Wednesday assorted links
1. Productivity claims made by Daniel Gross, channeled by Erik Torenberg.
2. L. Summers on the appropriate response to the coronavirus.
3. Gender and the consulting academic economist.
4. New Steve Davis and Kevin Murphy economics podcast.
5. New Zealand birds are capable of statistical inference.
Donald Trump tweets my column
But they really knew who was going to win! https://t.co/WZnOx6ZHmW
— Donald J. Trump (@realDonaldTrump) March 4, 2020
Please don’t even try reading the comments on this post.
How an economist thinks
I saw this on Twitter:
Hard Times for Adjunct Professors: 25% of part-time university faculty nationally rely on public assistance programs.
My immediate reaction was “Given the crowding in the sector, and that they presumably earn non-pecuniary returns from the enjoyment of teaching, shouldn’t we be taxing them at a higher rate?”
British colonialism in Nigeria
British colonialism in Nigeria lasted some six decades…First, the British sought to run Nigeria on the cheap. This led to a fetish for indirect rule. Much of the work of colonial governance was done in collaboration with traditional African authorities. The British expended little effort to create a centralized rule, a coherent armed force, or a professional civil service. The quality of the state that the British constructed and left behind in Nigeria was fairly poor…
The British depended on import taxes as the main source of revenue for running the colonial state. Little of these minimal revenues was spent on improving agriculture (except for the exportable cash crops), and even less on the promotion of technological or industrial development. When the British left Nigeria, the hand-hoe was still the main tool used for cultivation in the fields…
The British made do with a fairly low rate of taxation: during the interwar period tax revenue were only 2 percent to 3 percent of the GDP. As important was that nearly 60 percent of these revenues came from taxing foreign trade, a bureaucratic task that was much easier than collecting direct taxes…
Between 1900 and 1930, Nigeria’s average per capita income grew at about half a percent per annum and then essentially stagnated until the end of the war.
That is all from Atul Kohli, Imperialism and the Developing World: How Britain and the United States Shaped the Global Periphery. The book is quite good.
Overall, I have found that as I learn more about the history of British imperialism, the lower my opinion of it sinks.
The coronavirus debate is splitting into two broad camps
The “growthers” and the “base-raters” — which are you and why? Here is my latest Bloomberg column. Hard to excerpt but good.
China estimate of the day
“Only 30 percent of small and medium businesses nationwide have resumed work,” Shu Chaohui, an official at the Ministry of Industry and Information Technology, told reporters Tuesday. “It’s a pretty severe situation.”
…A nationwide survey led in February by Peking University found half the country’s small businesses will run out of cash within three months, and 14 percent might not survive past mid-March. Unlike large state conglomerates or multinational companies that could weather the storm, China’s small businesses say they simply do not have cash reserves to continue paying wages and rent.
And while manufacturing giants that mass-produce gadgets such as Apple iPhones can rely on the government to charter buses and trains to shuttle migrant workers back to their factories, nearly 40 percent of smaller businesses say they cannot get their workers back to Chinese cities because of transportation bottlenecks and quarantine restrictions, according to the Peking University study.
Here is more from Gerry Shih.
Tuesday assorted links
2. Are there negative externalities to having a lot of network-based hiring?
3. “My Guatemalan audiences took to Open Borders like fish to water.” Link here.
4. Why coronavirus testing is difficult. And here is a specific story.
Maybe they are the ones who know?
The top 1% are the only affluent group consistently more inclined than the general population to attribute variation in drive and IQ to both internal causes, particularly to innate causes (the top 1% also differ from the other affluent, at p < .01). This said, the affluent are not more dismissive than others of environmental causal explanations. Interestingly, across all income groups, “environmental” explanations for drive and IQ are more popular than the two internal explanations.
That is from a new paper (and here) by Elizabeth Suhay, Marko Klašnja, and Gonzalo Rivero.
What I’ve been reading
1. David Nutt, Drink? The New Science of Alcohol + Your Health.
A very good introduction to the growing body of evidence about the harms of alcohol, in all walks of life.
2. Samuel Zipp, The Idealist: Wendell Willkie’s Wartime Quest to Build One World.
Who cares about Wendell Willkie? I received this review copy determined not to read it, but of course I could not help but crack open the cover and sample a few pages, and then I was hooked. The first thirty pages alone had excellent discussions of early aviation (Willkie was an aviation pioneer of sorts with a cross-world flight), Midwestern family and achievement culture of the time, and the rise of the United States.
3. I was happy to write a blurb for Michael R. Strain’s The American Dream is Not Dead (But Populism Could Kill It).
4. Simon W. Bowmaker, When the President Calls: Conversations with Economic Policymakers.
The interviewed subjects include Feldstein, Boskin, Rubin, Summers, Stiglitz, Rivlin, Yellen, John Taylor, Lazear, Harvey Rosen, Goolsbee, Orszag, Brainard, Alan Krueger, Furman, Hassett, and others.
4. Cheryl Misak, Frank Ramsey: A Sheer Excess of Powers.
Thorough and useful, though not exciting to read.
5. Gabriel Said Reynolds, Allah, God in the Qur’an.
A very good treatment of what it promises, with an emphasis on the concept of mercy in Islam.
6. Sophy Roberts, The Lost Pianos of Siberia.
A wonderful book if you care about the lost pianos of Siberia and indeed I do: “Roberts reminds us in this fresh book that there are still some mysterious parts of our world.” (link here) Also of note is Varlam Shalamov, Sketches of the Criminal World: Further Kolyma Stories, the first third being remarkably moving and incisive as well.
There is also Sidney Powell and Harvey A. Silverman, Conviction Machine: Standing Up to Federal Prosecutorial Abuse is a frank and brutal documentation of why you should never trust a prosecutor or speak to the FBI.
Also new and notable is Lily Collison, Spastic Diplegia–Bilateral Cerebral Palsy: Understanding the Motor Problems, Their Impact on Walking, and Management Throughout Life: a Practical Guide for Families.
Social security and trends in inequality
Recent influential work finds large increases in inequality in the U.S., based on measures of wealth concentration that notably exclude the value of social insurance programs. This paper revisits this conclusion by incorporating Social Security retirement benefits into measures of wealth inequality. Wealth inequality has not increased in the last three decades when Social Security is accounted for. When discounted at the risk-free rate, real Social Security wealth increased substantially from $5.6 trillion in 1989 to just over $42.0 trillion in 2016. When we adjust for systematic risk coming from the covariance of Social Security returns with the market portfolio, this increase remains sizable, growing from over $4.6 trillion in 1989 to $34.0 trillion in 2016. Consequently, by 2016, Social Security wealth represented 58% of the wealth of the bottom 90% of the wealth distribution. Redistribution through programs like Social Security increases the progressivity of the economy, and it is important that our estimates of wealth concentration reflect this.
That is from a new paper by Sylvain Catherine, Max Miller, and Natasha Sarin, I look forward to reading it soon. It is at least possible that the Saez-Zucman results are coming under further question.
Just to repeat part of the abstract, I find this sentence striking: “When discounted at the risk-free rate, real Social Security wealth increased substantially from $5.6 trillion in 1989 to just over $42.0 trillion in 2016.” That’s a lot.
And this one: “Consequently, by 2016, Social Security wealth represented 58% of the wealth of the bottom 90% of the wealth distribution.” Wow.
What makes for a good CEO?
We develop a new method to measure CEO behavior in large samples via a survey that collects high-frequency, high-dimensional diary data and a machine learning algorithm that estimates behavioral types. Applying this method to 1,114 CEOs in six countries reveals two types: “leaders,” who do multifunction, high-level meetings, and “managers,” who do individual meetings with core functions. Firms that hire leaders perform better, and it takes three years for a new CEO to make a difference. Structural estimates indicate that productivity differentials are due to mismatches rather than to leaders being better for all firms.
That is from a new paper by Oriana Bandiera, Andrea Prat, Stephen Hansen, and Raffaella Sadun, forthcoming in the JPE.
Monday assorted links
1. Coronavirus protective shield markets in everything.
2. Does election forecasting itself lower turnout?
3. Ebola spread less under the local chiefs.
4. How much of world gdp has the coronavirus reduced?
5. Dreher interviews Douthat on decadence and different forms of pessimism.
6. Lots of younger Filipino crew members on Diamond Princess also infected.
A coronavirus conundrum, on the percentage of asymptomatic cases
New reports suggest that the coronavirus has been spreading in Washington state for at least six weeks, infecting hundreds or maybe more. At the same time, other reports suggest a high “R0 value,” sometimes 3 or more, reflecting that the coronavirus is highly contagious and it spreads very quickly.
It is then possible to have hundreds of cases in Washington state if most cases are asymptomatic, or with only slight symptoms. Yet when we look at the experiences of the coronavirus cruise ships, it seems a reasonable number of cases have symptoms of distress. For instance, on the Diamond Princess six people died and only about half are listed as having the virus but asymptomatic (see the previous link on the rhs). So many others seem to have reported being sick or requiring treatment.
So what gives? I see a few options, none of them obviously convincing:
1. People on the cruise ship were hit especially hard.
2. Significantly different strains of the virus are circulating (all of the sequence that has been done seems to run counter to this).
3. Washington state local public health infrastructure has in fact been overwhelmed as of late, we just thought it was all a very bad flu season.
4. Many of the people on the cruise ship who showed symptoms “thought they were supposed to” but were not actually so sick.
5. Most of the detected cases on the cruise ship in fact were asymptomatic, but the media has been misreporting the extent of actual illness among the passengers.
Any other suggestions? It is quite likely the cruise ship people are older than usual, but will that make up for the entire difference? People, what do you think is going on here?
Please restrict your comments to attempting to resolve this particular issue, as you can put your more general coronavirus observations on other posts.
Recession risk is rising
2020 @PredictIt recession prediction market probabilities are now above 40% amid #Coronavirus concerns.
That is from Jon Hartley, and here is his closely related new paper “Recession Prediction Markets and Macroeconomic Risk in Asset Prices.” Here is the prediction market page, at 47 as I am writing.
Why have stock markets been falling so much?
That is the topic of my latest Bloomberg column, note first of all that the virus is a kind of referendum on global response capabilities, and so far we have been failing (with Singapore as a possible exception). Here is another bit:
…investors now have a better sense of what other investors think about risk. Before Covid-19, investors did not have much direct information about what other investors thought about the robustness of the global economy. Their expectations were not seriously being tested.
When a new shock to the system comes along, however, everyone gets to observe everyone else’s selling behavior. And investors have learned that the faith of their fellow investors is not as strong as they had thought. That raises the risk premium on holding stocks, and in turn causes share prices to fall more. Given how much this pandemic is a truly new event, and that the process of trading itself generates information about the forecasts of other investors, price volatility can be expected to continue.
And this:
The stock market is scared by the fact that it took so long for the stock market to be scared.
Developing…