Category: Data Source

The American economy circa 2021

by  Tyler Cowen in

Spending on cars and trucks is 15.1 percent higher than it would have been on the 2019 trajectory; spending on furnishings and durable household equipment is 16.6 percent higher; and spending on recreational goods is a whopping 26 percent higher.

Altogether, durable goods spending is running $348.5 billion higher annually than it would have been in that alternate universe, as Americans have spent their stimulus checks and unused travel money on physical items.

The housing sector is experiencing nearly as big a surge. Residential investment was 14.4 percent above its prepandemic trend, representing $90 billion a year in extra activity. And that was surely constrained by shortages of homes to sell, and lumber and other materials used to make them. It is poised to soar further in coming months, based on forward-looking data like housing starts.

Another bright spot is business investment in information technology. The tech industry has been comparatively unscathed by the crisis. Spending on information processing equipment in the first quarter was 23 percent higher than its prepandemic trend, and investment in software 7.4 percent higher.

But:

Spending on transportation services remains 23 percent below its prepandemic trend, recreation services 31 percent, and restaurants and hotels 19 percent.

Those three sectors alone represent $430 billion in “missing” economic activity — largely equivalent, it’s worth noting, to the combined shift of economic activity toward durable goods and residential real estate.

A corollary shows up in trade data. Services exports are down 26 percent compared with the prepandemic trend, which reflects in significant part the freeze-up in global travel.

Here is the full NYT story.

Facts about biomass

by  Tyler Cowen in

The carbonaceous winners are plants, which make up about 80 percent of all biomass on Earth. Bacteria comes in second at 13 percent and fungus is third at just 2 percent.

Of the 550 gigatons of biomass carbon on Earth, animals make up about 2 gigatons, with insects comprising half of that and fish taking up another 0.7 gigatons. Everything else, including mammals, birds, nematodes and mollusks are roughly 0.3 gigatons, with humans weighing in at 0.06 gigatons. The research appears in The Proceedings of the National Academy of Sciences.

“The fact that the biomass of fungi exceeds that of all animals’ sort of puts us in our place,” Harvard evolutionary biologist James Hanken, who was not involved with the study, tells Borenstein.

Here is the full piece.  And from the cited research article:

…the biomass of domesticated poultry (≈0.005 Gt C, dominated by chickens) is about threefold higher than that of wild birds…

…the total plant biomass (and, by proxy, the total biomass on Earth) has declined approximately twofold relative to its value before the start of human civilization. The total biomass of crops cultivated by humans is estimated at ≈10 Gt C, which accounts for only ≈2% of the extant total plant biomass…

In terms of biomass, mollusks are a bigger deal than you might think.

Are Covid travel bans counterproductive for emerging economies?

by  Tyler Cowen in

Sometimes, yes:

…two opposing forces constitute the first-order determinants of total infections at any point in time.  On one hand, the longer a travel ban lasts, the less time community transmission exists in the rural sink.  Ceteris paribus, this will decrease rural infections.  On the other hand, the longer the restrictions remain, the longer migrants are contained within a hotspot where infection rates are rapidly increasing.  Consequently, the probability that migrants are infected with Covid-19  rises over time until the city achieves herd immunity, in turn increasing the rate at which they seed the rural sink with infections once the ban is lifted.  This drives up cumulative cases at any future date.

In some cases, for travel bans to work they have to be very long.  That is from a new paper by Fiona Burlig, Anant Sudarshan, Garrison Schlauch, who also provide evidence from India, and also from cross-country evidence, to support their analysis.

How well did Medicare pay-for-performance work?

by  Tyler Cowen in

For pain management, and pain management, only, it seems it worked just fine:

Medicare uses a pay-for-performance program to reimburse hospitals. One of the key input measures in the performance formula is patient satisfaction with their hospital care. Physicians and hospitals, however, have raised concerns regarding questions related to patient satisfaction with pain management during hospitalization. They report feeling pressured to prescribe opioids to alleviate pain and boost satisfaction survey scores for higher reimbursements. This overprescription of opioids has been cited as a cause of current opioid crisis in the United States. Due to these concerns, Medicare stopped using pain management questions as inputs in its payment formula. The authors collected multiyear data from six diverse data sources, employed propensity score matching to obtain comparable groups, and estimated difference-in-difference models to show that, in fact, pain management was the only measure to improve in response to the pay-for-performance system. No other input measure showed significant improvement. Thus, removing pain management from the formula may weaken the effectiveness of the Hospital Value-Based Purchasing Program at improving patient satisfaction, which is one of the key goals of the program. The authors suggest two divergent paths for Medicare to make the program more effective.

That is from a new paper by Lu Liu, Dinesh K. Gauri, and Rupinder P. Jindal.  Overall, why did incentives fail us so badly?

Via the excellent Kevin Lewis.

Newark fact of the day

by  Tyler Cowen in

Newark Police officers did not fire a single shot during the calendar year 2020, and the city didn’t pay a single dime to settle police brutality cases. That’s never happened, at least in the city’s modern history.

At the same time, crime is dropping, and police recovered almost 500 illegal guns from the street during the year.

Here is the longer story.

Do career disruptions matter for the top five percent?

by  Tyler Cowen in

How resilient are high-skilled, white collar workers? We exploit a uniquely comprehensive dataset of individual-level resumes of bank employees and the setting of the Lehman Brothers bankruptcy to estimate the effect of an unanticipated shock on the career paths of mobile and high skilled labor. We find evidence of short-term effects that largely dissipate over the course of the decade and that touch only the senior-most employees. We match each employee of Lehman Brothers in January 2008 to the most similar employees at Goldman Sachs, Morgan Stanley, Deutsche Bank, and UBS based on job positions, skills, education, and demographics. By 2019, the former Lehman Brothers employees are 2% more likely to have experienced at least a six-months-long break from reported employment and 3% more likely to have left the financial services industry. However, these effects concentrate among the senior individuals such as vice presidents and managing directors and are absent for junior employees such as analysts and associates. Furthermore, in terms of subsequent career growth, junior employees of Lehman Brothers fare no worse than their counterparts at the other banks. Analysts and associates employed at Lehman Brothers in January 2008 have equal or greater likelihoods of achieving senior roles such as managing director in existing enterprises by January 2019 and are more likely to found their own businesses.

That is from a new paper by Anastassia Fedyk and James Hodson.  Via the excellent Kevin Lewis.

When doctors stay in their lane

by  Tyler Cowen in

Here is the paper, showing massive overdiagnosis, even following testing.  If you don’t wish to click through, here is a nice summary:

 

Ideology and performance in public organizations

by  Tyler Cowen in

We combine personnel records of the United States federal bureaucracy from 1997-2019 with administrative voter registration data to study how ideological alignment between politicians and bureaucrats affects the personnel policies and performance of public organizations. We present four results. (i) Consistent with the use of the spoils system to align ideology at the highest levels of government, we document significant partisan cycles and substantial turnover among political appointees. (ii) By contrast, we find virtually no political cycles in the civil service. The lower levels of the federal government resemble a “Weberian” bureaucracy that appears to be largely protected from political interference. (iii) Democrats make up the plurality of civil servants. Overrepresentation of Democrats increases with seniority, with the difference in career progression being largely explained by positive selection on observables. (iv) Political misalignment carries a sizeable performance penalty. Exploiting presidential transitions as a source of “within-bureaucrat” variation in the political alignment of procurement officers over time, we find that contracts overseen by a misaligned officer exhibit cost overruns that are, on average, 8% higher than the mean overrun. We provide evidence that is consistent with a general “morale effect,” whereby misaligned bureaucrats are less motivated.

They seem to be saying (among other things) that government is worse under Republican administrations because Democrats in the bureaucracy are not as loyal to their missions?  That is a new NBER working paper by Jorg L. Spenkuch, Edoardo Teso, and Guo Xu.

How to extract information from on-line reviews, or why Star Wars is still a thing

by  Tyler Cowen in

Online reviews promise to provide people with immediate access to the wisdom of the crowds. Yet, half of all reviews on Amazon and Yelp provide the most positive rating possible, despite human behaviour being substantially more varied in nature. We term the challenge of discerning success within this sea of positive ratings the ‘positivity problem’. Positivity, however, is only one facet of individuals’ opinions. We propose that one solution to the positivity problem lies with the emotionality of people’s opinions. Using computational linguistics, we predict the box office revenue of nearly 2,400 movies, sales of 1.6 million books, new brand followers across two years of Super Bowl commercials, and real-world reservations at over 1,000 restaurants. Whereas star ratings are an unreliable predictor of success, emotionality from the very same reviews offers a consistent diagnostic signal. More emotional language was associated with more subsequent success.

Here is more from Matthew D. Rocklage, Derek D. Rucker, and Loran F. Nordgren, via the excellent Kevin Lewis.

Facts about Nigerian-Americans

by  Tyler Cowen in

Second-generation black Americans have been inadequately studied in prior quantitative research. The authors seek to ameliorate this research gap by using the Current Population Survey to investigate education and wages among second-generation black Americans with a focus on Nigerian Americans. The latter group has been identified in some qualitative studies as having particularly notable socioeconomic attainments. The results indicate that the educational attainment of second-generation Nigerian Americans exceeds other second-generation black Americans, third- and higher generation African Americans, third- and higher generation whites, second-generation whites, and second-generation Asian Americans. Controlling for age, education, and disability, the wages of second-generation Nigerian Americans have reached parity with those of third- and higher generation whites. The educational attainment of other second-generation black Americans exceeds that of third- and higher generation African Americans but has reached parity with that of third- and higher generation whites only among women. These results indicate significant socioeconomic variation within the African American/black category by gender, ethnicity, and generational status that merits further research.

Here is the full paper by Sakomoto, et.al.

Further estimates on the cost of climate change and global warming

by  Tyler Cowen in

Sea level rise will cause spatial shifts in economic activity over the next 200 years. Using a spatially disaggregated, dynamic model of the world economy, this paper estimates the consequences of probabilistic projections of local sea level changes. Under an intermediate scenario of greenhouse gas emissions, permanent flooding is projected to reduce global real GDP by 0.19 percent in present value terms. By the year 2200, a projected 1.46 percent of the population will be displaced. Losses in coastal localities are much larger. When ignoring the dynamic response of investment and migration, the loss in real GDP in 2200 increases from 0.11 percent to 4.5 percent.

That newly published paper is from Klaus Desmet, Robert E. Kopp, Scott A. Kulp, Dávid Krisztián Nagy, Michael Oppenheimer, Esteban Rossi-Hansberg and Benjamin H. Strauss in American Economic Journal: Macroeconomics.  Am I wrong to feel a little…underwhelmed by those estimates?  Here is an earlier recent paper on other cost estimates.

The mortality of scholars

by  Tyler Cowen in

After recovering from a severe mortality crisis in the seventeenth century, life expectancy among scholars started to increase as early as in the eighteenth century, well before the Industrial Revolution. Our finding that members of scientific academies—an elite group among scholars—were the first to experience mortality improvements suggests that 300 years ago, individuals with higher social status already enjoyed lower mortality. We also show, however, that the onset of mortality improvements among scholars in medicine was delayed, possibly because these scholars were exposed to pathogens and did not have germ theory knowledge that might have protected them. The disadvantage among medical professionals decreased toward the end of the nineteenth century.

Here is more from Robert Stelter, David de la Croix, and Mikko Myrskylä.  Via the excellent Kevin Lewis.

The influence of hidden researcher decisions in applied microeconomics

by  Tyler Cowen in

Another one from the Department of Uh-Oh:

Researchers make hundreds of decisions about data collection, preparation, and analysis in their research. We use a many‐analysts approach to measure the extent and impact of these decisions. Two published causal empirical results are replicated by seven replicators each. We find large differences in data preparation and analysis decisions, many of which would not likely be reported in a publication. No two replicators reported the same sample size. Statistical significance varied across replications, and for one of the studies the effect’s sign varied as well. The standard deviation of estimates across replications was 3–4 times the mean reported standard error.

Here is the paper by numerous authors, via Scott Cunningham.

Are Americans getting worse?

by  Tyler Cowen in

Maybe so:

Morbidity and mortality have been increasing among middle-aged and young-old Americans since the turn of the century. We investigate whether these unfavorable trends extend to younger cohorts and their underlying physiological, psychological, and behavioral mechanisms. Applying generalized linear mixed effects models to 62,833 adults from the National Health and Nutrition Examination Surveys (1988-2016) and 625,221 adults from the National Health Interview Surveys (1997-2018), we find that for all gender and racial groups, physiological dysregulation has increased continuously from Baby Boomers through late-Gen X and Gen Y. The magnitude of the increase is higher for White men than other groups, while Black men have a steepest increase in low urinary albumin (a marker of chronic inflammation). In addition, Whites undergo distinctive increases in anxiety, depression, and heavy drinking, and have a higher level than Blacks and Hispanics of smoking and drug use in recent cohorts. Smoking is not responsible for the increasing physiological dysregulation across cohorts. The obesity epidemic contributes to the increase in metabolic syndrome, but not in low urinary albumin. The worsening physiological and mental health profiles among younger generations imply a challenging morbidity and mortality prospect for the United States, one that may be particularly inauspicious for Whites.

Here is the full article, via an excellent loyal MR reader.

Testing Todd

by  Tyler Cowen in

Emmanuel Todd, that is.  Here is a recent paper from Jerg Gutmann and Stefan Voigt:

Many years ago, Emmanuel Todd came up with a classification of family types and argued that the historically prevalent family types in a society have important consequences for its economic, political, and social development. Here, we evaluate Todd’s most important predictions empirically. Relying on a parsimonious model with exogenous covariates, we find mixed results. On the one hand, authoritarian family types are, in stark contrast to Todd’s predictions, associated with increased levels of the rule of law and innovation. On the other hand, and in line with Todd’s expectations, communitarian family types are linked to racism, low levels of the rule of law, and late industrialization. Countries in which endogamy is frequently practiced also display an expectedly high level of state fragility and weak civil society organizations.

Via the excellent Kevin Lewis.