts of this book have bad economics and extreme mood affiliation, but in general it has more actual information than other books on the same topic and at times the author makes decent external cost arguments against the current system of clothes production. So a qualified recommendation, at least I am glad I read it, even though some parts are obviously too sloppy.
Razeen Sally, Return to Sri Lanka: Travels in a Paradoxical Island. People do not think enough about Sri Lanka, including in the social sciences! It is a richer and nicer country than what most people are expecting, and it is good for studying both conflict and ethnic tensions. This memoir — information rich rather than just blather — is one good place to get you started.
David Goldblatt, The Age of Football: The Global Game in the Twenty-First Century. Football meaning soccer of course, this book covers how soccer interacts with politics in many particular countries, including Africa, and just how much the game has grown in global markets. Mostly informative, good if you wish to read a book about this topic (I don’t).
Conversations with Zizek. Maybe the best introduction to why Žižek is a richer thinker than his critics allege? The book serves up insights on a consistent basis, and there is a minimum of jargon. Marcus Pound had a good blurb: “Audacious and vertiginous, this book is everything one expects from him, a heady mix of psychoanalysis, politics, theology, philosophy, and cultural studies that will leave the reader both exhausted and exhilarated.”
That is all from B.B.