Category: Data Source
Europe facts of the day
“At least half of Germans, French and Italians say their country should not use military force to defend a NATO ally if attacked by Russia,” the Pew Research Center said it found in its survey, which is based on interviews in 10 nations.
There is more here, and so every great moderation must come to an end…
This is also of note:
According to the study, residents of most NATO countries still believe that the United States would come to their defense.
Meanwhile:
Eighty-eight percent of Russians said they had confidence in Mr. Putin to do the right thing on international affairs…
Solve for the equilibrium, as they like to say. It is much easier to stabilize a conservative power (e.g., the USSR) than a revisionist power (Putin’s Russia).
It is also worth thinking about how this entire state of affairs has come to pass.
China (India) facts of the day
The ratio of incomes gives a sense of the relative differences in productivity between the cities and countryside. For China, this ratio is 3.2 – the highest in world. On average, urban workers are more than three times as productive as rural workers and are being compensated accordingly. No wonder some 270m migrant workers have flocked to the cities to secure better paying industrial jobs. For India, the same measure gives a ratio of 1.6, one of the lowest for emerging market economies, indicating that urban productivity is only moderately higher than in rural areas, and cities do not offer such a magnet of higher earnings.
The other key indicator is the relative difference in property prices in China versus India. China’s mega-cities have seen a five-fold increase in property prices in renminbi terms, or nearly seven-fold in US dollars over the past decade. No wonder concerns about a possible property bubble in China dominate global financial news. Yet despite these astounding increases, property prices in Beijing and Shanghai are still only half those of their Indian counterparts of New Delhi and Mumbai.
…India’s excessively high property prices reflect a combination of two archaic practices. One is the legacy of its colonial past in reserving large parcels of valuable urban land for government use, including sprawling and wasteful estates for civil servants and military cantonments. The other comes from outdated and overly rigid building codes that discourage concentrated development of commercial activity and housing in the core of its major cities. This pushes development to the outer suburbs, making it difficult to realise the agglomeration benefits that drive productivity gains.
That is from Yukon Hwang at the FT.
Interpreting the results of the Oregon Medicaid experiment
There is a new and probably very important paper by Amy Finkelstein, Nathaniel Hendren, and Erzo F.P. Luttmer:
We develop and implement a set of frameworks for valuing Medicaid and apply them to welfare analysis of the Oregon Health Insurance Experiment, a Medicaid expansion that occurred via random assignment. Our baseline estimates of the welfare bene fit to recipients from Medicaid per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with a relatively robust lower bound of about $0.15. At least two- fifths – and as much as four- fifths – of the value of Medicaid comes from a transfer component, as opposed to its ability to move resources across states of the world. In addition, we estimate that Medicaid generates a substantial transfer to non-recipients of about $0.6 per dollar of government spending.
An implication of this is that the poor would be better off getting direct cash transfers: “Our welfare estimates suggest that if (counterfactually) Medicaid recipients had to pay the government’s cost of their Medicaid, they would not be willing to do so.”
And perhaps this sentence could use the “rooftops treatment”:
It is a striking finding that Medicaid transfers to non-recipients are large relative to the benefits to recipients; depending on which welfare approach is used, transfers to non-recipients are between one-and-a-half and three times the size of benefits to recipients.
Or this:
Across a variety of alternative specifications, we consistently find that Medicaid’s value to recipients is lower than the government’s costs of the program, and usually substantially below. This stands in contrast to the current approach used by the Congressional Budget Office to value Medicaid at its cost. It is, however, not inconsistent with the few other attempts we know of to formally estimate a value for Medicaid; these are based on using choices to reveal ex-ante willingness to pay, and tend to fi nd estimates (albeit for different populations) in the range of 0.3 to 0.5.
Did schooling drive the Industrial Revolution?
Alexandra M. de Pleijt has a new paper on that topic (pdf):
Did human capital contribute to economic growth in England? In this paper the stock of total years of schooling present in the population between 1300 and 1900 is quantified. The stock incorporates extensive source material on literacy rates, the number of primary and secondary schools and enrollment figures. The trends in the data suggest that, whilst human capital facilitated pre-industrial economic development, it had no role to play during the Industrial Revolution itself: there was a strong decline in educational attainment between ca. 1750 and 1830. A time series analysis has been carried out that confirms this conclusion.
The reference there is from Ben Southwood.
The education myth?
Ricardo Hausmann has an excellent and provocative column, here is part of it:
In the 50 years from 1960 to 2010, the global labor force’s average time in school essentially tripled, from 2.8 years to 8.3 years. This means that the average worker in a median country went from less than half a primary education to more than half a high school education.
How much richer should these countries have expected to become? In 1965, France had a labor force that averaged less than five years of schooling and a per capita income of $14,000 (at 2005 prices). In 2010, countries with a similar level of education had a per capita income of less than $1,000.
In 1960, countries with an education level of 8.3 years of schooling were 5.5 times richer than those with 2.8 year of schooling. By contrast, countries that had increased their education from 2.8 years of schooling in 1960 to 8.3 years of schooling in 2010 were only 167% richer. Moreover, much of this increase cannot possibly be attributed to education, as workers in 2010 had the advantage of technologies that were 50 years more advanced than those in 1960. Clearly, something other than education is needed to generate prosperity.
As is often the case, the experience of individual countries is more revealing than the averages. China started with less education than Tunisia, Mexico, Kenya, or Iran in 1960, and had made less progress than them by 2010. And yet, in terms of economic growth, China blew all of them out of the water. The same can be said of Thailand and Indonesia vis-à-vis the Philippines, Cameroon, Ghana, or Panama. Again, the fast growers must be doing something in addition to providing education.
The piece is interesting throughout.
Urban Average is Over
Nearly half of the biggest US metropolitan areas have yet to recoup all the lost jobs from the Great Recession and almost a third have failed to return to previous levels of output, according to analysis that underscores the fragmenting urban fortunes beneath the surface of America’s recovery.
Research on 100 urban areas from the Brookings think-tank, reveals an economic patchwork in which the legacy of boom and bust hangs heavily over cities in Florida and inland California, while at the other end of the spectrum, technology and bioscience-focused cities such as Austin, Texas, San Francisco, and Raleigh, North Carolina have comfortably surpassed their previous peaks.
“This may be the norm now — extreme variation,” said Mark Muro, policy director for the Metropolitan Policy Program at Washington-based Brookings.
The persistence of Italian musical and entertainment traditions
There is a new paper by Karol Jan Borowiecki, published in Oxford Economic Papers:
I investigate the consequences of long-run persistence of a society’s preferences for cultural goods. Historical cultural activity is approximated with the frequency of births of music composers during the Renaissance and is linked with contemporary measures of cultural activity in Italian provinces. Areas with a 1% higher number of composer births nowadays show an up to 0.29% higher supply of classical concerts and 0.16% more opera performances. Classical concerts and opera performances have also rather bigger audiences and obtain greater revenues in provinces that have been culturally active in the past. Today, those provinces also exhibit a somewhat lower supply of other forms of entertainment (e.g., sport events), thereby implying a tantalizing divergence in societies’ cultural preferences that is attributable to events rooted in the past. It is also shown that the geography of composer births is remarkably persistent over a period of seven centuries.
For the pointer I thank Ben Southwood.
Minority Report for Kiwi youths?
In 2012 economists at the University of Auckland published research establishing clear correlations between family circumstances and incidents of child abuse or neglect. “No one realized we were sitting on such rich data in terms of its predictive power,” says Rhema Vaithianathan, who led the research. “We can find children who are at considerably elevated risk, and we can find them at birth.”
And:
Using data from welfare, education, employment, and housing agencies and the courts, the government identified the most expensive welfare beneficiaries—kids who have at least one close adult relative who’s previously been reported to child safety authorities, been to prison, and spent substantial time on welfare. “There are million-dollar kids in those families,” English says. “By the time they are 10, their likelihood of incarceration is 70 percent. You’ve got to do something about that.”
Moving closer to home:
Jennie Feria, who oversees risk assessment for L.A.’s Department of Children and Family Services, says one idea is to rate families, giving them a number that could be used to identify who’s most at risk in the way lenders rely on credit scores to determine creditworthiness. “The way we may use it, it’s going to be like it’s a FICO score,” Feria says. The information, she says, could be used both to prioritize cases and to figure out who needs extra services. “It’s at the very early stages, because we don’t know how we’re going to use it yet exactly.”
It will be interesting to see how that one develops. The article is by Josh Eidelson.
The myth of abandoned British austerity
David Smith sets us straight on this one:
One of the most enduring claims about the British economy in recent years is that the then coalition government abandoned austerity in 2012. It is a claim that gives comfort to those who see everything that has happened to the economy through the lens of fiscal policy. Only when austerity was abandoned in 2012, some argue, did the economy begin to recover. Unfortunately it does not fit the facts. It is a myth.
There are two elements to this. The first is the question of whether, in response to slower growth in the economy, or other factors, George Osborne abandoned his programme of fiscal consolidation.
The two foremost authorities on fiscal policy in Britain are the Institute for Fiscal Studies and the Office for Budget Responsibility. The IFS set out the position clearly after each budget and autumn statement during the last parliament. Chart 1.6 on p26 in its latest green budget, here, sets out the broad position. As it shows, consolidation continues through the parliament.
The IFS’s updated figures, published as part of its Election 2015 coverage, has the following sequence of numbers for the fiscal consolidation: 2010-11, 1.5% of GDP, 2011-12 2.3%, 2012-13 1.1%, 2013-14 1.5%, 2014-15 0.7%, 2015-16 0.6%, adding up to a cumulative fiscal tightening between 2009-10 and 2015-16 of 7.7% of GDP.
The OBR also addressed this, in its paper, Crisis and Consolidation in the Public Finances, here. Chapter 3 is the relevant chapter which, like the iFS, shows a programme of fiscal consolidation extending through the parliament. There was no abandonment of austerity.
There is more here, with other points of interest, hat tip goes to Chris Giles.
China errors and omissions of the day
Adding the ‘errors and omissions’ deficit to recorded net hot money outflows gives an aggregate estimate of overall hot outflows or capital flight from the mainland. By construction, this slumped to a record $209.5bn ($838bn annualised) or an eye-watering 9¼% of GDP (Chart 2). Overall, in the year to Q1, China has seen capital flight of $584bn or 5.6% of GDP.
That is from Richard Iley, cited by David Keohane at the FT.
By the way, here is the response of the Chinese government:
China has again ruled out the possibility of massive capital outflow, saying an overwhelming majority of foreign companies that pulled out their investments in the country were shell firms, The Beijing News reported on Wednesday.
The average investment scale of those firms is relatively small, and 20 percent of them entered China less than five years ago, said the newspaper citing Tang Wenhong, head of the Department of Foreign Investment Administration of the Commerce Ministry.
Judge for yourself…a better response would have been “this outflow is a natural process of investment diversification, as China liberalizes its capital markets gradually over time.” That doesn’t account for everything that is going on, but at least it makes potential sense.
By the way, if you ask some Chinese about India, they will mention Buddhism and people riding on the top of trains.
The new RCT results on poverty reduction
Declan Butler reports:
Giving some of the world’s poorest people a two-year aid package — including cash, food, health-care services, skills training and advice — improves their livelihoods for at least a year after the support is cut off, according to the results of an experiment involving more than 10,000 households in six countries.
The poverty intervention had already been trialled successfully in Bangladesh, and the study’s researchers say it shows the approach works in other cultures too. “We finally have truly credible evidence that a programme for the poorest of the poor can really help them meaningfully reduce their poverty,” says Dean Karlan, an economist at Yale University in New Haven, Connecticut, and a co-author of the study, reported today in Science. “Until now, we haven’t really been able to go to a government outside Bangladesh and say, we’re confident this works.”
Ethiopia, one of the countries that was in the trial, is planning to continue and scale up the intervention to cover around 3 million people, says Karlan, and Pakistan and India are considering scaling up interventions, too.
Banerjee and Duflo are involved in the work as well, and this is sometimes called the “graduation model,” because the aim is to graduate people out of poverty. Note this:
The intervention is not cheap. Costs per household ranged from $1,455 in India to $5,962 in Pakistan, although they were offset by positive returns on investment ranging from 133% in Ghana to 433% in India. The researchers hope to cut costs in future by scaling back the experiment’s more expensive components, such as training.
And while the model worked in many places, it failed in rural southern India and Honduras, in part due to…problems with chickens. Nonetheless this is big, big news. The link to the original research is here.
For pointers I thank Kevin Lewis and Michelle Dawson.
The U.S. classical music market
The classical sales situation in the US has hit the pits. Aside from Andrea Bocelli, who trundles on at around 400 a week – cds and downloads combined – the best performer on Nielsen Soundscan was the Anonymous 4, chirping sweetly on a farewell tour with just 189 registered sales.
Sales are so bad that Hilary Hahn, at number 10, failed to clear 100.
There is more here, and for the pointer I thank Samir Varma.
Will U.S. demographics be improving?
For just a while? Keep in mind that an aging population still can be moving more people into prime working age:
Changes in demographics are an important determinant of economic growth, and although most people focus on the aging of the “baby boomer” generation, the movement of younger cohorts into the prime working age is another key story in coming years…
The prime working age population peaked in 2007, and appears to have bottomed at the end of 2012. The good news is the prime working age group has started to grow again, and should be growing solidly by 2020 – and this should boost economic activity in the years ahead.
That is from Bill McBride at Calculated Risk. Check out this St. Louis Fed graph, via Conor Sen.
India gold fact of the day
Wealthy Hindu temples such as this one are repositories for much of the $1 trillion worth of privately held gold in India — about 22,000 tons, according to an estimate from the World Gold Council. In 2011, one temple in south India was found to have more than $22 billion in gold hidden away in locked rooms rumored to be filled with snakes. Another has enough gold to rival the riches stashed at the Vatican, experts say.
There is more here, the main theme of the article is that some are calling for the gold reserves to be mobilized, a running theme in economic debate since Keynes and earlier in the nineteenth century as well.
Canada fact of the day
The University of Toronto’s commercialization office states that it is “in a class with the likes of MIT and Stanford.” But Stanford has generated $1.3-billion (U.S.) in royalties for itself and the Massachusetts Institute of Technology issued 288 U.S. patents last year alone; U of T generates annual licensed IP income of less than $3-million (Canadian) and averages eight U.S. patents a year. Statistics Canada reports that in 2009, just $10-million was netted by all Canadian universities for their licences and IP. Even when accounting for universities that have open IP policies, this is a trivial amount by global standards.
That is from Jim Balsillie, and is interesting more generally, most of all on Canada and innovation. For the pointer I thank Scott Barlow. My previous post on this topic is here.