Category: Data Source

Who are the hardest workers in the world?

The answer surprised me.

Keep in mind, though, that the figures are for hours per person, not hours per working person. So a country with a low unemployment rate will do relatively well in the rankings, even if it is full of slackers.

That same country has: “one of the strongest levels of economic growth, but donates the fourth-lowest level of official foreign aid per person at $54 a year, and has the highest greenhouse gas emissions per capita.”

McLeod’s Daughters anyone?

The most dangerous jobs

Timber cutters come in first place, here is the longer list. Being a timber cutter is 26 times more dangerous than the average American job (the link has wage data as well). Here is one morbid description of a timber accident; here is another detailed account.

By the way, delivering pizzas is one of the most dangerous occupations as well. Being an Alaskan pilot is especially hazardous although it does not count as a separate occupation. In a thirty year career you have a one in eight chance of dying; flying into a mountain during bad weather is the most common boo-boo. If you look at absolute numbers only, more truck drivers die on the job (808, in 2002) than any other occupation.

Thanks to Eugene Volokh for the original pointer.

Which country does the most to help the world’s poor?

Foreign Policy magazine will tell you it is the Netherlands. If you click on the link, you will see their rankings. (Note that the paper edition has more detail and less confusing visuals.) Denmark and Sweden are next in line, the U.S. comes in seventh. Japan comes in last among the developed nations. The metrics are adjusted to per capita terms.

Unlike many other studies, this metric goes beyond foreign aid payments. It also considers immigration policy, trade, and investment as means of helping the world’s poor.

Looking at the index, the aid component is too heavily weighted and the immigration component is underweighted. I find the issue-by-issue scores most informative. Canada has the best immigration score, the U.S. is a close second. The U.S. has the best trade score. The Netherlands and Germany have the highest investment scores. The Scandinavian countries have the highest aid scores, by far. Norway has the lowest trade score, largely because of its high agricultural tariffs. By the way, here is an earlier MR post on the importance of remittances.

The bottom line: OK, I am an American. But it is hard for me to resist pushing the United States into the top slot. Can we look at all of history since the 1930s? If you consider military and cultural influence over the long haul, I think we have it clinched.

Where Your Money is Going

The federal government is projected to spend $21,671 per household in 2004…$3,500 more than in 2001. Tax revenues will reach $16,981 per household through a combination of the income tax, payroll tax, gas tax, estate tax and assorted business taxes typically passed on through higher prices and smaller investment returns. The remaining $4,690 represents the deficit per household, which will be dumped in the laps of our children.

Here is a breakdown of where that $21,671 goes:

Social Security and Medicare: $7,165. The 15.3 percent payroll tax, split evenly between the employer and employee, covers most of these costs.

Defense: $4,240. Lawmakers drastically cut defense spending throughout the 1990s. The September 11 attacks reversed this trend, and the $1,300 per household increase since 2001 has returned defense spending to its historical levels.

Low-income programs: $3,479. Nearly half of this spending subsidizes state Medicaid programs that provide health services to poor families. In line with economywide health-care trends, Medicaid costs are rising 10 percent per year. Other low-income spending includes: Temporary Assistance for Needy Families (TANF), food stamps, housing subsidies, child-care subsidies, Supplemental Security Income (SSI), and low-income tax credits.

Interest on the federal debt: $1,460. Washington is $7 trillion in debt. It owes $4 trillion to the public that owns its bonds and the rest to other federal agencies. Record-low interest rates have reduced the interest payments by $1,000 per household over the last six years. As interest rates climb back to normal levels, so will these costs to taxpayers.

Federal employee retirement benefits: $835. This funds the retirement and disability benefits of federal employees, including the military. Interest from federal trust funds covers part of this spending.

Health research and regulation: $619. Health-research spending has doubled since 1998, and nearly all of that spending growth has been concentrated in the National Institute of Health. This category also includes the Food and Drug Administration and dozens of grant programs for health providers.

Education: $583. Primarily a state and local function, 8 percent of education spending comes from Washington. Federal education spending has surged 76 percent since the 2001 enactment of the No Child Left Behind Act. Most federal dollars go to low-income school districts, special education, and college student financial aid.

Veterans benefits: $565. The federal government provides income and health benefits to veterans. Spending is up 34 percent since 2001.

Unemployment benefits: $451. Unemployment costs fluctuate based on the number of unemployed Americans. Recent costs have ranged between $220 per household in 2000 (when unemployment was low) and $526 per household in 2003 (when unemployment was higher). This year, unemployment costs are decreasing as job growth continues.

Highways and mass transit: $400. Most highway and mass transit spending is financed by the 18.4 cent per-gallon federal gas tax. Per-household costs have increased from $254 in 1998 to $400 this year, and the current highway reauthorization bill in Congress would boost them substantially.

Justice administration: $389. Justice spending includes federal attorneys and prisons, as well as law enforcement grant programs. New homeland security costs have added $100 per household to justice spending.

International affairs: $320. This includes foreign economic and military assistance, operation of U.S. Embassies abroad, and contributions to organizations such as the United Nations. International spending has doubled since the terrorist attacks of September 11, 2001.

The programs listed above cover $20,506 per household. The remaining $1,165 is allocated to all other federal programs, including farm subsidies, environmental programs, space exploration, air transportation and community development.

Here is the full story, I’ve added the bold face. Here is a Charles Murray proposal to let taxpayers choose which parts of government they will finance. You can’t lower your tax bill but you can direct your funds to one department rather than another. The obvious problem is that everyone will wish to send their money to the glamorous programs, but still the sentiment is a good one.

P.S. Don’t forget to send in your check. That’s today’s bottom line, no matter what else I have to say.

Econ Journal Watch

The inaugural issue of Econ Journal Watch has just been published (I am an advisor and have a paper in the first issue). EJW publishes comments on articles appearing in economics journals. Other journals also publish comments but they are rare and generally restricted to pointing out logical or mathematical flaws in a chain of deductions. EJW, in contrast, seeks to take on the unrealistic assumptions, omission of relevant facts, and phony claims of relevance that pervade many economics articles.

EJW also has a number of recurring features such as “Do Economists Reach a Conclusion?.” Papers in this section test Truman’s quip about needing a one-handed economist. In the first issue, Rick Geddes looks at the postal monopoly and Mark Thornton at drug prohibition. When attention is focused on those economists who have actually studied the issue and reached a policy conclusion both authors find a surprising consensus in favor of reform.

Lots of other interesting material. I’ve put this one in our permanent list of resources (left hand side bar).

Beliefs about welfare

Why does Western Europe spend so much more on welfare payments than does the United States?

Why is the latter system (45% of GDP) bigger than the former system (30% of GDP)?

While 29% of Americans believe that poor people are trapped in poverty, 60% of Europeans share this belief.

While 30% of Americans believe that luck determines income, 54% of Europeans share this belief.

While 60% of Americans believe that poor people are lazy, 24% of Europeans share this belief.

Robert Tagorda continues with the following:

These statistics come from the Economist, which has a fascinating review of Fighting Poverty in the US and Europe: A World of Difference. Authored by Harvard scholars Alberto Alesina and Edward Glaeser, this forthcoming book argues that institutional and political differences lead to contrasting American and European approaches.

More provocatively [we now move to Tagorda citing The Economist]:

The other half of the explanation lies in America’s racial diversity. In spite of 20 years of unprecedented immigration, European countries, particularly smaller ones like Portugal and those of Scandinavia, are still highly racially homogenous. America, by contrast, has great diversity, which is especially wide in some states. In addition, the poor in America are disproportionately non-white. Non-Hispanic whites are 71% of America’s population but only 46% of the poor.

Racial diversity in individual states is correlated with the generosity of welfare. For instance, the authors find that in 1990 Aid to Families with Dependent Children ranged from over $800 per family per month in mainly white Alaska to less than $150 in Alabama and Mississippi, where almost one-third of the population is black. Even after adjustment for inter-state differences in average incomes, the correlation with race remained strong. Across countries, too, racial diversity goes with low government spending on poverty relief.

The reason, argue the authors, is that “race matters”, and they marshal statistical evidence, much of it from opinion surveys, to back this up. People are likely to support welfare if they live close to recipients of their own race; but are antipathetic if they live near recipients from another race. The divergent attitudes of Europeans and Americans to the poor are underwritten by the fact that the poor in Europe tend to be ethnically the same as most other folk. In America, their skin is often a different colour. [Emphasis added by Tagorda.]

My take: I buy the basic results. The sorry truth is that a fully cosmopolitan society is an impossible ideal. Furthermore the proffered questions don’t fully get at the real beliefs of many Americans, which is that most poor people deserve their status. (I think some of the poor are lazy, but being a determinist I don’t assign fault.) That being said, it is such false beliefs that keep American welfare spending at reasonable, non-European levels. By the way, here is a related paper by the authors.

Measuring globalization

Foreign Policy magazine has just published its globalization index. The top five?

1. Ireland
2. Switzerland
3. Netherlands
4. Finland
5. Canada

The losers include Indonesia, Egypt, India (outsourcing has not taken over the country), and Iran. The index includes factors of economic integration, personal contact, technology, and political engagement. The link includes the full data plus a detailed discussion of how the index was constructed.

Check out this graph, levels of globalization vs. life expectancy. Globalization vs. religious participation is harder to read but interesting nonetheless.

My favorite is levels of globalization vs. women’s well-being, take a guess which way it goes. This graph should be enshrined in the undergraduate curriculum of every major university.

Economic freedom in North America

The Fraser Institute has just put out its Economic Freedom of North America, 2004 report, here is the full and lengthy text, including all the data.

And how do the freedom rankings look? If you look at all sources of government intervention, the winners are:

1. Delaware
2. Colorado
3. Georgia
4. Nevada
5. New Hampshire

Louisiana comes in seventh, Alberta comes in ninth. Here is a short piece on enterprise culture in Alberta, here is a press release on possible declines in economic freedom in Alberta.

The eight biggest losers are all Canadian provinces, with Prince Edward Island as the least free. Here is a bureaucratic report on their current economic situation. Here is a summary of other Canadian results, including a recent upward freedom trend in Canada as a whole.

As for the States, West Virginia comes in last; for the full list go the linked report. If you look only at “sub-national” freedom (state-level regulations but not federal impacts), Colorado moves into first place, most of the other results do not change very much.

Economic freedom and prosperity are strongly correlated (Louisiana is an outlier), although the direction of causality of course can be debated. Here is a link to other Fraser data sources.

Haiti, continued…

Remember the Haitian embargo? One group of bad guys took over from another group of bad guys (i.e., Aristide and his cronies), so we stopped trading with them?

Georgie Anne Geyer offered some apt words on why this embargo was a disaster:

The economic part of the Haitian disaster was laid down in 1991, all with the best of intentions…The U.S. and other countries had imposed a severe embargo upon Haiti. This had the not-unexpected effect of (1) turning the military to smuggling, their first love anyway, and (2) utterly and tragically destroying the small businesses of Haiti.
“In the 1980s, we were planting up to 10 million trees a year in reforestation,” the ambassador to Haiti in that era, Ernest Preeg, reminisced sadly with me this week. “We had an anti-malaria program, secondary road programs and a brand-new container port. Haiti made textiles, footwear, toys, and baseballs. Three years of the embargo destroyed all the job-creating programs, and then Aristide destroyed the rest. After that, most of the aid went strictly to ‘democracy projects.’ In short, we took everything away from the long-term; we sacrificed the long-term for the short.”

Colin Powell has pledged, albeit in ambiguous words, that the U.S. will not intervene in the current collapse of order. Observers speculate that the prospect of Haitian refugees, mostly arriving in the electoral swing state of Florida, may change this calculus.

My view: The U.S. government built some valuable roads for Haiti in the 1920s, during our failed nation-building episode there. Otherwise our government has done many things to harm the Haitians, and few things to help. I’m all for greater free trade, but we are past the point where this would be very useful. Here is a previous post on Haiti, here is another.

How much is a bathroom worth?

Economists are now applying econometrics to the time-honored questions of real estate. Based on a sample of 29,000 sales, and a proper set of statistical controls, the researchers derived an extensive set of valuations. The numbers given express the percentage change in the value of the home:

1. A full bathroom: 24 percent
2. A water view: 8 percent (I would have expected more)
3. Waterfront location: 18 percent
4. View of a golf course: 8 percent
5. A garage: 12.9 percent
6. A tennis court: 3.1 percent
7. In-ground sprinkler systems: 8 percent (surprisingly high)
8. An in-ground pool: 7.9 percent
9. A separate laundry room: 15 percent (surprisingly high)
10. An above-ground pool: minus 2 percent.
11. Is your house a “fixer-upper”?: minus 23.6 percent.

Here is a summary table of the results. Here is original research. Here is a Washington Post story.

Many of these amenities sell for more than what they cost to install. So the bottom line here supports the conventional wisdom of the trade. People don’t fix up their homes enough before selling them.

Health and education charts

The GapMinder site has some interesting charts and animations of things like income distribution over time, world health measures and so forth. The authors have obviously read their Tufte. The example below shows a child mortality statistic plotted againstGDP per capita. The sizes of the circles indicates populations, colors indicate regions of the word. Click on the image and it will open at full-size in another window.

WorldHealth.GIF

What is the most corrupt state?

In a recent study Louisiana only comes in third, Mississippi takes top honors, followed by North Dakota. The District of Columbia has a disproportionate share of convictions, but it does not count as a state. Nebraska is measured as the least corrupt state, Oregon, New Hampshire, and Iowa are also near the bottom. Here is the story, here is the source account and study.

A Baton Rouge headline reads “La. not No.1 in Corruption.” Former governor Edwin Edwards received ten years in prison for corruption-related charges, one case of many in Louisiana history. The last three insurance commissioners have gone to jail for corruption.

Is music file-swapping down?

Maybe not, according to Business Week, from the issue of 16 January. Some sources will tell you the practice is plummeting:

Two widely cited surveys seemed to show that legal action, which began in September, was chilling file-sharing activity. In December, a phone survey by the Pew Internet Project of 1,358 U.S. Net users found music downloading had dropped by half since May. And in November, comScore Media Metrix, monitoring 120,000 U.S. users, saw big yearly declines at four popular file-sharing services — KaZaA, Grokster, BearShare, and WinMX.

But the reality is more complex:

…those surveys provide a relatively narrow view of the file-swapping universe. BayTSP, a Silicon Valley watchdog that works for three of the major record labels, tracks the number of songs available for download worldwide. It sees just a 10% drop since July and also notes steady migration from older, virus-ridden programs like KaZaA to hipper peer-to-peer networks such as eDonkey and Bit Torrent — which were absent from comScore’s tally.

And Los Angeles-based researcher BigChampagne, which monitors millions of global file swappers, actually sees a 35% increase in illegal traffic from 2002 to 2003. Given BayTSP’s and BigChampagne’s broader sample sizes, says John Palfrey, of Harvard Law School’s Berkman Center for Internet & Society, “They’re going to have more accurate empirical data.”

Note that the Pew study simply calls adults and asks them if they break the law. It underrepresents children and of course the respondent might think he is talking to the RIAA instead of a researcher. And much of the current growth in file-sharing is coming at the international level, not in the United States.

My predictions: Within two years Congress will revisit the 1998 Digital Act and give the music companies some extra legal weapons. It still won’t work, as downloaders will move to anonymous networks, possibly emanating from outside the United States.

How fast did China grow?

From 1978 to 1998 China grew a measured average of 8.0 percent a year, a breathtaking performance. But how fast did the country really grow? And how much did Chinese productivity improve?

Alwyn Young, at the University of Chicago, turned his attention to these questions in his recent “Gold Into Base Medals: Productivity Growth in the People’s Republic of China during the Reform Period,” in the December 2003 Journal of Political Economy. Here is an earlier, on-line version of the paper. Young, who is renowned for his thoroughness and care with data, found the following:

1. Chinese enterprises systematically underreport inflation.

2. In the non-agricultural sector, such underreporting accounts for 2.5 percent growth per year.

3. The main drivers of Chinese growth have been rising economic participation rates, improvements in educational attainment, and the movement of labor out of agriculture.

4. Labor and total factor productivity improvements, in the non-agricultural sector, are 2.6 and 1.4 percent respectively.

The bottom line: The Chinese economy has indeed done well. But once we cut through the mysteries of the numbers, we find an explicable reality. The Chinese growth experience is in reality comprised of “reasonable and comprehensible” numbers, rather than miracles. Young even wonders if the Chinese could not have done better than they did. On one hand, most economies would be delighted with a sustained 2.6 percent rate of labor productivity growth. But on the other hand, China has been moving away from a centrally planned economy. We might have expected even larger productivity boosts, given the incentive benefits of economic freedom. We also can interpret the figures as showing that China has enduring problems, and has not moved as far away from central planning as we might wish.