Category: Data Source

China fact of the day

China’s major commercial banks have a funding issue outside Beijing’s control: They’re running low on the U.S. dollars they need for activities both at home and abroad.

The combined dollar liabilities at the big four commercial banks exceeded their dollar assets at the end of 2018, their annual results show—a sharp reversal from just a few years ago. Back in 2013, the four together had around $125 billion more dollar assets than liabilities, but now they owe more dollars to creditors and customers than are owed to them.

Bank of China BACHY -0.66% is by far the greatest contributor to the shift. Once the holder of more net assets in dollars than any other Chinese lender, it ended 2018 owing about $70 billion more in dollar liabilities than it booked in dollar assets. The other three lenders actually finished the year with more dollar assets than liabilities, though Industrial & Commercial Bank of China IDCBY -0.33% had a deficit at the end of 2017.

In its annual report, Bank of China says that its asset-liability imbalance is more than addressed by dollar funding that doesn’t sit on its balance sheet. Instruments like currency swaps and forwards are accounted for elsewhere.

But such off-balance-sheet lending can be flighty. As the Bank for International Settlements notes, the vast majority of currency derivatives mature in under one year, meaning they are up for constant renewal and could evaporate during times of pressure.

Here is the full WSJ piece, via Christopher Balding.

Intergenerational mobility in Canada and the United States

Southern Ontario — the most populous part of Canada lying north of Lake Ontario and Lake Erie — displays a similar bottom to top quintile mobility as adjacent regions in Michigan, Ohio, and New York State, most regions being categorized in the 0.05 to 0.10 range.  This said, some areas of Quebec adjacent to New York State, Vermont, and New Hampshire display a lower probability than their counterparts in Ontario and New England.  Regions with rather high chances of escaping low income and rising to the very top quintile cover the American midwest, where in most Commuting Zones the probability is more than 20 percent, similar probabilities being experienced in the adjacent regions of western Canada.

That is from a new paper by Marie Connolly, Miles Corak, and Catherine Haeck.  I take that to be fairly strong evidence for the “culture matters” view of mobility, rather than the “policy is everything” view.

To the extent the United States has lower mobility than Canada, it is largely because so many people here live in the low-mobility regions of the American South.

Families and social networks don’t always help stroke victims

A recent study in Nature Communications shows that when stroke patients are surrounded by close connections like their immediate family, they are less likely to get to the hospital in time for treatment, compared to patients with looser social connections.

Amar Dhand is a neurologist at Harvard Medical School with a PhD in sociology from Oxford who studies the relationship between social connections and health. His team surveyed 175 stroke patients in Boston and St. Louis, and mapped their social networks against the time it took them to arrive at the hospital. The 67 patients who took more than six hours to arrive had both smaller and tighter-knit social networks than the 108 who arrived in under six hours…

“This is the biggest problem in stroke therapy today,” Dhand says. “The delay that is caused by patients and the caregivers. The social context is the largest part of the delay, hands down, in stroke patients arriving in hospital in time.” There’s a predictable sequence of events for stroke patients in close networks, he notes. Initially, a patient may delay telling their family about their symptoms, not wanting them to worry.  “Secondly, they [the family] over-negotiate the symptoms, and perhaps even argue about them,” Dhand says. “Then they all validate each others opinion to watch and wait.”

He calls it an”echo chamber,” where family members, hoping for the best, minimize the gravity of the situation and conflate it with previous, less severe illnesses.

In contrast, when patients with only loose social networks have a stroke, there isn’t as much dithering. Patients who suffer strokes in a public place may be sent to the emergency room out of an abundance of caution by employees of the mall, store, or restaurant where they are afflicted. In some cases, an ambulance may be called by someone who doesn’t want the responsibility of caring for the sick person.

Here is the full article.

Are volunteers better fighters?

It seems so:

A voluntary army’s quality exceeds or falls below a drafted army’s average quality depending on whether selection is advantageous or adverse. Using a collection of data sets that cover the majority of the US Army soldiers during World War II, we test for adverse selection into the army. Rather, we find advantageous selection: volunteers and drafted men showed no significant difference in fatalities, but volunteers earned distinguished awards at a higher rate than drafted men, particularly after the attack on Pearl Harbor. Analyses at the level of units concur with our findings based on enlistment records.

That is from a newly published article by Javier A. Birchenall and Thomas G. Koch, via Robin Hanson.

Baseball umpires are not so great, and older umpires are much worse

This deep-dive analysis demonstrated that MLB umpires make certain incorrect calls at least 20 percent of the time, or one in every five calls. Research results revealed clear two-strike bias and pronounced strike zone blind spots. Less-experienced younger umpires in their prime routinely outperformed veterans, and umpires selected in recent World Series were not the best performers. Results showed a declining but still unacceptably high BCR score, but on a positive note, only a marginal inter-inning call inconsistency.

The most likely mistakes are made at the top of the strike zone.  And older umpires really are worse:

Based on the research, professional umpires, similar to professional baseball players, have a standard peak. The study revealed that home plate umpires who made the Top 10 MLB performance list (2008-2018) had an average of 2.7 years of experience, and averaged 33 years of age with a BCR of 8.94 percent. None of these top performers had more than five years of experience or were older than 37…

In contrast to the overall top performers, research uncovered that umpires on the Bottom 10 MLB performance list (2008-2018) had an average experience level of 20.6 years, were 56.1 years of age, and had an average BCR of 13.96 percent. This group’s error rate was a staggering 56 percent higher than the top 10 MLB performers. Umpire Jerry Layne, with 29 years on the job and at age 61, sported the highest BCR, 14.18 percent. This performance research clearly indicates that more experience and age does not necessarily produce the best umpires.

Here is the full story, written by Mark T. Williams, who also did the data work, via the excellent John Chamberlain.

Is the IT Revolution Over? An Asset Pricing View

I develop a method that structures financial market data to forecast economic outcomes. I use it to study the IT sector’s transition to its long-run share in the US economy. The method uses a model which links economy-wide growth with IT’s market valuation to match transition data on macroeconomic quantities, the sector’s life cycle patterns, and, importantly, market valuation ratios. My central estimates indicate that the revolution ends between 2028 and 2034 and that future average labor productivity growth will fall to 1.7 percent from the 2.7 recorded over 1974–2015. I show empirically the IT sector’s price-dividend ratio univariately explains over half of the variation in future productivity growth.

By Colin Ward.  Speculative, as they say!  Still, interesting to see someone go through the exercise.  Via the excellent Kevin Lewis.

The cost of cannabis

Accounting for income endogeneity, our results suggested that being a current cannabis user may cost an individual over £5600 per year, in terms of lost wellbeing, while being a current user of other drugs may cost approximately £4000 per year. While acknowledging possible reverse causality, we estimated the annual population cost of drug use may be as high as £10.7bn in terms of lost wellbeing.

That is from a new paper by Anna Maccagnan, Tim Taylor, and Mathew P. White, via the excellent Rolf Degen.

New results on the China shock, furthermore the China shock is largely over

Using Census micro data we find that the impact of Chinese import competition on US manufacturing had a striking regional variation. In high-human capital areas (for example, much of the West Coast or New England) most manufacturing job losses came from establishments industry switching to services. The establishment remained open but changed to research, design, management or wholesale. In the low human-capital areas (for example, much of the South and mid-West) manufacturing job-losses came from plant closure without much offsetting gain in service employment. Offshoring appears to drive these manufacturing job losses – the Chinese trade impact arose primarily in large importing firms that were simultaneously expanding service sector employment. Hence, our data suggest Chinese trade redistributed jobs from manufacturing in lower income areas to services in higher income areas. Finally, the impact of Chinese imports appear to have disappeared after 2007 – we find strong employment impacts from 2000 to 2007, but nothing since from 2008 to 2015.

That is from a new paper by Nicholas Bloom, Kyle Handley, André Kurmann, and Philip Luck.  Via Bryan Caplan.

Early-career setback and future career impact

Setbacks are an integral part of a scientific career, yet little is known about whether an early-career setback may augment or hamper an individual’s future career impact. Here we examine junior scientists applying for U.S. National Institutes of Health (NIH) R01 grants. By focusing on grant proposals that fell just below and just above the funding threshold, we compare “near-miss” with “near-win” individuals to examine longer-term career outcomes. Our analyses reveal that an early-career near miss has powerful, opposing effects. On one hand, it significantly increases attrition, with one near miss predicting more than a 10% chance of disappearing permanently from the NIH system. Yet, despite an early setback, individuals with near misses systematically outperformed those with near wins in the longer run, as their publications in the next ten years garnered substantially higher impact. We further find that this performance advantage seems to go beyond a screening mechanism, whereby a more selected fraction of near-miss applicants remained than the near winners, suggesting that early-career setback appears to cause a performance improvement among those who persevere. Overall, the findings are consistent with the concept that “what doesn’t kill me makes me stronger.” Whereas science is often viewed as a setting where early success begets future success, our findings unveil an intimate yet previously unknown relationship where early-career setback can become a marker for future achievement, which may have broad implications for identifying, training and nurturing junior scientists whose career will have lasting impact.

That is the abstract of a new paper by Yang Wang, Benjamin F. Jones, and Dashun Wang.

What Explains Labor’s Declining Share of Revenue in Major League Baseball?

Somehow I had missed this earlier paper by John Charles Bradbury:

Since the early-2000s, the share of revenue going to Major League Baseball players has been diminishing similar to the decline of labor’s share of revenue observed in the US economy. This study examines potential explanations for the decline in baseball, which may result from related factors and provide information relevant to explaining this macroeconomic trend. The results indicate that the value-added from non-player inputs, collective bargaining agreement terms, and related changes in the returns to winning contributed to the decline of players’ share of income. Competition from substitute foreign labor and physical capital are not associated with the decline in labor’s share of income in baseball.

There is also this sentence:

The decline in labor’s revenue share in MLB is consistent with changes in revenue share in the hospitality and leisure industry that experienced a decrease in labor’s share of income from 65.7 percent to 62.1 percent between 1987 and 2011 (Elsby, Hobijn, and Şahin 2013).

Another hypothesis I have heard is that baseball players are not nearly as good at, or as well-suited for, the use of social media, as compared say to the more visible basketball players.  Another (quite speculative) claim is that sabermetrics has commoditized a lot of players and in turn lowered their bargaining power.

Sentences to ponder

…modest genetic selection/concentration was evident for teen pregnancy and poor educational outcomes, suggesting that neighbourhood effects for these outcomes should be interpreted with care.

Note however:

Findings argue against genetic selection/concentration as an explanation for neighbourhood gradients in obesity and mental health problems.

Here is the full piece, via K.

Genes, income, and happiness

Significant differences between genetic correlations indicated that, the genetic variants associated with income are related to better mental health than those linked to educational attainment (another commonly-used marker of SEP). Finally, we were able to predict 2.5% of income differences using genetic data alone in an independent sample. These results are important for understanding the observed socioeconomic inequalities in Great Britain today.

That is from a new paper by W. David Hill, et.al.  And from Abdel Abdellouai’s summary:

Educational attainment shows a larger genetic overlap with subjective wellbeing than IQ does (rgs = .11 & .03, respectively), while income shows a larger genetic overlap with subjective wellbeing than both education or IQ (rg = .32).

All via Richard Harper.

Loser companies

As economic profits grow larger, so do economic losses at the other end of the distribution. The bottom 10 percent of companies destroy as much value as the top 10 percent create, and today’s bottom-decile companies have 1.5 times more economic loss, on average, than their counterparts of 20 years ago (Exhibit 1). That means for every company that creates economic value, there is another company that destroys economic value. Yet these value-destroying companies continue to survive, holding on to their resources for increasingly longer durations and continuing to attract capital. A growing number are turning into “zombie” companies, unable to generate enough cash flow even to sustain interest payments on their debts. The impact of these economic losses goes beyond these companies’ investors, managers, and workers: it drives down the returns for healthy companies that compete for the same resources or profits.

That is from a new McKinsey study, via Marty Manley.