Category: Data Source
How strong is the best case for industrial policy?
The textbook case for industrial policy is well understood: sectors with relatively large external economies of scale should be subsidized at the expense of other sectors. Little is known, however, about the magnitude of the welfare gains from such interventions. We develop an empirical strategy that leverages commonly available trade data to estimate sector-level economies of scale and, in turn, to quantify the gains from optimal industrial policy in a general equilibrium environment. Our results point toward significant economies of scale across manufacturing sectors but gains from industrial policy that are hardly transformative, even among the most open economies.
…recall that South Korea — a country often presented as an industrial policy success story — experienced gains in real GDP per capita of 6.82% a year from 1960 to 1989, as documented in Rodrik (1995). A 4.06% long-run welfare increase in nothing to spit at, but a miracle it is not.
That is from a new JPE piece by Dominick Bartelme, Arnaud Costinot, Dave Donaldson, and Andres Rodriguez-Clare. Here are less gated copies of the piece.
How Good is AI at Twisting Arms? Experiments in Debt Collection
How good is AI at persuading humans to perform costly actions? We study calls made to get delinquent consumer borrowers to repay. Regression discontinuity and a randomized experiment reveal that AI is substantially less effective than human callers. Replacing AI with humans six days into delinquency closes much of the gap. But borrowers initially contacted by AI have repaid 1% less of the initial late payment one year later and are more likely to miss subsequent payments than borrowers who were always called by humans. AI’s lesser ability to extract promises that feel binding may contribute to the performance gap.
That is from a new paper by James J. Choi, Dong Huang, Zhishu Yang, and Qi Zhang. No AI asked me to run this blog post!
The Research Behavior of Individual Investors
Browser data from an approximately representative sample of individual investors offers a detailed account of their search for information, including how much time they spend on stock research, which stocks they research, what categories of information they seek, and when they gather information relative to events and trades. The median individual investor spends approximately six minutes on research per trade on traded tickers, mostly just before the trade; the mean spends around half an hour. Individual investors spend the most time reviewing price charts, followed by analyst opinions, and exhibit little interest in traditional risk statistics. Aggregate research interest is highly correlated with stock size, and salient news and earnings announcements draw more attention. Individual investors have different research styles, and those that focus on short-term information are more likely to trade more speculative stocks.
That is from a new NBER working paper by Toomas Laarits and Jeffrey Wurgler.
Social media and well-being
Here is a new set of results, by Laura Lemahieu, et.al.:
Abstaining from social media has become a popular digital disconnection strategy of individuals to enhance their well-being. To date, it is unclear whether social media abstinences are truly effective in improving well-being, however, as studies produce inconsistent outcomes. This preregistered systematic review and meta-analysis therefore aims to provide a more precise answer regarding the impact of social media abstinence on well-being. The databases of PubMed, Scopus, Web of Science, Communication Source, Cochrane Library, and Google Scholar were searched for studies examining the effect of social media abstinence on three outcomes, namely positive affect, negative affect, and/or life satisfaction. In total, ten studies (N = 4674) were included, allowing an examination of 38 effect sizes across these three outcomes. The analyses revealed no significant effects of social media abstinence interventions on positive affect, negative affect, or life satisfaction. Relationships between social media abstinence duration and the three outcomes were also non-significant. The findings thus suggest that temporarily stepping away from social media may not be the most optimal approach to enhance individual well-being, emphasizing the need for further research on alternative disconnection strategies. Nevertheless, important methodological differences between studies should be considered when interpreting these results.
I thank M. for the pointer.
Where do stock market returns come from?
Here is a new and sure to be controversial piece from the JPE:
Why does the stock market rise and fall? From 1989 to 2017, the real per capita value of corporate equity increased at a 7.2% annual rate. We estimate that 40% of this increase was attributable to a reallocation of rewards to shareholders in a decelerating economy, primarily at the expense of labor compensation. Economic growth accounted for just 25% of the increase, followed by a lower risk price (21%) and lower interest rates (14%). The period 1952–88 experienced only one-third as much growth in market equity, but economic growth accounted for more than 100% of it.
That is by Daniel L. Greenwald, Martin Leftau, and Sydney C. Ludvigson. Of course in more recent times it is tech stocks that have done very well, and they also tend to elevate pay standards.
Men watch women’s sports more than women do
Here is the link, via Alex T.
Who believes in conspiracy theories?
While the psychological dispositions that underlie conspiracy thinking are well researched, there has been remarkably little research on the political preferences of conspiracy believers that go beyond self-reported ideology or single political issue dimensions. Using data from the European Voter Election Study (EVES), the relationship between conspiracy thinking and attitudes on three deeper-lying and salient political dimensions (redistribution, authoritarianism, migration) is examined. The results show a clear picture: Individuals with economically left-wing and culturally conservative attitudes tend to score highest on conspiracy thinking. People at this ideological location seem to long for both economic and cultural protection and bemoan a “lost paradise” where equalities had not yet been destroyed by “perfidious” processes of cultural modernization and economic neoliberalism. This pattern is found across all countries and holds regardless of socioeconomic characteristics such as education and income. While previous research has found that belief in conspiracies tends to cluster at the extremes of the political spectrum, our analysis opens up a more complex picture, showing that conspiracy thinking is not merely related to extremist orientations, but to specific combinations of political attitudes.
Here is the full article by Florian Buchmayr and André Krouwel, via the excellent Kevin Lewis, who is not obsessed with conspiracy theories.
The vanishing male writer
It’s easy enough to trace the decline of young white men in American letters—just browse The New York Times’s “Notable Fiction” list. In 2012 the Times included seven white American men under the age of 43 (the cut-off for a millennial today); in 2013 there were six, in 2014 there were six.
And then the doors shut.
By 2021, there was not one white male millennial on the “Notable Fiction” list. There were none again in 2022, and just one apiece in 2023 and 2024 (since 2021, just 2 of 72 millennials featured were white American men). There were no white male millennials featured in Vulture’s 2024 year-end fiction list, none in Vanity Fair’s, none in The Atlantic’s. Esquire, a magazine ostensibly geared towards male millennials, has featured 53 millennial fiction writers on its year-end book lists since 2020. Only one was a white American man.
Over the course of the 2010s, the literary pipeline for white men was effectively shut down. Between 2001 and 2011, six white men won the New York Public Library’s Young Lions prize for debut fiction. Since 2020, not a single white man has even been nominated (of 25 total nominations). The past decade has seen 70 finalists for the Center for Fiction’s First Novel Prize—with again, not a single straight white American millennial man. Of 14 millennial finalists for the National Book Award during that same time period, exactly zero are white men. The Wallace Stegner Fellowship at Stanford, a launching pad for young writers, currently has zero white male fiction and poetry fellows (of 25 fiction fellows since 2020, just one was a white man). Perhaps most astonishingly, not a single white American man born after 1984 has published a work of literary fiction in The New Yorker (at least 24, and probably closer to 30, younger millennials have been published in total).
Here is more from Jacob Savage at Compact.
Wind turbines lower Danish real estate prices
We analyze the impact of wind turbines on house prices, distinguishing between effects of proximity and shadow flicker from rotor blades covering the sun. By utilizing data from 2.4 million house transactions and 6,878 wind turbines in Denmark, we can control for house fixed effects in our estimation. Our results suggest strong negative impacts on house prices, with reductions of up to 12 percent for modern giant turbines. Homes affected by shadow flicker experience an additional decrease in value of 8.1 percent. Our findings suggest a nuanced perspective on the local externalities of wind turbines regarding size and relative location.
Here is the full paper by Carsten Andersen and Timo Hener, via the excellent Kevin Lewis. I rather like how they look, and would gladly buy a home near some, if only for the scenery. Though I would rather have a nearby gas station instead?
The New Geography of Labor Markets
We use matched employer-employee data to study where Americans live in relation to employer worksites. Mean distance from employee home to employer worksite rose from 15 miles in 2019 to 26 miles in 2023. Twelve percent of employees hired after March 2020 live at least fifty miles from their employers in 2023, triple the pre-pandemic share. Distance from employer rose more for persons in their 30s and 40s, in highly paid employees, and in Finance, Information, and Professional Services. Among persons who stay with the same employer from one year to the next, we find net migration to states with lower top tax rates and areas with cheaper housing. These migration patterns greatly intensify after the pandemic and are much stronger for high earners. Top tax rates fell 5.2 percentage points for high earners who stayed with the same employer but switched states in 2020. Finally, we show that employers treat distant employees as a more flexible margin of adjustment.
That is from a new NBER working paper by Mert Akan, et.al.
The Anatomy of Marital Happiness
How can I not link to a new Sam Peltzman piece on such a topic? Here goes:
Since 1972, the General Social Survey has periodically asked whether people are happy with Yes, Maybe or No type answers. Here I use a net “happiness” measure, which is percentage Yes less percentage No with Maybe treated as zero. Average happiness is around +20 on this scale for all respondents from 1972 to the last pre-pandemic survey (2018). However, there is a wide gap of around 30 points between married and unmarried respondents. This “marital premium” is this paper’s subject. I describe how this premium varies across and within population groups. These include standard socio demographics (age, sex, race education, income) and more. I find little variety and thereby surface a notable regularity in US socio demography: there is a substantial marital premium for every group and subgroup I analyze, and this premium is usually close to the overall 30-point average. This holds not just for standard characteristics but also for those directly related to marriage like children and sex (and sex preference). I also find a “cohabitation premium”, but it is much smaller (10 points) than the marital premium. The analysis is mainly visual, and there is inevitably some interesting variety across seventeen figures, such as a 5-point increase in recent years.
Via the excellent, and married, Kevin Lewis.
NIMBY contrarianism
The standard view of housing markets holds that the flexibility of local housing supply–shaped by factors like geography and regulation–strongly affects the response of house prices, house quantities and population to rising housing demand. However, from 2000 to 2020, we find that higher income growth predicts the same growth in house prices, housing quantity, and population regardless of a city’s estimated housing supply elasticity. We find the same pattern when we expand the sample to 1980 to 2020, use different elasticity measures, and when we instrument for local housing demand. Using a general demand-and-supply framework, we show that our findings imply that constrained housing supply is relatively unimportant in explaining differences in rising house prices among U.S. cities. These results challenge the prevailing view of local housing and labor markets and suggest that easing housing supply constraints may not yield the anticipated improvements in housing affordability.
That is from a new NBER working paper by Schuyler Louie, John A. Mondragon, and Johannes Wieland.
Have humans passed peak brain power?
In one particularly eye-opening statistic, the share of adults who are unable to “use mathematical reasoning when reviewing and evaluating the validity of statements” has climbed to 25 per cent on average in high-income countries, and 35 per cent in the US.
A new measurement for the value of free goods
The welfare contributions of new goods and free goods are not well-measured in our current national accounts. We derive explicit terms for the contributions of these goods and introduce a new framework and metric, GDP-B which quantifies their benefits. We apply this framework to several empirical examples including Facebook and smartphone cameras and estimate their valuations through incentive-compatible choice experiments. We find that including the gains from Facebook adds 0.05 to 0.11 percentage points to welfare growth per year while improvements in smartphones adds approximately 0.63 percentage points per year.
That is from a new AEJ piece by Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers, and Kevin J. Fox.
Chad fact of the day
Chad’s PM2.5 levels were more than 18 times higher than the WHO guideline, with mineral dust in the Sahara Desert as the primary source of air pollutants.
Here is the full article, most of all noting that six of the world’s ten most polluted cities are in India. Via the excellent Samir Varma.