Category: Data Source

Non-binary gender economics

Economics research has largely overlooked non-binary individuals. We aim to jump-start the literature by providing data on several economically-important beliefs and preferences. Among many results, non-binary individuals report more gender-based discrimination and express different career and life aspirations, including less desire for children. Anti-non-binary sentiment is stronger than anti-LGBT sentiment, and strongest among men. Non-binary respondents report lower assertiveness than men and women, and their social preferences are similar to men’s and less prosocial than women’s, with age an important moderator. Elicited beliefs reveal inaccurate stereotypes as people often mistake the direction of group differences or exaggerate their size.

Here is the new NBER working paper by Katherine B. Coffman, Lucas C. Coffman, and Keith Marzilli Ericson.  P.s. comments are closed.

Which U.S. firms have grown in profitability?

China’s admission into the WTO in 2001 heralded a new era of globalization, increasing both import competition in domestic markets and foreign opportunities for US firms. In the aggregate, the average annual profitability of US public firms during the post globalization period (2003-2019) increased by 11.5% of the corresponding pre-globalization period (1984-2002) profitability. This increase in overall aggregate profitability was primarily driven by foreign profitability increasing by 47.4% for firms in the S&P 500 index, which are larger and have more intangible assets created by R&D and SG&A expenditures. In contrast, following globalization, the average aggregate domestic profitability of US firms remained flat, and firms employed more capital to generate sales. Firms with higher intangible assets benefited more from globalization.

That is from a new NBER working paper by Bullipe R. Chintha, Ravi Jagannathan, and Sri S. Sridhard.  When Average is Over was published about eleven years ago, in talks and media appearances I used to commonly draw a distinction between people/firms who are exporting their products — yes economists too — and those who are not.  Which category do you belong to?

U.S.A. yikes fact of the day

Between January 2016 and December 2022, the monthly antidepressant dispensing rate increased 66.3%, from 2575.9 to 4284.8. Before March 2020, this rate increased by 17.0 per month (95% confidence interval: 15.2 to 18.8). The COVID-19 outbreak was not associated with a level change but was associated with a slope increase of 10.8 per month (95% confidence interval: 4.9 to 16.7). The monthly antidepressant dispensing rate increased 63.5% faster from March 2020 onwards compared with beforehand. In subgroup analyses, this rate increased 129.6% and 56.5% faster from March 2020 onwards compared with beforehand among females aged 12 to 17 years and 18 to 25 years, respectively. In contrast, the outbreak was associated with a level decrease among males aged 12 to 17 years and was not associated with a level or slope change among males aged 18 to 25 years.

That is by Kao-Ping Chua, et.al., from the high-quality journal Pediatrics.  So that is how we respond to crises?  By doping up the young women?  Yikes!

Via the excellent Kevin Lewis.

Further data on alcohol use amongst American youth

This paper provides the first long-run assessment of adolescent alcohol control policies on later-life health and labor market outcomes. Our analysis exploits cross-state variation in the rollout of “Zero Tolerance” (ZT) Laws, which set strict alcohol limits for drivers under age 21 and led to sharp reductions in youth binge drinking. We adopt a difference-in-differences approach that combines information on state and year of birth to identify individuals exposed to the laws during adolescence and tracks the evolving impacts into middle age. We find that ZT Laws led to significant improvements in later-life health. Individuals exposed to the laws during adolescence were substantially less likely to suffer from cognitive and physical limitations in their 40s. The health effects are mirrored by improved labor market outcomes. These patterns cannot be attributed to changes in educational attainment or marriage. Instead, we find that affected cohorts were significantly less likely to drink heavily by middle age, suggesting an important role for adolescent initiation and habit-formation in affecting long-term substance use.

Here is the article by Tatiana Abboud, Andriana Bellou, and Joshua Lewis, via tekl once again.  People, you can make things easier for the political philosophers — why should they have to weigh liberty against utility?  Just give up drinking voluntarily.

The Gender Gap in Confidence: Expected but Not Accounted For

We investigate how the gender gap in confidence affects the views that evaluators (e.g., employers) hold about men and women. We find the confidence gap is contagious, causing evaluators to form overly pessimistic beliefs about women. This result arises even though the confidence gap is expected and even though the confidence gap shouldn’t be contagious if evaluators are Bayesian. Only an intervention that facilitates Bayesian updating proves (somewhat) effective. Additional results highlight how similar findings follow even when there is no room for discriminatory motives or differences in priors because evaluators are asked about arbitrary, rather than gender-specific, groups.

That is a new piece by Christine L. Exley and Kirby Nielsen in the new March 2024 AER.

I am tired of making this point

Here Robin Hanson notes that social spending as a percent of gdp tends to rise almost universally:

 

Do recessions benefit our health?

That is the topic of my latest Bloomberg column, here is one excerpt:

The human and economic costs of recessions are deep and well-documented. They can also have real health benefits, however, and seldom are they expressed so starkly as in this sentence in a new paper from the National Bureau of Economic Research: “The Great Recession provided one in twenty-five 55-year-olds with an extra year of life.”

…Overall, the paper notes, age-adjusted mortality in the US fell by 2.3% during the Great Recession. The finding, from professors at MIT, the University of Chicago and McMasters University, broadly tracks previous research showing that that mortality rates rise in good times and fall in hard times.

And:

One answer is related to air pollution, which is lower in recessions, typically because of reduced economic activity. The benefits of lower pollution levels persist long after the recession — at least 10 years, according to the researchers’ estimates. Air pollution reduction accounts for more than one-third of the mortality benefits from the Great Recession.

And all of this:

The data do provide some additional clues. Except for cancer, for example, all major causes of mortality fell during the Great Recession. Decreases in cardiovascular-related deaths accounted for about half the mortality gains during that time. Furthermore, the mortality benefits were concentrated among Americans without college degrees. You might think that some of these improved health outcomes were due to people losing their stressful, low-paying jobs, but unemployment can be pretty stressful too.

For a 55-year-old, according to the paper’s estimates, about one-quarter of the economic costs of the Great Recession were countered by these mortality gains. So the Great Recession was still a very bad event — just less bad than we used to think. That is especially true for less educated Americans, who were hit harder by unemployment but also reaped the mortality gains.

At the top end of the age distribution, Americans aged 65 and older didn’t lose much from the Great Recession, in part because so many were already retired or working only part-time (in some cases, they were ensconced in jobs they were not going to lose). The researchers estimate that those over age 60 were also better off, on net, from the Great Recession.

Worth a ponder.  Here is the original paper by Amy FinkelsteinMatthew J. NotowidigdoFrank Schilbach Jonathan Zhang.

Lithium

WEF 2002: The world could face lithium shortages by 2025, the International Energy Agency (IEA) says, while Credit Suisse thinks demand could treble between 2020 and 2025, meaning “supply would be stretched”.

Reuters 2023:  Lithium producers are growing anxious that delays in mine permitting, staffing shortages and inflation may hinder their ability to supply enough of the battery metal to meet the world’s aggressive electrification timelines.

GEP 2023: Lithium faces supply shortages due to past underinvestment amid surging electric vehicle demand.

This list could easily be extended. In contrast here from Nat Bullard’s presentation is data on battery prices per kilowatt-hour. Note that almost all of the above is very short-term extrapolation from the price increase in 2022. As Tyler says, do not underrate the elasticity of supply.

But I haven’t yet given you my favorite headline on this topic, an all-time classic:

Lithium Price Crash Could Trigger Shortages From 2025

 

The California tax burden is driving people out

That is the topic of my latest Bloomberg column, here is one bit:

California’s highest income tax rate is 13.3%. That is in addition to a top federal tax rate of 37%. California also has a state sales tax rate of 7.25%, and many localities impose a smaller sales tax. So if a wealthy person earns and spends labor income in the state of California, the tax rate at the margin could approach 60%. Then there is the corporate state income tax rate of 8.84%, some of which is passed along to consumers through higher prices. That increases the tax burden further yet.

And this:

Researchers Joshua Rauh and Ryan Shyu, currently and formerly at Stanford business school, have studied the behavioral response to Proposition 30, which boosted California’s marginal tax rates by up to 3% for high earners for seven years, from 2012 to 2018. They found that in 2013, an additional 0.8% of the top bracket of the residential tax base left the state. That is several times higher than the tax responses usually seen in the data.

These high-earning California residents seem to have reached a tipping point: Maybe many of them could afford the extra tax burden, but at some point they got fed up, read the signals and decided the broader system wasn’t working in their interest.

Overall, Proposition 30 increased total tax revenue for California — but not nearly as much as intended. Due to departures, the state lost more than 45% of its windfall tax revenues from the policy change, and within two years the state lost more than 60% of those same revenues.

Here is an AEA link (gated) to the original research.

Sticky norms

Shanhong Luo, a professor at Fayetteville State University, studies the factors behind attraction between romantic partners, including the norms that govern relationships. In a paper published in 2023 in Psychological Reports, a peer-reviewed journal, Dr. Luo and a team of researchers surveyed 552 heterosexual college students in Wilmington, N.C., and asked them whether they expected men or women to pay for dates — and whether they, as a man or a woman, typically paid more.

The researchers found that young men paid for all or most of the dates around 90 percent of the time, while women paid only about 2 percent (they split around 8 percent of the time). On subsequent dates, splitting the check was more common, though men still paid a majority of the time while women rarely did. Nearly 80 percent of men expected that they would pay on the first date, while just over half of women (55 percent) expected men to pay.

Surprisingly, views on gender norms didn’t make much of a difference: On average, both men and women in the sample expected the man to pay, whether they had more traditional views of gender roles or more progressive ones.

Here is more from the NYT.

Correlations between spouses

Is Science a Public Good?

Science seems like a public good; in theory, ideas are non-rivalrous and non-excludable. But the closer we look at how ideas actually spread and are used in the world, the less they seem like public goods. As I am fond of pointing out, Thomas Keller wrote a literal recipe book for the dishes he served at his world famous French Laundry restaurant and yet, the French Laundry did not go out of business. Ideas are in heads and if you don’t move the heads, often the ideas don’t move either.

In a new NBER working paper, The Effect of Public Science on Corporate R&D by Arora, Belenzon, Cioaca, Sheer & Zhang, (Tyler mentioned it briefly earlier) the authors make a similar point:

…the history of technical progress teaches us that abstract ideas are also difficult to use. Ideas have to be tailored for specific uses, and frequently, have to be embodied in people and artifacts before they can be absorbed by firms. However, such embodiment also makes ideas less potent sources of increasing returns, turning non-rival ideas into rival inputs, whose use by rivals is easier to restrict. Our findings confirm that firms, especially those not on the technological frontier, appear to lack the absorptive capacity to use externally supplied ideas unless they are embodied in human capital or inventions. The limit on growth is not the creation of useful ideas but rather the rate at which those ideas can be embodied in human capital and inventions, and then allocated to firms to convert them into innovations.

The question of whether science is a public good is not merely technical but has significant implications. If science is a public good, markets will likely underproduce it, making government subsidies to universities crucial for stimulating R&D and economic growth. Conversely, if ideas are embodied and thus closely tied to their application, government funding for university research might not only fail to enhance economic growth but could also hinder it. This occurs as subsidies draw scientists away from firms, where their knowledge directly contributes to product development, towards universities, where their insights risk becoming lost in the ivory tower. (Teaching scientists who then go on to careers in the private sector is much more likely to be complementary to productivity growth than funding research which pulls scientists away from the private sector.)

In a commentary on Arora et al., the Economist notes that growth in universities and government science has coincided with a slowdown in productivity.

Universities have boomed in recent decades. Higher-education institutions across the world now employ on the order of 15m researchers, up from 4m in 1980. These workers produce five times the number of papers each year. Governments have ramped up spending on the sector. The justification for this rapid expansion has, in part, followed sound economic principles. Universities are supposed to produce intellectual and scientific breakthroughs that can be employed by businesses, the government and regular folk. Such ideas are placed in the public domain, available to all. In theory, therefore, universities should be an excellent source of productivity growth.

In practice, however, the great expansion of higher education has coincided with a productivity slowdown.

Arora et al. present detailed empirical evidence causally linking the productivity slowdown to the expansion of government science. Government science has yielded smaller-than-expected productivity improvements due to significant trade-offs. Subsidies have moved heads out of firms and into universities and for many firms this shift of talent has not only reduced the firms’ capacity to generate ideas (crowding out) but has also impaired their ability to adopt academic innovations. As the authors write:

…productivity growth may have slowed down because the potential users—private corporations—lack the absorptive capacity to understand and use those ideas.

The great Terence Kealey made many of these points much earlier in his important book, The Economic Laws of Scientific Research (here is an online precis). Kealey, however, was challenging a beautiful theory, supported by the great and good of the economics profession, by pointing to an ugly practice. Arora et al. show that the beauty of the theory may have misguided us and that “the vast fiscal resources devoted to public science…probably make businesses across the rich world less innovative” (quoting the Economist).