Month: August 2022

Who are the richest athletes in the world?

by  Tyler Cowen in

These numbers are surely inexact, but still this piece makes for interesting reading.  Excerpt:

4. Anna Kasprzak

Net Worth: $1 Billion

Anna Kasprzak is a Danish dressage rider who has represented Denmark in the Summer Olympics in 2012 and 2016. Kasprzak is considered to be one of the best dressage riders in the world and she has won multiple medals throughout her career.

As of August 2022, Anna Kasprzak’s net worth is estimated to be $1 billion.

Was not on my Bingo card.  Nor was Vinnie Johnson, who clocks in at $400 million!  The Human Microwave to be sure…

Jason Abaluck on the minimum wage

by  Tyler Cowen in

Here is his critique of Bryan Caplan, noting that “Bryan” in Jason’s dialogue is of course not the actual Bryan.  (It is Jason’s somewhat imaginary view of how he thinks a dialogue actually ought to proceed, with satirical elements interjected, to show that Bryan’s account is too simple.)  It is a better analysis than what Bryan offered, but I am not altogether happy with it and I think it shows the same defects as Bryan’s treatment, albeit at a higher level of detail.

A few broad points:

1. Public choice considerations should be paramount!  To be clear, this could in principle favor minimum wages over alternative interventions, but if public choice considerations are not first and foremost this is more of a dialogue for a 12-year-old than a 13-year-old.

The reality is that America has one political party — currently in control of the Federal government — that is very much beholden to organized labor, an interest group that has a strong desire for a minimum wage that is too high.  Often they don’t get their way, but that is precisely because of the curmudgeons and their objections.  I fear a world in which minimum wage hike advocates really take over policy discourse, as they would end up serving the interests of organized labor, not economic optimization.

The true choice is between a minimum wage that is too low and a minimum wage that is too high.  I prefer the former.  An optimized minimum wage does not usually appear on the menu at all, and that should be one of the first points we teach.

As a side note, if you read anyone criticizing the “Econ 101” approach to minimum wage hikes, run the other way.  If only Econ 101 could spend more time on such public choice considerations.

2. Any policy decision is also a decision by governments to communicate particular economic lessons to the citizenry.  Which are the lessons carried by deployment of a minimum wage hike?

a. Price controls work.

b. A world of high wages, high prices, and doing stuff to “create jobs” is how to boost prosperity.  Therefore protectionism can make sense too, and we need to stuff the Davis-Bacon Act into every government bill we can, as has been done with the new climate projects.  Those are also forms of minimum wages.  And it is OK if infrastructure costs a lot to build, because that means high wages too.

Those lessons may not be what you intend, but those are what you will end up getting and indeed we have ended up getting them.  You do not get to teach voters the scope and limits of labor market monopsony models.  Instead, you get bad economic reasoning writ large.

2b. As a general observation, if an analysis does not cover #1 and #2 in some fashion, I don’t view it as very sophisticated.  It almost has to be misleading.

3. It should be stressed there is good evidence that we have alternative policies — namely investing in infants — that have pretty clear benefits for both distribution and efficiency.  In contrast, the efficiency benefits of minimum wages are murky.  So minimum wages probably are a dominated policy option, once we start comparing alternative methods of redistribution, as the thread suggests we do.  You could add the deregulation of hearing aids to that list, and literally thousands of other deregulatory options as well, noting many of them may involve some upfront costs and thus pursuing them does fall into the realm of analyzing trade-offs.

In the dialogue you also will read: “But as a starting point, we should note that redistribution *always* has a shadow cost, so we want to compare the minimum wage to other policies like a negative income tax that redistribute at some efficiency cost.”  I would stress that many redistributions have a shadow benefit, not cost.  And once you recognize that, minimum wage hikes, like many other “progressive” policies, suddenly look a lot worse in relative terms.  Why not focus your energies on those areas where distribution and efficiency move together?  Are we supposed to think that such areas are so few and far between?  If so, the pro-minimum wage hike view is truly a bleak and negative-sum one and let us all describe it as such.

4. How about some words on the interaction between the minimum wage and (still-welcomed) illegal immigration?

5. More narrowly, I would pick a few nits on the descriptive analytics.  For instance in this discussion “Someone has to pay for wage increases for inframarginal workers. The gain to min wage workers comes from capital holders, non min-wage workers and consumers who indirectly pay for wage increases.”  Might not some of the gains come from those who end up unemployed?  Maybe not a priori, but I worry when this is overlooked altogether.  There do seem to be some negative employment effects, even if you think they are overrated.  The discussion then follows: “Those groups will have higher income-today than non-wage workers.”  That doesn’t follow either.  Some of the distributional consequences from minimum wage hikes can be very bad for poorer teenagers, for instance.

The end remarks on feminism are I think simply a misrepresentation of Bryan’s actual views, and an example of the kind of thing that is not well expressed on Twitter (you can blame the same on Bryan too, to be clear, all the more so).

In general, when I am being served a more “sophisticated” take on minimum wage laws, I end up being disappointed every single time.

Model this newsroom estimator

by  Tyler Cowen in

The New York Times’s performance review system has for years given significantly lower ratings to employees of color, an analysis by Times journalists in the NewsGuild shows.

The analysis, which relied on data provided by the company on performance ratings for all Guild-represented employees, found that in 2021, being Hispanic reduced the odds of receiving a high score by about 60 percent, and being Black cut the chances of high scores by nearly 50 percent. Asians were also less likely than white employees to get high scores.

In 2020, zero Black employees received the highest rating, while white employees accounted for more than 90 percent of the roughly 50 people who received the top score.

The disparities have been statistically significant in every year for which the company provided data, according to the journalists’ study, which was reviewed by several leading academic economists and statisticians, as well as performance evaluation experts.

…Management has denied the discrepancies in the performance ratings for nearly two years…

And from the economists:

Multiple outside experts consulted by the reporters consistently said the methodology used in the Guild’s most recent analysis was reasonable and appropriate and that the approach used by the company appeared either flawed or incomplete. Some went further, suggesting the company’s approach seemed tailor-made to avoid detecting any evidence of bias.

Rachael Meager, an economist at the London School of Economics, was blunt: “LMAO, that’s so dumb,” she wrote when Guild journalists described the company’s methodology to her. “That’s what you would do if you want to obliterate signal,” she added, using a word that in economics refers to meaningful information.

“This is so stupid as to border on negligence,” added Dr. Meager, who has published papers on evaluating statistical evidence in leading economics journals.

Peter Hull, a Brown University economist who has studied statistical techniques for detecting racial bias, also questioned the company’s approach and recommended a way to test it: running simulations in which bias was intentionally added. The company’s method repeatedly failed to detect racial disparities in those tests.

Here is the full article, prepared by the NYT Guild Equity Committee, including Ben Casselman.  Of course we now live in a world where very few people will be surprised by this.  Where exactly does the moral authority lie here for making editorial judgments about content concerning race?

Tuesday assorted links

by  Tyler Cowen

1. Cultural intelligence” as a factor behind your talent, and talent-spotting?  From 2017.

2. The Physiognomy Theory of Revolutionary History (speculative).

3. Changing Congressional lingo on UFOs.  Don’t worry, though, it is just the stupid bureaucracy.

4. Car seat laws as contraception.

5. Lance Taylor has passed away.

6. “Using US tax return data, we find that support for the incumbent president crowds out charitable donations.”

7. Why is it so difficult for Carlsen to achieve a rating of 2900?

As Goes India, so Goes Democracy

by  Alex Tabarrok in

We lost China. It is imperative that we not lose India.

By we, I mean the West and liberal democracy broadly speaking. Many of us thought that China would liberalize naturally as the Chinese people grew rich and demand followed Maslow’s hierarchy. Many other countries had followed this path. But China doesn’t have a liberal history, technology provided irresitible tools for social control, and democracy no longer looks to be as important for riches as it once did. With China lost and the United States in relative decline, the liberal world very much needs India as a large, multi-ethnic, and free democracy. Liberal democracy is also India’s best hope and bulwark against being ripped apart by internal divisions. But much remains in the balance. Suketu Mehta has a very good essay on this issue:

…Indian democracy is one of the 20th century’s greatest achievements. Over 75 years, we built, against great odds, a nation that for the first time in its 5,000-year history empowered women and the Dalits, people formerly known as untouchables. We largely abolished famine. We kept the army out of politics. After independence, many people predicted that we would become Balkanised. Yugoslavia became Balkanised, but India stayed together. No small feat.

But I write this today to tell you: things in India are more dire than you realise. India is a country that is majority Hindu, but it is not officially a Hindu state. The people who are in power in India today want to change this. They want India to be a Hindu ethnocratic state, where all other religions live by Hindu sufferance.

This has practical consequences: people of other religions are actively harassed, even lynched on the streets; their freedom to practice their religion in their own way is circumscribed. And when they protest, they are jailed and their houses bulldozed. Most worrying, much of the judiciary seems to be sympathetic to the Hindu nationalist agenda, and issues its verdicts accordingly.

There is also sustained and systematic harassment of writers, journalists, artists, activists, religious figures – anyone who questions the official narrative. We who have attached our names here are taking great personal risk in writing this: our citizenship of India could be revoked, we could be banned from the country, our property in India seized, our relatives harassed.

There are many others who think like we do but have told us they cannot speak out, for fear of the consequences. I never thought I’d use the word “dissident” in describing myself and my friends who have compiled this document. I thought that word only applied to the Soviet Union, North Korea, China.

It is crucial that India remains a democracy for all its citizens. India is not Pakistan, Iran, Afghanistan. Not yet. A lot of India’s standing in the world – the reason we are included in the respectable nations, the reason our people and our tech companies are welcome all over the world – is that we are seen, unlike, say, China, as being a multi-ethnic democracy that protects its minorities.

With over 200 million Indian Muslims, India is the third largest Muslim country in the world. There are 30 million Indian Christians. There are Sikhs, Buddhists, Jains, Zoroastrians, Atheists. They are as Indian as I am – a Hindu who’s proud of being a Hindu, but not a Hindu as Prime Minister Narendra Modi and the Bharatiya Janata Party seek to define me.

…The alienation of Indian Muslims would be catastrophic, for India and the world. They are being told: you are invaders, this is not your country, go back to where you came from. But Indian Muslims did not come from elsewhere; they were in the country all along, and chose which God to worship. After the Partition of India and Pakistan in 1947, they voted with their feet; they chose to stay, and build a nation.

…The country also has an enormous, restive, and largely unemployed youth population – half of its population is under 25. But only 36% of the working-age population has a job. To meet these challenges, it is crucial that the country stay united, and not fracture along religious lines, spend its energies building a brighter future instead of darkly contemplating past invasions.

In this time when country after country is turning its back on democracy, India has to be an example to countries around the world, this beautiful dream of nationhood expressed in the Hindu scriptures as “Vasudhaiva Kutumbakam” – the whole earth is a family. We should all be rooting for this incredible experiment in multiplicity to work. As goes India, so goes democracy.

Are chess players worse when playing remote?

by  Tyler Cowen in

During the COVID-19 pandemic, traditional (offline) chess tournaments were prohibited and instead held online. We exploit this unique setting to assess the impact of remote work policies on the cognitive performance of individuals. Using the artificial intelligence embodied in a powerful chess engine to assess the quality of chess moves and associated errors, we find a statistically and economically significant decrease in performance when an individual competes remotely versus offline in a face-to-face setting. The effect size decreases over time, suggesting an adaptation to the new remote setting.

That is from a new Economic Journal piece by Steffen Künn, Christian Seel, and Dainis Zegners.  I wonder if similar results might hold for Work from a Distance?

Via the excellent Samir Varma.

Caleb Watney and Heidi Williams on drug pricing reforms

by  Tyler Cowen in

Because patents are filed before the start of clinical trials, rather than when a drug actually hits the market, drugs that require long clinical trials effectively receive shorter patent terms. This reduces incentives to develop drugs that require long clinical trials, including many preventive medicines.

A simple way to correct this is for the Food and Drug Administration to guarantee a minimum baseline of 12 years of market exclusivity for branded drugs. Importantly, this would not change or lengthen protection for drugs that would be developed anyway; most already receive 12 to 16 years of market protection, and the United States already provides this for particular categories, such as biologic drugs. For drugs with short periods of market exclusivity, this policy could make the difference between the drug being developed or not.

Here is the full Op-Ed,  likely correct throughout.

Monday assorted links

by  Tyler Cowen

1. Bodhana Sivanandan, seven, shines at British Championships.  And 17-year-old Pragnanandhaa defeats Carlsen in their Rapid match yesterday, and takes #2 in the FTX tourney.

2. “Once amongst the tallest people in the world, the generations of bison-reliant people born after the slaughter lost their entire height advantage.”

3. “Our evidence suggests that refugees exert more assimilation effort in response to local threat, but do not integrate faster because of higher discrimination in more hostile regions.”

4. Colombia might decriminalize cocaine.

5. In this galaxy cluster, you can hear a black hole.  Sounds like it does in the movies!

6. Survey of Michael Kremer’s contributions.

Covid-19 and female Indian labor force participation

by  Tyler Cowen

Here are some new results of import:

The Covid-19 pandemic has created unprecedented disruptions in labour markets across the world including loss of employment and decline in incomes. Using panel data from India, we investigate the differential impact of the shock on labour market outcomes for male and female workers. We find that, conditional on being in the workforce prior to the pandemic, women were seven times more likely to lose work during the nationwide lockdown, and conditional on losing work, eleven times more likely to not return to work subsequently, compared to men. Using logit regressions on a sample stratified by gender, we find that daily wage and young workers, whether men or women, were more likely to face job loss. Education shielded male workers from job loss, whereas highly educated female workers were more vulnerable to job loss. Marriage had contrasting effects for men and women, with married women less likely to return to work and married men more likely to return to work. Religion and gender intersect to exacerbate the disproportionate impact, with Muslim women more likely to not return to work, unlike Muslim men for whom we find religion having no significant impact. Finally, for those workers who did return to work, we find that a large share of men in the workforce moved to self-employment or daily wage work, in agriculture, trade or construction. For women, on the other hand, there is limited movement into alternate employment arrangements or industries. This suggests that typical ‘fallback’ options for employment do not exist for women. During such a shock, women are forced to exit the workforce whereas men negotiate across industries and employment arrangements.

That is a recently published piece by Rosa Abraham, Amit Basole, and Surbhi Kesar.  So often we have seen that what appear to be path-dependent effects occasioned by Covid are also predictors of the future longer-run equilibrium.

Via Sean Geraghty.  And here is my previous post on the topic.  And this is from Bloomberg:

Closing the employment gap between men and women — a whopping 58 percentage points — could expand India’s GDP by close to a third by 2050. That equates to nearly $6 trillion in constant US dollar terms, according to a recent analysis from Bloomberg Economics. Doing nothing threatens to derail the country on its quest to become a competitive producer for global markets. Though women in India represent 48% of the population, they contribute only around 17% of GDP compared to 40% in China. 

All of this is worth a further ponder.

A new reason to shut down the internet

by  Tyler Cowen in

As candidates are set to appear for a major recruitment exam in Assam to fill 27,000 government posts in various departments, the state government has suspended mobile internet services around examination centres during the hours of the exam to prevent candidates from cheating.

The exam is part of the largest recruitment drive in the state for which around 14 lakh students will appear.

Internet services won’t be available in all districts where the exam is being conducted, the government said.

Here is the full story, via Siddharth M.

Investing in infants

by  Tyler Cowen in

We provide new evidence that cash transfers following the birth of a first child can have large and long-lasting effects on that child’s outcomes. We take advantage of the January 1 birthdate cutoff for U.S. child-related tax benefits, which results in families of otherwise similar children receiving substantially different refunds during the first year of life. For the average low-income single-child family in our sample this difference amounts to roughly $1,300, or 10 percent of income. Using the universe of administrative federal tax data in selected years, we show that this transfer in infancy increases young adult earnings by at least 1 to 2 percent, with larger effects for males. These effects show up at earlier ages in terms of improved math and reading test scores and a higher likelihood of high school graduation. The observed effects on shorter-run parental outcomes suggest that additional liquidity during the critical window following the birth of a first child leads to persistent increases in family income that likely contribute to the downstream effects on children’s outcomes. The longer-term effects on child earnings alone are large enough that the transfer pays for itself through subsequent increases in federal income tax revenue.

Here is the full paper by Andrew C. Barr, Jonathan Eggleston, and Alexander A. Smith.