Category: Uncategorized

In this paper, we argue that there was a strong link between the surge of support for the Socialist Party after World War I (WWI) and the subsequent emergence of Fascism in Italy. We first develop a source of variation in Socialist support across Italian municipalities in the 1919 election based on war casualties from the area. We show that these casualties are unrelated to a battery of political, economic and social variables before the war and had a major impact on Socialist support (partly because the Socialists were the main anti-war political movement). Our main result is that this boost to Socialist support (that is “exogenous” to the prior political leaning of the municipality) led to greater local Fascist activity as measured by local party branches and Fascist political violence (squadrismo), and to significantly larger vote share of the Fascist Party in the 1924 election. We document that the increase in the vote share of the Fascist Party was not at the expense of the Socialist Party and instead came from right-wing parties, thus supporting our interpretation that center-right and right-wing voters coalesced around the Fascist Party because of the “red scare”.

That is from a new paper by Daron Acemoglu, Giuseppe De Feo, Giacomo De Luca, and Gianluca Russo.

1. Were the experts too slow to embrace travel restrictions? (NYT)  And the Covid culture that is German (short video).

2. Does personality drive moral judgement?: Polite deontologists and curious consequentialists.

3. My rewrite of this thread: doctors hate highly beneficial but somewhat inaccurate testing methods that lower their status and good feelings about themselves.

4. Further results on “dry tinder” in the Nordics: “My results show that a large share of the excess mortality in Sweden in April 2020 may be partially explained by a vulnerable, elderly population due to very mild flu seasons in 18/19 and 19/20 as well as very few deaths during the 2019 summer compared to earlier years and compared to other Nordic countries.”

5. John Cochrane on political diversity in the AEA.

6. NASA tests new $23M titanium space toilet.

7. Do we find herd immunity in the NYC data?

1. Slate Star Codex now a series of hardcover books on Amazon.

2. Liberties, a new journal of culture and politics.

3. Talk/video on the new fusion developments, and more here.

4. How did the DOE’s first crop of risky energy tech do?  Original research here.

5. The major genetic risk factor for severe COVID-19 is inherited from Neanderthals.  And some useful context.  And Peter Hessler on the Chinese vaccine (New Yorker).

The latest MRU video in our series Economists in the Wild features Orley Ashenfelter talking about his research on wine. One thing I hadn’t known is that Orley used his regressions to figure out that New Jersey was actually a great place to start a vineyard, and he did! See also the results from the Judgment of Princeton.

Here’s a free assignment to help connect this video to class: https://mru.io/1a6ba

Regression analysis assignment: https://mru.io/d8194

More professor resources: http://mru.io/professor-resources-5e7df

High school teacher resources: https://mru.io/high-school-resources-27767

1. Now they are cancelling parrots.  And there is no satire anymore.  Or is it Straussian?

2. Oakland airport wants to attract passengers with free rapid Covid testing.

3. Should Matt Yglesias go on the warpath against car seats?

4. Virtual work partners to help you focus.

5. Survey of the evidence on declining Covid death rates.  And here is yet further evidence on the relevance of T-cells.  And new Covid results from lots of Indian data (NYT).

6. 15-minute test coming to Europe (Bloomberg).

7. Good thread on the new fusion developments.

The Richmond Fed has a nice review of Reston, VA and Columbia, MD, two of the first private towns in the United States.

Reston was “not just a building project but a whole new way of living.” Practically, this meant dense, mixed-use development that was not permissible under the existing zoning code in Fairfax County, Va. Although the county was resistant at first, it ultimately created a new zoning code that rejected the single-use standard of the day and allowed for a mix of single-family homes, apartments, condominiums, commercial development, recreational facilities, and open spaces in proximity to one another.

…Fifty miles northeast, Columbia, Md., was unveiled on June 21, 1967. This new town was the brainchild of James Rouse, a real estate developer, urban planner, civic activist, and philanthropist. Like Reston, Columbia was built on a vision of livability and integration. Its motto, “The Next America,” was meant to capture Rouse’s hope that the community could serve as an example of pragmatic utopianism for other communities across the nation — that is, an example of social interaction and harmony that, in Rouse’s words, could provide “an alternative to the mindlessness, the irrationality, the unnecessity of sprawl and clutter as a way of accommodating the growth of the American city.”

Both Reston and Columbia have been consistently ranked as two of the best towns to live in the United States. One bit I didn’t know, was that both Reston and Columbia were integrated from the beginning:

In the mid-1960s, Doris Briggs and her four children drove the 700 miles from Chicago to Virginia in her Chevrolet in pursuit of a new life. Briggs would later recall, “Everybody said, ‘Don’t do it, don’t do it, you have no friends.’ I said I have friends everywhere. And I had my faith, had my four children, and I knew it was going to be a better life for me.” Their destination, Reston, Va., promised a community-centered alternative to modern suburbia that was inclusive of black families like the Briggses — well before the Fair Housing Act of 1968 made housing discrimination illegal.

Addendum: Here’s my NYTimes op-ed with Shruti Rajagopalan, Designing Private Cities Open to All.

1. Beetle technician.  Rat tickler: “it’s crucial for researchers to know whether the animals are having a positive or negative experience.”

2. No central original point here, but this paper is actually an extremely useful piece for understanding currency risk.  And Captain Beefheart’s ten commandments of guitar playing.

3. “Surprisingly, we document that innovation was resilient in the face of one of the largest financial crises in the U.S. history, suggesting that it is likely to be even more so during milder economic recessions.”  Link here.  One plausible way of reading the result is that independent inventors were damaged, but their efforts were reallocated into firms, which improved by a result.

4. Buried lakes on Mars?

5. An actual scientific study of intermittent fasting suggests no real benefit and loss of muscle mass.

6. “With more of us than ever working from home during the coronavirus pandemic, there has been a spike in demand from employers for surveillance software. US-based Hubstaff says its number of UK customers is up four times year-on-year since February.”  Link here.

Benjamin Jones and Larry Summers have an excellent new paper calculating the returns to social innovation.

This paper estimates the social returns to investments in innovation. The disparate spillovers associated with innovation, including imitation, business stealing, and intertemporal spillovers, have made calculations of the social returns difficult. Here we provide an economy-wide calculation that nets out the many spillover margins. We further assess the role of capital investment, diffusion delays, learning-by-doing, productivity mismeasurement, health outcomes, and international spillovers in assessing the average social returns. Overall, our estimates suggest that the social returns are very large. Even under conservative assumptions, innovation efforts produce social benefits that are many multiples of the investment costs.

What was interesting to me is that their methods of calculation are obvious, almost trivial. It can take very clever people to see the obvious. Essentially what they do is take the Solow model seriously. The Solow model says that in equilibrium growth in output per worker comes from productivity growth. Suppose then that productivity growth comes entirely from innovation investment then this leads to a simple expression:

Where g is the growth rate of output per worker (say 1.8% per year), r is the discount rate (say 5%), and x/y is the ratio of innovation investment, x, to GDP, y, (say 2.7%). Plugging the associated numbers in we get a benefit to cost ratio of (.018/.05)/.027=13.3.

To see where the expression comes from suppose we are investing zero in innovation and thus not growing at all. Now imagine we invest in innovation for one year. That one year investment improves economy wide productivity by g% forever (e.g. we learn to rotate our crops). The value of that increase, in proportion to the economy, is thus g/r and the cost is x/y.

Jones and Summers then modify this simply relation to take into account other factors, some of which you have undoubtedly already thought of. Suppose, for example, that innovation must be embodied in capital, a new design for a nuclear power plant, for example, can’t be applied to old nuclear power plants but most be embodied in a new plant which also requires a lot of investment in cement and electronics. Net domestic investment is about 4% of GDP so if all of this is necessary to take advantage of innovation investment (2.7% of gdp), we should increase “required” to 6.7% of GDP which is equivalent to multiplying the above calculation by 0.4 (2/7/6.7). Doing so reduces the benefit to cost ratio to 5.3 which means we still get a very large internal rate of return of 27% per year.

Other factors raise the benefit to cost ratio. Health innovations, for example, don’t necessarily show up in GDP but are extremely valuable. Taking health innovation cost out of x means every other R&D investment must be having a bigger effect on GDP and so raises the ratio. Alternatively, including health innovations in benefits, a tricky calculation since longer life expectancy is valuable in itself and raises the value of GDP, increases the ratio even more. (See also Why are the Prices So Damn High? on this point). International spillovers also increase the value of US innovation spending.

Bottom line is, as Jones and Summers argue, “analyzing the average returns from a wide variety of perspectives suggests that the social returns [to innovation spending] are remarkably high.”