Category: Data Source

USA fact of the day

by  Tyler Cowen in

Of the world’s share of AAA sovereign debt, we issue 59 percent of it.  (Next is Germany with ten percent and then France with nine percent of the total.)  You can read this a few ways:

1. Wow, we really abuse that AAA privilege.

2. Losing the AAA rating would spell disaster for repo markets and the like.

3. The world trusts us enormously, isn’t that wonderful?

4. All of the above.

The *greater* stagnation

by  Tyler Cowen in

Peter Lindert and Jeffrey Williamson write:

The new estimates imply that America’s real income per capita dropped by about 22% over the quarter century 1774-1800, a decline almost as steep as during the Great Depression between 1929 and 1933, and certainly longer. If the 1790s recorded brisk growth rates (Sylla 2011: pp. 81-3), it follows that the Revolutionary War period could have been America’s greatest income slump ever. That fall may have been 28% or even higher in per-capita terms.

Factors behind this decline include the Revolutionary War, the lagging South, and a negative trade effect.  The article is interesting throughout, for instance:

In 1774 the colonial South had about twice the per-capita income of New England, even when one rightly counts slaves as in the population. The absolute economic decline of the South Atlantic over the last quarter of the 18th century and its relative decline over the subsequent four decades stand out as an example of what has come to be called reversal of fortune (Acemoglu et al. 2002). By 1840 the South Atlantic was well behind the Northeast, having been well ahead in 1774, and its population share of the original thirteen colonies had fallen too. Furthermore, we can find no evidence that the colonial South had any large army of poor whites in 1774; indeed, Southern free labour had some of the highest wages anywhere in the colonies. Thus, it appears that the ubiquity of poor whites in the South was strictly a nineteenth-century phenomenon, associated, presumably, with post-1774 decades of very poor growth. Why the reversal of fortune for the South? We are still not sure whether it was bad luck in its export commodity markets, institutional failure, or exceptionally severe wartime damage.

Ghana is richer than they had thought

by  Tyler Cowen in

Richard Rorty may differ, but Charles Kenny and Andy Sumner report this:

Even gold and diamond-producing Ghana, which declared itself 63% richer at the end of last year than previously thought, didn’t suggest the newfound riches were the result of mineral exports. Instead, the recalculation was driven by the fact the country’s services sector was a lot bigger than previously calculated. Part of that will reflect the incredible success of the telecoms sector – 75% of the country’s population are mobile subscribers. And, of course, the expansion of telecoms is a worldwide phenomenon. So a lot of the growth we are seeing in poor countries is broad-based, not just reliant on the current commodity boom – which is good news for the future.

They also serve up this zinger:

One prominent Zambian, Dambisa Moyo, has written of her country that “a direct consequence of the aid-driven interventions has been a dramatic descent into poverty. Whereas prior to the 1970s, most economic indicators had been on an upward trajectory, a decade later Zambia lay in economic ruin”. In the 1980s, aid to Zambia averaged about 14% of the country’s GNI. In the 2000s, a decade of strong growth, the same proportion was 17%. If Zambia’s ruin in the 1980s was the result of aid, is Zambia’s graduation to middle-income status in the new millennium a sign that aid now works really well?

Hat tip goes to Chris Blattman.

Consumer surplus from the internet, revisited

by  Tyler Cowen in

David Henderson raised this question again, as has Bryan Caplan in the past.  Both seem to suggest that the consumer surplus from the internet is quite high or perhaps even “huge,” although I am not sure what number they have in mind.  I am disappointed that they are not engaging with the academic literature on this topic.

1. An 86-page 2010 FCC study concludes that “a representative household would be willing to pay about $59 per month for a less reliable Internet service with fast speed (“Basic”), about $85 for a reliable Internet service with fast speed and the priority feature (“Premium”), and about $98 for a reliable Internet service with fast speed plus all other activities (“Premium Plus”). An improvement to very fast speed adds about $3 per month to these estimates.”

2. A study from Japan found that: “The estimated WTP for availability of e-mail and web browsing delivered over personal computers are 2,709 Yen and 2,914 Yen, on a monthly basis, respectively, while average broadband access service costs approximately 4,000 Yen in Japan.”  By the way, right now the exchange rate is about 80 Yen to a dollar.

3. The Austan Goolsbee paper, based on 2005 data, does a time study to find that the consumer surplus of the internet is about two percent of  income.

4. This paper finds a four percent consumer surplus from the personal computer more generally, not just the internet.

5. Robin Hanson serves up an excellent debunking of some exaggerated consumer surplus claims.

6. Many of the benefits of internet cruising are captured in gdp figures, such as using it to find a job or the money you spend on smart phones.  By the way, here is a good paper on consumer surplus in the book market, though it offers no overall CS estimate from the internet.

You can take issue with these papers for ignoring personal internet use at work, the inframarginal benefits to infovores, or other issues, such as whether the existence of the internet increases workloads in what are supposedly leisure hours.  But there is the place to start and the numbers are not outrageously high, not close to it.

Or put all that aside and think through the problem intuitively, in terms of time use decisions.  Your marginal hour of non-internet leisure time is worth more than spending another hour of time on the internet.  In other words, at the margin your consumer surplus from the internet is about the same as your consumer surplus from going to the movies or taking a walk.  That’s nice, but suddenly the consumer surplus from the internet doesn’t seem like such a big deal any more.  It’s probably not going to add up to millions.  If the internet were as awesome for consumer fun as some people claim, it would have pushed out more of our other uses of leisure time.

What about the inframarginal units of internet use?  Might the consumer surplus there be huge?  If you think of books, movies, newspapers, and CDs as some of the relatively close substitutes for some uses of the internet, we know from cultural economics that the demand curves for those enjoyments are usually smooth, normal, and continuous, more or less.  They don’t have enormous, hidden inframarginal benefits.

Penicillin probably does have such an enormous inframarginal benefit; the initial doses can be of great value but past some margin the value falls to zero or negative.  The internet doesn’t seem to be like penicillin.

You can even make an argument that the inframarginal valuations of internet use are especially low, relative to the marginal values.  Have you ever heard that the internet is “addictive”?  That doing some makes you want to do more?  That the internet has a virtually unending supply of interesting content?  Personally I find that I could read more working papers, without much decline in their interestingness, except that the exigencies of my daily life interfere (at some margin).  Those are all signs that the marginal valuation of the internet does not fall off so drastically as one moves down the demand curve.  If you’re not using the internet more, it’s not because the internet is getting much worse with additional use units, it’s because it is digging into increasingly important parts of your non-internet life.  That brings us back to the inframarginal unit having a value not so far away from the marginal units.

It is likely that the consumer surplus of the internet is in the range of two to four percent of gdp.  On one hand, that’s “a lot” but on the other hand it’s not enough to close the “stagnation gap” in wages since 1973.  It’s not close.  It also may be quite small compared to the consumer surplus from the major innovations from earlier in the 20th century, such as antibiotics, without which I probably would be dead.

Simple numbers about Italy

by  Tyler Cowen in

European banks have total claims and potential exposures of €998.7 billion to Italy, more than six times the 162.4 billion euro exposure they have to Greece, according to Barclays Capital. European banks have €774 billion of exposure to Spain and €534 billion of exposure to Ireland.

In the United States, banks are also more exposed to Italy than to any other euro zone country, to the tune of €269 billion, according to Barclays. American banks’ next biggest exposure is to Spain, with total claims estimated at €179 billion.

But at the end of the day, “if Italy goes, it’s no longer a domino,” said Mr. Gros, the analyst in Brussels. “It’s a brick.”

The link is here.

Are we using tax cuts to make up for declining median household income?

by  Tyler Cowen in

DeptofNumbers reports:

I’ve long wondered what median income would look like after taxes were taken into account and if the structure of Lane’s chart might change given the dynamic nature of tax policy. Bruce Bartlett’s recent post on average tax rates for four-person families pointed out the data I needed to make such a comparison. The Tax Policy Center produces annual average tax rates for four-person families at the median income level. Using their historical data I can back out the growth of after-tax median family income since 1980 (just after GDP per capita and median family income start to diverge) and add that data to the chart that Lane produced.

…The results, though not earth shattering, are interesting. Prior to 2000, both real (i.e. inflation adjusted) median family income and real median family income after taxes grew at about the same rate. Real median family income has actually declined since 2000, but when you look at after-tax dollars received by households it’s been relatively flat. In other words, the median family has been able to avoid a more substantial decline in income by paying somewhat less in taxes. [emphasis added by TC]

There are useful graphs at the link.  This of course is one big reason why raising taxes — or even ceasing to cut them — is an unpopular idea with the American electorate.

Wolfers on Happiness

by  Alex Tabarrok in

Excellent talk on happiness by Justin Wolfers. Robert Frank and discussion which follow are also good but Wolfers is outstanding.

A couple of things I learned. The flat happiness line in the United States over time is often contrasted with rising GDP per capita to assert a paradox. The paradox goes away once you take into account that median earnings haven’t risen (ala TGS).

Wolfers also shows that income matters not just for happiness but for a large number of correlates, inputs and outputs of happiness. Compared to people in poorer countries, people in richer countries, for example, more often say their food tastes good, they report less pain and they smile more.

 

Netherlands fact of the day

by  Tyler Cowen in

Take the case of the Netherlands. Unbeknown to most people, it is world’s third largest agricultural exporter, despite having little land (it has the world’s fifth highest population density). This has been possible because the Dutch have “industrialised” agriculture by, for example, deploying hydroponic agriculture (growing plants in water) that uses computer-controlled feeding of high-quality chemicals—something that would not have been possible if the Netherlands did not have some of the world’s most advanced chemical and electronics industries.

That is from Ha-Joon Chang, via Matt Yglesias.  Here is the list of largest exporters.

Greece facts (?) of the day

by  Tyler Cowen in

The figure of 53 years old as an average retirement age is being bandied about. So much, in fact, that it is being seen as fact. The figure actually originates from a lazy comment on the NY Times website. It was then repeated by Fox News and printed on other publications. Greek civil servants have the option to retire after 17.5 years of service, but this is on half benefits. The figure of 53 is a misinformed conflation of the number of people who choose to do this (in most cases to go on to different careers) and those who stay in public service until their full entitlement becomes available. Looking at Eurostat’s data from 2005 the average age of exit from the labour force in Greece (indicated in the graph below as EL for Ellas) was 61.7; higher than Germany, France or Italy and higher than the EU27 average. Since then Greece have had to raise the minimum age of retirement twice under bail-out conditions and so this figure is likely to rise further.

The graph is at the link.  That analysis seems more plausible than the competing accounts, but if you believe it to be wrong, please enlighten us in the comments.

Hat tip goes to Guy LaRoche.  Guy also recommends this post:

And if the lending of money wasn’t enough, the paranoia that Turkey (also a member of NATO) will invade Greece has led to an arms race. Think of what was going on: France was lending money to Greece, to buy French arms. Let alone that most (all?) of the 12 Phantoms Greece bought in 1988 have crashed since during exercises (second grade quality?), killing most of their pilots. Not to mention that because of bribery to civil servants from foreign medical companies, Greece pays 3x the amount of money for medicines and medical instruments than any other European country.

In other words, the problems are more cultural than we might think and less susceptible to direct fiscal management than we might think.  All of the posts are interesting throughout.

Punk’d

by  Alex Tabarrok in

Excellent piece in the Village Voice (some ads nsfw) about the Ashton Kutcher-Demi Moore campaign on child prostitution:

“It’s between 100,000 and 300,000 child sex slaves in the United States today,” Ashton Kutcher told CNN‘s Piers Morgan on April 18. That, says Kutcher, is how many kids are lost to prostitution in America every single year.

…”Last month, the New York Times breathlessly confided, “An estimated 100,000 to 300,000 American-born children are sold for sex each year.”…

• USA Today: “Each year, 100,000 to 300,000 American kids, some as young as 12…”

• CNN: “There’s between 100,000 to 300,000 child sex slaves in the United States…”…

• C-SPAN: “Children in our country enslaved sexually…from 100,000 to 300,000…”

But a detailed review of police files across the nation tells another story.

Village Voice Media spent two months researching law enforcement data.

We examined arrests for juvenile prostitution in the nation’s 37 largest cities during a 10-year period.

To the extent that underage prostitution exists, it primarily exists in those large cities.

Law enforcement records show that there were only 8,263 arrests across America for child prostitution during the most recent decade.

That’s 827 arrests per year.

The article has much more detail on how an already bogus figure of 100,000-300,000 children “at risk” of prostitution expanded and then went viral. 

Sentences to ponder

by  Tyler Cowen in

A coming study by Mr. Krueger, using historical data on time use between 1991 and 2006, finds that unemployed Americans tend to sleep an hour longer than the employed, he said. In the U.S. T.V.-watching tends to consume almost a quarter of unemployed peoples’ waking hours.

There is more here, interesting throughout, and for the pointer I thank Brent Depperschmidt.