Category: Data Source

Where did the $800 billion Paycheck Protection Program money go?

The Paycheck Protection Program (PPP) provided small businesses with roughly $800 billion dollars in uncollateralized, low-interest loans during the pandemic, almost all of which will be forgiven. With 93 percent of small businesses ultimately receiving one or more loans, the PPP nearly saturated its market in just two months. We estimate that the program cumulatively preserved between 2 and 3 million job-years of employment over 14 months at a cost of $170K to $257K per job-year retained. These estimates imply that only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs; the balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms. Program incidence was highly regressive, with about three-quarters of PPP funds accruing to the top quintile of households. This compares unfavorably to the other two major pandemic aid programs, enhanced UI benefits and Economic Impact Payments (i.e. stimulus checks). PPP’s breakneck scale-up, its high cost per job saved, and its regressive incidence have a common origin: PPP was essentially untargeted because the United States lacked the administrative infrastructure to do otherwise.

That is from a new NBER working paper by David Autor and many others.

The prisoner’s dilemma for prisoners and Mafia men

We develop experimental evidence on cooperation and response to sanctions by running prisoner’s dilemma and third party punishment games on three different pools of subjects; students, ordinary criminals and Camorristi (Neapolitan ‘Mafiosi’). The latter two groups were recruited from within prisons. Camorra prisoners show a high degree of cooperativeness and a strong tendency to punish defectors, as well as a clear rejection of the imposition of external rules even at significant cost to themselves. The subsequent econometric analysis further enriches our understanding demonstrating inter alia that individuals’ locus of control and reciprocity are associated with quite different and opposing behaviours amongst different participant types; a strong sense of self-determination and reciprocity both imply a higher propensity to punish for Camorra inmates, but quite the opposite for ordinary criminals, further reinforcing the contrast between the behaviour of ordinary criminals and the strong internal mores of Camorra clans.

Here is the paper by Annamarie Nese, et.al., via Ethan Mollick and Ilya Novak.

The gender equality paradox seems to hold for chess

The gender-equality paradox refers to the puzzling finding that societies with more gender equality demonstrate larger gender differences across a range of phenomena, most notably in the proportion of women who pursue degrees in science, technology, engineering, and math. The present investigation demonstrates across two different measures of gender equality that this paradox extends to chess participation (N = 803,485 across 160 countries; age range: 3–100 years), specifically that women participate more often in countries with less gender equality. Previous explanations for the paradox fail to account for this finding. Instead, consistent with the notion that gender equality reflects a generational shift, mediation analyses suggest that the gender-equality paradox in chess is driven by the greater participation of younger players in countries with less gender equality. A curvilinear effect of gender equality on the participation of female players was also found, demonstrating that gender differences in chess participation are largest at the highest and lowest ends of the gender-equality spectrum.

Here is the paper by Allon Vishkin, via @autismcrisis.

Why Does the CDC Do This?

The Centers for Disease Control and Prevention on Monday advised Americans to avoid travel to Canada, citing “very high” levels of the coronavirus.

Canada was placed under a Level 4 travel health notice — the highest category…“Because of the current situation in Canada, even fully vaccinated travelers may be at risk for getting and spreading Covid-19 variants,” the C.D.C. said.

It’s very strange. It’s as if the CDC are on auto pilot and even after two years can’t recognize that the United States may not be the safest place in the world. But why announce to everyone that they can’t compare risks? Why throw away so much credibility?

The political polarization of U.S. firms

Executive teams in U.S. firms are becoming increasingly partisan, leading to a political polarization of corporate America. We establish this new fact using political affiliations from voter registration records for top executives of S&P 1500 firms between 2008 and 2018. The rise in partisanship is explained by both an increasing share of Republican executives and increased sorting by partisan executives into firms with like-minded individuals. Further, we find that within a given firm-year, executives whose political views do not match those of the team’s majority have a higher probability of leaving the firm. The increase in partisanship is taking place despite executive teams becoming more diverse in terms of gender and race.

That is from a new paper by Vyacheslav Fos, Elisabeth Kempf, and Margarita Tsoutsoura.

Does Pot Contribute to GDP?

As Tyler and I explain in our textbook, GDP is the market value of all finished goods and services produced within a country in a year. Sounds simple but there are always edge cases including whether or not illegal goods should count towards GDP. According to the definition, illegal goods should count towards GDP. But in practice they often don’t. In part because some people think that counting illegal goods would signal approval (or that not counting them signals disapproval) but also because it’s hard to count the market value of illegal goods. Do we really expect the BEA to survey drug dealers and prostitutes about the price of their goods and services?

But what happens when an illegal good is legalized? The market value of any finished legal good should definitely count towards GDP but just adding it to GDP on the day of legalization causes problems. Did the economy boom the day pot was legalized? Did the recession end that day? Did we all become wealthier? Some countries shrug and just add footnotes.

In 1987, Italy, whose citizens are famous scofflaws when it comes to reporting income and paying taxes, announced that it was adjusting GDP upward by about a fifth to reflect the underground—but not necessarily illegal—economy. Overnight, Italy became the fifth-largest economy in the world, surpassing the United Kingdom. National euphoria ensued. Italians dubbed it “il sorpasso,” the overtaking.

But when Canada legalized pot in 2018, Statistics Canada decided not just to add pot to GDP but to backdate all their previous GDP statistics to create a consistent series. The Walrus has the interesting story.

The teams had to invent codes to capture classifications for new line items. Among them: 71.0105, in the classification of instructional programs for cannabis culinary arts and cannabis-chef training, and 71.0110, for cannabis-selling skills and sales operations.

…Apart from hammering out semantic protocols, StatCan faced two central hurdles in determining how to count cannabis: How much do Canadians use? And what does it cost? But the economists at StatCan wanted to calculate those numbers not just for the final quarter of 2018, when cannabis became legal, but for every year back to 1961, which is as far back as the national accounts go, at least in their current form.

…So the cannabis team dug back through decades of surveys on drug use, addiction rates, law enforcement, and health data to figure out how much cannabis Canadians were consuming back in the day. It started small, with as little as twenty-four tonnes a year in the early 1960s. By 2015, it was close to 700 tonnes. Until the 1990s, when the US war on drugs ramped up, a lot of that came from abroad. Now, we’re a major exporter.

Still, StatCan craved more detail. So, in 2018, analysts hooked up with researchers at McGill University’s department of chemical engineering for a year-long scrutiny of wastewater in Halifax, Montreal, Toronto, Edmonton, and Vancouver. (Halifax clocked in with the highest cannabis load per capita and roughly triple the usage of Vancouverites. Go figure.) That pilot project has now been suspended for lack of money, says Barber-Dueck.

The latest figures show that more than 2 million Canadians use cannabis at least once a week, and more than a third of those use it every day. But what have they been paying? Barber-Dueck says that the team ploughed into historical databases of weed prices, talked to law enforcement officers, and canvassed longtime illegal growers, mining their memories. British Columbians were especially forthcoming. “People are pretty open about it and have been for years,” Barber-Dueck says.

As the legalization date approached, the team created the crowd-sourcing app StatsCannabis, complete with a cannabis logo. “Statistics Canada needs your help collecting cannabis prices,” the app pleads, adding, “Your data is protected!”

The technique had its drawbacks, Peluso notes. Heavy users of cannabis are the most frequent participants in the surveys by default. But they’re also filling out the survey right after they’ve made a purchase. “When you survey heavy users of a psychotropic substance, the error band is always a little bit bigger. You’re picking up people whose—How shall I put it?—whose awareness might be slightly compromised.”

So does pot contribute to GDP? It does in Canada but not in the United States!

Neither Canada nor the United States include prostitution in GDP although the Netherlands does. The United States has higher GDP per capita than either the Netherlands or Canada but if we included pot and prostitution our GDP per capita would be even higher and would better reflect our true standard of living relative to these other countries!

Hat tip: Ryan Briggs on twitter who notes that as another consequence Canada’s CPI now includes pot prices, at a weight of .55%.

The new consensus of economists is further to the left

Based on an extensive survey of the members of the American Economic Association this paper compares consensus among economists on a number of economic propositions over four decades. The main result is an increased consensus on many economic propositions, specifically the appropriate role of fiscal policy in macroeconomics and issues surrounding income distribution. Economists now embrace the role of fiscal policy in a way not obvious in previous surveys and are largely supportive of government policies that mitigate income inequality. Another area of consensus is concern with climate change and the use of appropriate policy tools to address climate change.

That is from a new paper by Doris Geide-Stevenson and Alvaro La Parra Perez.  While I believe left-wing economists are more likely to answer such surveys (and maybe this gap is growing over time?), still I do not doubt the essential correctness of this result.  Note also that immigration and floating exchange rates remain popular, tariffs remain unpopular.

Via Jeremy Horpedahl.

Ethnic discrimination on Airbnb

We use data from Airbnb to identify the mechanisms underlying discrimination against ethnic minority hosts. Within the same neighborhood, hosts from minority groups charge 3.2 percent less for comparable listings. Since ratings provide guests with increasingly rich information about a listing’s quality, we can measure the contribution of statistical discrimination, building upon Altonji and Pierret (2001). We find that statistical discrimination can account for the whole ethnic price gap: ethnic gaps would disappear if all unobservables were revealed. Also, three-quarters (2.5 points) of the initial ethnic gap can be attributed to inaccurate beliefs of potential guests about hosts’ average group quality.

That is from a newly published paper (AEA) by Morgane Laouénan and Roland Rathelot.

The mental health benefits of vaccines

We estimate that COVID-19 vaccination reduces anxiety and depression symptoms by nearly 30%. Nearly all the benefits are private benefits, and we find little evidence of spillover effects, that is, increases in community vaccination rates are not associated with improved anxiety or depression symptoms among the unvaccinated. We find that COVID-19 vaccination is associated with larger reductions in anxiety or depression symptoms among individuals with lower education levels, who rent their housing, who are not able to telework, and who have children in their household. The economic benefit of reductions in anxiety and depression are approximately $350 billion. Our results highlight an important, but understudied, secondary benefit of COVID-19 vaccinations.

Here is the NBER working paper by Virat Agrawal, Jonathan H. Cantor, Jeeraj Sood, and Christopher M. Whaley.

The Rise and Decline of Thinking over Feeling

In texts, both fictional and non-fictional and in English and Spanish, thinking words relating to technology and social organization (experiment, gravity, weigh, cost, contract) become more common between 1850 and approximately 1977 (beginning of the great stagnation) but since then thinking words have declined markedly and feeling words relating to belief, spirituality, sapience, and intuition (e.g. forgiveness, heal, feel) have become more common.

The graph at right shows the ratio of rationality words to intuition words over time in different corpuses. Paper here.

The surge of post-truth political argumentation suggests that we are living in a special historical period when it comes to the balance between emotion and reasoning. To explore if this is indeed the case, we analyze language in millions of books covering the period from 1850 to 2019 represented in Google nGram data. We show that the use of words associated with rationality, such as “determine” and “conclusion,” rose systematically after 1850, while words related to human experience such as “feel” and “believe” declined. This pattern reversed over the past decades, paralleled by a shift from a collectivistic to an individualistic focus as reflected, among other things, by the ratio of singular to plural pronouns such as “I”/”we” and “he”/”they.” Interpreting this synchronous sea change in book language remains challenging. However, as we show, the nature of this reversal occurs in fiction as well as nonfiction. Moreover, the pattern of change in the ratio between sentiment and rationality flag words since 1850 also occurs in New York Times articles, suggesting that it is not an artifact of the book corpora we analyzed. Finally, we show that word trends in books parallel trends in corresponding Google search terms, supporting the idea that changes in book language do in part reflect changes in interest. All in all, our results suggest that over the past decades, there has been a marked shift in public interest from the collective to the individual, and from rationality toward emotion.

The authors blame the change in language towards feelings on the failure of “neo-liberalism” which seems dubious and without plausible mechanism. If anything, I would put the causality the other way. A more plausible explanation is more female writers and the closely related feminization of culture.

The analysis is consistent with my earlier post on how quickly the NYTimes became woke.

Hat tip: Paul Kedrosky.

Which search engine does the most to limit conspiracy theorizing?

Web search engines are important online information intermediaries that are frequently used and highly trusted by the public despite multiple evidence of their outputs being subjected to inaccuracies and biases. One form of such inaccuracy, which so far received little scholarly attention, is the presence of conspiratorial information, namely pages promoting conspiracy theories. We address this gap by conducting a comparative algorithm audit to examine the distribution of conspiratorial information in search results across five search engines: Google, Bing, DuckDuckGo, Yahoo and Yandex. Using a virtual agent-based infrastructure, we systematically collect search outputs for six conspiracy theory-related queries (“flat earth”, “new world order”, “qanon”, “9/11”, “illuminati”, “george soros”) across three locations (two in the US and one in the UK) and two observation periods (March and May 2021). We find that all search engines except Google consistently displayed conspiracy-promoting results and returned links to conspiracy-dedicated websites in their top results, although the share of such content varied across queries. Most conspiracy-promoting results came from social media and conspiracy-dedicated websites while conspiracy-debunking information was shared by scientific websites and, to a lesser extent, legacy media. The fact that these observations are consistent across different locations and time periods highlight the possibility of some search engines systematically prioritizing conspiracy-promoting content and, thus, amplifying their distribution in the online environments.

Here is the full paper by Aleksandra Urmana, Mykola Makhortykhb, Roberto Ulloac, and Juhi Kulshrestha.  Of course it is also worth investigating which search engine does the most to “censor” true conspiracy theories.  Are there any?

Via Aleksandra Urman.

Don’t tell Charlie Munger

I don’t believe this result, but it is at least worth a ponder:

Previous research has found significant impacts of daylight and views on the cognitive function of office workers. In this study, we use scores on decision-making performance to estimate the annual economic potential of optimizing daylighting and views in U.S. offices. Cognitive scores were compared against over 100,000 previous test scores to obtain the distributional shift in cognitive performance when working in an office with optimized daylighting and views as opposed to an office with traditional blinds. These changes in performance were then compared to compensation data from the Bureau of Labor Statistics. Office workers shifted on average from the 52nd percentile to 65th percentile, equivalent to a $11,809 difference in salary per person per year. When conservatively accounting for the number of employees working within 15 ft of a window with blinds, optimizing daylight and views in U.S. offices has the potential to generate $352B ($240B–$464B), or 1.7% of the 2018 U.S. gross domestic product (GDP), in additional productivity. These findings suggest that building developers, architects and tenants should give additional attention to daylight design and façade technology as they consider new building construction, renovation and leasing options.

Here is the full piece by Piers MacNaughton et.al., via the excellent Kevin Lewis.

Does China own more of America than we thought?

This paper demonstrates that the measured stock of China’s holding of U.S. assets could be much higher than indicated by the U.S. net international investment position data due to unrecorded historical Chinese inflows into an increasingly popular global safe haven asset: U.S. residential real estate. We first use aggregate capital flows data to show that the increase in unrecorded capital inflows in the U.S. balance of payment accounts over the past decade is mainly linked to inflows from China into U.S. housing markets. Then, using a unique web traffic dataset that provides a direct measure of Chinese demand for U.S. housing at the zip code level, we estimate via a difference-in-difference matching framework that house prices in major U.S. cities that are highly exposed to demand from China have on average grown 7 percentage points faster than similar neighborhoods with low exposure over the period 2010-2016. These average excess price growth gaps co-move closely with macro-level measures of U.S. capital inflows from China, and tend to widen following periods of economic stress in China, suggesting that Chinese households view U.S. housing as a safe haven asset.

If true, does that raise or lower the chance of a war?  That piece is from William Barcelona, Nathan Converse, and Anna Wong.  Via the excellent Kevin Lewis.

Israel fact of the day

The prevalence of consanguineous marriage among the Arab population in Israel increased significantly from 36.3% to 41.6% in the decade from 2007 to 2017. First-cousin and closer marriages constituted about 50% of total consanguineous marriages in the two periods surveyed. Consanguinity was found to be significantly related to religion and place of residence. Thus, the prevalence of consanguineous marriage remains high among the Arab population in Israel, similar to other Arab societies.

Here is the research paper, via the excellent Kevin Lewis.