Category: Data Source

Britain’s regional divide is smaller than you might think

In London, the median household has a disposable income before housing costs that is only 21 per cent higher than the weakest area, which is in the north-east England. After paying a lot for very small homes, Londoners have no higher incomes than the UK average. Most inequality occurs within regions not among them — the Institute for Fiscal Studies says that if average regional income differences were eradicated, 95 per cent of UK income inequality would still exist.

That is from Chris Giles at the FT.

How upset are the Brits really?

There has been lots of talk lately (including by me) about how unhappy and divided the UK is. The vote for Brexit is often described as a cry of pain from suffering people.

So I was stunned to see the chart reprinted below, which comes from the independent Resolution Foundation think-tank and shows that self-reported British life satisfaction is the highest since surveys began in the 1970s. About 93 per cent of Britons now say they are “fairly” or “very” satisfied with their lives.

Resolution reports “a very marked upward drift” since 2000, despite stagnating satisfaction during the financial crisis and since the referendum. Academic experts tell me they believe these findings. Nancy Hey, director of the What Works Centre for Wellbeing, says that, contrary to Britain’s doom-ridden national debate: “For most people, things have been getting gently better.”

Here is more from Simon Kuper at the FT, via Yana.  In management, it strikes me as an interesting and underexplored question to what extent people, when things are going relatively well, turn on each other, or not.

Americans trust their government more than you are being told

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

Americans’ trust in their government is abysmally low, according to both survey data and a more subjective reading of opinions about President Donald Trump and Congress. I hold a contrarian view: Trust in the actual operations of government is pretty high, and the real growing mistrust is of each other.

Consider first that the Trump administration’s record spending and deficits don’t seem all that unpopular, even among those who detest Trump or might favor different spending priorities. No major candidate is campaigning on a platform of fiscal responsibility and restraint, and that is a sign of high trust in government.

I go through the major government programs, and show they are (mostly) pretty well trusted by the American people.  Here is another consideration:

Finally, interest rates on government debt have been remarkably low for years, probably the single best measure of trust in a government; less trusted countries such as Argentina and Turkey have to pay very high interest rates to borrow. The recent rise in U.S. rates is due more to an economic expansion than to rising fears of default.

Here is the basic model:

In reality, as people get older, they rely on government for more and more. While that is indeed a form of trust, it also increases anxiety about those in charge, and their values and priorities. The higher level of anxiety exists precisely because there is, for better or worse, greater dependence. Don’t confuse the resulting nervousness with a lack of trust.

Our leaders aside, we trust the actual operation of government on the ground, so to speak.  These days, what we do not trust is each other:

Many Democrats and Republicans do not want their children to marry into the other political party, for instance, and these preferences are growing stronger. So when one branch of the government is affiliated with one of the parties, as it inevitably is, members of the other party will voice a low level of trust. But their complaint may be about the supporters of that branch of the government as much as the government itself.

Recommended.

Do minimum wage hikes get rid of bad restaurants?

We study the impact of the minimum wage on firm exit in the restaurant industry, exploiting recent changes in the minimum wage at the city level. We find that the impact of the minimum wage depends on whether a restaurant was already close to the margin of exit. Restaurants with lower ratings are closer to the margin of exit on average, and are disproportionately driven out of business by increases to the minimum wage. Our point estimates suggest that a one dollar increase in the minimum wage leads to a 10 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating on Yelp), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale). We expand the analysis to look at prices using data from delivery orders, and find that lower rated restaurants also increase prices in response to minimum wage increases. Our analysis also highlights how digital data can be used to shed new light on labor policy and the economy.

That is from a new NBER working paper by Dara Lee Luca and Michael Luca.  Obviously this will not be good for jobs, yet part of me believes that creative destruction in the restaurant sector is undersupplied…

The politics of CEOs

We find that more than 57% of CEOs are Republicans [defined by 2/3 or more campaign contributions to Republicans], 19% are Democrats…and the rest are Neutral [do not contribute 2/3 of their campaign spending to either of the two major parties].  Therefore, Republican CEOs are more than three times as Democratic CEOs.  Furthermore, Republican CEOs lead companies with almost twice the asset value of companies led by Democratic CEOs.

That is from 2000-2017, across the S&P 1500.  And:

We show that the median CEO directs 75% of his or her total contributions to Republicans.

And:

We find that companies led by Republican CEOs are less transparent to their investors on whether how, and how much they spend on politics.

The most Republican-leaning sectors are energy (89.1%), manufacturing, and chemicals.  Business equipment and telecoms are the least-leaning R to D sectors for their CEOs, though still Republican by clear margins.  In the Northeast and West the number of Democratic CEOS has almost caught up to the Republicans.  As for female CEOs, they lean Republican 34.3% to Democratic 32.3%, a small margin but still more Republican donors.

That is all from a new paper The Politics of CEOs, by Alma Cohen, Moshe Hazan, Roberto Tallarita, and David Weiss, NBER link here.

Intelligence predicts cooperativeness better than conscientiousness does

We study how intelligence and personality affect the outcomes of groups, focusing on repeated interactions that provide the opportunity for profitable cooperation. Our experimental method creates two groups of subjects who have different levels of certain traits, such as higher or lower levels of Intelligence, Conscientiousness, and Agreeableness, but who are very similar otherwise. Intelligence has a large and positive long-run effect on cooperative behavior. The effect is strong when at the equilibrium of the repeated game there is a trade-off between short-run gains and long-run losses. Conscientiousness and Agreeableness have a natural, significant but transitory effect on cooperation rates.

That is by Eugenio Proto, Aldo Rustichini, and Andis Sofianos, forthcoming in the JPE.  Note that agreeable people do cooperate more at first, but they don’t have the strategic ability and consistency of the higher IQ individuals in these games.  Conscientiousness has multiple features, one of which is caution, and that deters cooperation, since the cautious are afraid of being taken advantage of.  So, at least in these settings, high IQ really is the better predictor of cooperativeness, especially over longer-term horizons.

Is day care bad for kids, especially well-off kids?

Exploiting admission thresholds to the Bologna daycare system, we show using RDD that one additional daycare month at age 0–2 reduces IQ by 0.5% (4.7% of a s.d.) at age8–14 in a relatively affluent population. The magnitude of this negative effect increases with family income. Similar negative impacts are found for personality traits. These findings are consistent with the hypothesis from psychology that children in daycare experience fewer one-to-one interactions with adults, with negative effects in families where such interactions are of higher quality. We embed this hypothesis in a model that lends structure to our RDD.

Here is the forthcoming JPE article by Margherita Fort, Andrea Ichino and Giulio Zanella.  And here are various ungated versions.  (Do any of you have the links handy for other papers with similar results?  They do exist.)

Quick quiz, we should:

a. Subsidize day care heavily

b. Not subsidize day care, or

c. Wait and see until more evidence is in.

Who is passing and failing this quiz?  How about you?

Which countries are best for creating and encouraging women chess players?

Via David Smerdon, here is the picture:

To oversimplify only a wee bit, it is the countries with less gender equality which have more female chess players, relative to male chess players.  Here is some description:

Denmark is the worst country in our list of participation, with only one female player to roughly 50 males, while the rest of Scandinavia as well as most of western Europe also languish at the bottom.

On the other hand, some of the best countries show evidence of the effect of female role models, and would be no surprise to players familiar with women’s chess history. Georgia (ranked 5th) and China (ranked 4th) both featured multiple women’s World Champions. There are also some high rates from a few unexpected sources: Vietnam (1st), the United Arab Emirates (2nd), Indonesia (8th), and even Kenya (12th) really buck the trend. Interestingly, a lot of the best countries for female chess players are in Asia. Besides Vietnam, there are five other countries in the best ten, and if I am a little more lenient with the chess population cut-offs, Mongolia and Tajikistan would also be in there.

Here is one cited hypothesis:

Could it be that, deep down, women just don’t like chess as much as men?

I consider that to be possible, but unconfirmed.  In any case, the lesson is that gender imbalance in a particular field can be correlated with greater equality of opportunity overall.

Dept. of Uh-Oh, college and mobility edition

Intergenerational mobility is higher among college graduates than among people with lower levels of education. In light of this finding, researchers have characterized a college degree as a great equalizer leveling the playing field, and proposed that expanding higher education would promote mobility. This line of reasoning rests on the implicit assumption that the relatively high mobility observed among college graduates reflects a causal effect of college completion on intergenerational mobility, an assumption that has rarely been rigorously evaluated. This article bridges this gap. Using a novel reweighting technique, I estimate the degree of intergenerational income mobility among college graduates purged of selection processes that may drive up observed mobility in this subpopulation. Analyzing data from the National Longitudinal Survey of Youth 1979, I find that once selection processes are adjusted for, intergenerational income mobility among college graduates is very close to that among non-graduates. This finding suggests that expanding the pool of college graduates per se is unlikely to boost intergenerational income mobility in the United States. To promote mobility, public investments in higher education (e.g., federal and state student aid programs) should be targeted at low-income youth.

That is from new research by Xiang Zhou, via the excellent Kevin Lewis.

Do sexual attitudes cause religious behavior?

…contrary to long-held assumptions that religious upbringing causes sexually restrictive attitudes and behaviors, several large data sets now suggest a reverse causal arrow—people’s preferred mating strategies determining their attraction toward, or repulsion from, religion. Second, other recent findings suggest that distrust of nonreligious individuals is almost completely erased by knowledge that they are following a restricted monogamous lifestyle. Thus, reproductive strategies often underlie apparently sacred concerns. We close with a consideration of ways in which reproductive interests might underlie a broad range of benefits associated with religious affiliation.

Here is the article, via the excellent K.

Measurement for everything

One of the most widely used screenplay programs in Hollywood has a new tool to help with gender equality and inclusion.

In an update announced Thursday, Final Draft — software that writers use to format scripts — said it will now include a proprietary “Inclusivity Analysis” feature, allowing filmmakers “to quickly assign and measure the ethnicity, gender, age, disability or any other definable trait of the characters,” including race, the company said in a statement.

It also will enable users to determine if a project passes the Bechdel Test, measuring whether two female characters speak to each other about anything other than a man. The Final Draft tool, a free add-on, was developed in collaboration with the Geena Davis Institute on Gender in Media at Mount Saint Mary’s University, which has been at the forefront of studying the underrepresentation of women on screen.

Here is the full Melena Ryzik NYT story.

Do Experts Listen to Other Experts?

Not so much:

Organizations in science and elsewhere often rely on committees of experts to make important decisions, such as evaluating early-stage projects and ideas. However, very little is known about how experts influence each others’ opinions, and how that influence affects final evaluations. Here, we use a field experiment in scientific peer review to examine experts’ susceptibility to the opinions of others. We recruited 277 faculty members at seven US medical schools to evaluate 47 early stage research proposals in biomedicine. In our experiment, evaluators: (1) completed independent reviews of research ideas, (2) received (artificial) scores attributed to anonymous “other reviewers” from the same or a different discipline, and (3) decided whether to update their initial scores. Evaluators did not meet in person and were not otherwise aware of each other. We find that, even in a completely anonymous setting and controlling for a range of career factors, women updated their scores 13% more often than men, while very highly cited “superstar” reviewers updated 24% less often than others. Women in male-dominated subfields were particularly likely to update, updating 8% more for every 10% decrease in subfield representation. Very low scores were particularly “sticky” and seldom updated upward, suggesting a possible source of conservatism in evaluation. These systematic differences in how world-class experts respond to external opinions can lead to substantial gender and status disparities in whose opinion ultimately matters in collective expert judgment.

That is from a new working paper by Misha Teplitskiy, Hardeep Ranu, Gary Gray, Michael Menietti, Eva Guinan and Karim R. Lakhani.  For the pointer I thank the excellent Kevin Lewis.

Average annual change in total factor productivity between 1990 and 2014

Here are the estimates from Penn World Tables, only selected countries are presented:

Sri Lanka 2.48

China 2.40

Poland 1.70

Uruguay 1.61

Romania 1.61

United States 0.89

Brazil -0.12

South Africa -0.53

Mexico -0.82

Ukraine -1.20

A few points.  First, I still believe Sri Lanka is an undervalued development story, in spite of recent developments.  Second, the economy of Poland is not discussed enough.  Third, other sources confirm similar numbers for Mexico, arguably because misallocations of capital and labor have increased due to the growing size of the informal sector.  Fourth, there are far too many other nations in the negative column.

Those numbers are reproduced in “Productivity in Emerging-Market Economies: Slowdown or Stagnation?”, by José de Gregorio, in the new and interesting volume Facing Up To Low Productivity Growth, edited by Adam S. Posen and Jeromin Zettelmeyer.

Gender and the confidence gap

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

The first new study focuses on performance in high school, and the startling result is this: Girls with more exposure to high-achieving boys (as proxied by parental education) have a smaller chance of receiving a bachelor’s degree. Furthermore, they do worse in math and science, are less likely to join the labor force, and more likely to have more children, which in turn may limit their later career prospects.

Those are disturbing results.  Exposure to high-achieving peers is normally expected to be a plus, not a minus. It is what parents are trying to do when they place their children into better schools, or when school systems work hard to attract better students.

And:

A second new study finds that even blind review does not avoid gender bias in the processing of grant proposal applications, drawn from data from the Gates Foundation. It turns out that women and men have different communications styles, with the women more likely to use narrow words, and the men more likely to use broader ones. And reviewers, it turns out, favor broad words, which are more commonly associated with more sweeping claims, and disfavor the use of too many narrow words.

The net result is that “even in an anonymous review process, there is a robust negative relationship between female applicants and the scores assigned by reviewers.” This discrepancy persists even after controlling for subject matter and other variables. Notably, however, it disappears when controlling for different rhetorical styles.

These two studies probably are connected to each other. While the two sets of researchers do not address each other’s claims, it is not a huge leap to think of broader, more sweeping language as reflecting a kind of confidence, whether merited or not. Narrow words, on the other hand, may reflect a lower level of confidence or a greater sense of rhetorical modesty. Not only might lower confidence hurt many women in life, but a greater unwillingness to signal confidence — regardless of whether it’s genuine — might hurt them too.

There is much more at the link, recommended.

Frank Lichtenberg and the cost of saving lives through pharmaceuticals

Humans are living longer, better lives thanks to innovations in prescription drugs over the past three decades, according to several new studies by Frank Lichtenberg, the Courtney C. Brown Professor of Business.

Every year, according to Lichtenberg’s research, drugs launched since 1982 are adding 150 million life-years to the lifespans of people in 22 countries that he analyzed. He calculated the average pharmaceutical expenditure per life-year saved at $2,837 — a bargain, he says.

“According to most health economists and policymakers, if you could extend someone’s life by a year for less than $3,000, that is highly cost effective,” says Lichtenberg, who gathered new data for these studies to cast a never-before seen view of the econometrics of prescription drugs. “People might be surprised by how cost-effective drugs appear to be in general.”

…To tease out the answer, the professor gathered data on drug launches and the age-standardized premature mortality rate by country, disease, and year. Drawing on data from the World Health Organization, the United Nations, consulting company IQVIA, and French database Theriaque, Lichtenberg was able to identify the role that pharmaceutical innovation played in reducing the number of years of life lost due to 66 diseases in 27 countries. (“Years of life lost” is an estimate of the average years a person would have lived if he or she had not died prematurely.)

Between 1982 and 2015, for example, the US saw the launch of 719 new drugs, the most of any country in the sample; Israel had about half as many launches. By looking at the resultant change in each country between mortality and disease, Lichtenberg calculated that the years of life lost before the age of 85 in 2013 would have been 2.16 times as high if no new drugs had been launched after 1981. For a subset of 22 countries with more full data, the number of life-years gained in 2013 from drugs launched after 1981 was 148.7 million.

Here is more from Stephen Kurczy, and here is previous MR coverage of Lichtenberg and his work.  Given these estimates, do you really think we should be spending less on pharmaceuticals?