Category: Uncategorized
Saturday assorted links
Human Capital Accumulation in China and India in 20th Century
By Nitin Kumar Bharti and Li Yang:
Abstract. The education system of a country is instrumental in its long-run development. This paper compares the historical evolution of the education systems in the two largest emerging economies- China and India, between 1900 and 2018. We create a novel time-series data of educational statistics related to enrolment, graduates, teachers and expenditure based on historical statistical reports. China adopted a bottom-up approach in expanding its education system, compared to India’s top-down approach in terms of enrolment. While India had a head-start in modern education, it has gradually been overtaken by China- at Primary education in the 1930’s Middle/Secondary level in the 1970s and Higher/Tertiary level in the 2010s. It resulted in the lower cohort-wise average education and higher education inequality in India since 1907. Vocational education is a central component of the Chinese education system, absorbing half of the students in higher education. In India, the majority of the students pursue traditional degree courses (Bachelors, Masters etc.), with 60% in Humanities courses. Though India is known as the “land of engineers”, China produces a higher share of engineers. We conjecture that the type of human capital in China through engineering and vocational education helped develop its manufacturing sector. Utilizing micro-survey data since the 1980s, we show that education expansion has been an inequality enhancer in India. This is due to both the unequal distribution of educational attainment and higher individual returns to education in India.
Interesting throughout, via Pseudoerasmus.
Higher education is getting cheaper
That is the topic of my latest Bloomberg column, here is one excerpt:
There are a lot of numbers, but here is the comparison I find most impressive: Adjusting for grants, rather than taking sticker prices at face value, the inflation-adjusted tuition cost for an in-state freshman at a four-year public university is $2,480 for this school year. That is a 40% decline from a decade ago…
As might be expected, the trajectory for student debt is down as well. About half of last year’s graduates had no student debt. In 2013, only 40% did. That famous saying from economics — if something cannot go on forever, it will stop — is basically true. Due to changes in the formula, aid for Pell Grants is up, which helps to limit both student debt and the expenses of college.
Is quality going down? Probably a bit, but with a caveat:
,,,various adjustments kick in to limit the scope of the potential damage. Rather than cutting classes in computer science, a university might decide (as mine did) not to field a football team. Or a school might rely less on full-time professors and more on adjuncts. That is often a negative, but again schools can and do adjust, for instance by paying their adjuncts more and putting more effort into finding and keeping the good ones. A school might also reduce courses that attract few students and put more emphasis on subject areas with high enrollments.
Granted, none of this is ideal. But such adjustments can keep much of the damage at manageable levels. Many schools also are easing off their DEI bureaucracies.
And students will make adjustments of their own. If their classes give them less than what they want, they may turn more to the internet — to online education or, these days, AI. To argue that a large-language model is not as good as a professor is to miss the point. These innovations only have to make up some of the marginal deteriorations of quality.
With apologies to Peter Thiel, I believe U.S. higher education is going to muddle through.
Where they are headed
The Australian government has pledged to legislate an age limit of 16 years for social media access, with penalties for online platforms that do not comply.
But the Labor government has not spelled out how it expects Facebook, Instagram, TikTok and others to actually enforce that age limit. Anthony Albanese is facing pressure from the Coalition opposition to rush the bill through parliament in the next three weeks, although a federal trial into age assurance technology has not yet commenced.
Albanese and the communications minister, Michelle Rowland, did not rule out the potential for social media users to have their faces subject to biometric scanning, for online platforms to verify users’ ages using a government database, or for all social media users – regardless of age – being subject to age checks, only saying it would be up to tech companies to set their own processes.
Here is the full story. Keep in mind this move, if applied consistently, would eliminate anonymous postings. It also would have to be enforced across a very large number of apps, even for Meta alone. Should everyone’s biometrics be put into what might be China-hackable form? And it means the government — not the parents — is deciding the proper level of social media access for children.
Are the major social media critics for this? Against it? Or are they not so keen to say, one way or the other?
Friday assorted links
The economics of U.S. LNG exports
I assess the climate impact of granting federal approval to all proposed U.S. liquified natural gas (LNG) export terminal projects, which would double U.S. export capacity by 2030. Results indicate a net decrease in global emissions through 2070, primarily due to higher local gas prices in the U.S., leading to lower domestic gas generation and accelerated renewable adoption.
That is from the job market paper of Constanza Abuin, from Harvard University.
Do you want a Democratic or Republican doctor?
Political polarization is increasingly affecting policymaking, but how is it influencing professional decision-making? This paper studies the differences in medical practice between Republican and Democratic physicians over 1999-2019. It links physicians in the Medicare claims data with their campaign contributions to determine their partyalignment. In 1999, there were no partisan differences in medical expenditure perpatient. By 2019, Republican physicians are now spending 13% more, or $70 annually per patient. We analyze four potential sources of this partisan difference: practice characteristics (i.e., specialization and location), patient composition, preferences for financial gain, and beliefs about appropriate care. Even among physicians in the same specialty and location treating patients for the same condition, Republican physicians spend 6% more, especially on elective procedures. Using a movers design, we also find large partisan differences for treating the same patient. We find no evidence that these partisan differences are driven by profit incentives. Instead, the evidence points to diverging beliefs. Republican physicians adhere less to clinical guidelines, consistent with their reported beliefs in prior surveys. The timing of the divergence matches the politicization of evidence-based medicine in Congress. These results suggest that political polarization may lead to partisan differences in the beliefs and behavior of practitioners.
That is from the job market paper of Woojin Kim from UC Berkeley. I found this one of the most interesting job market papers of this year.
The 92nd St. Y
Income Inequality
Robert Kuttner and Tyler Cowen in conversation, moderated by Jeff Greenfield
Thursday assorted links
More market price reactions
Market up like crazy (especially small caps),
1. Freddie Mac (FMCC) and Fannie Mae (FNMA) stocks just gained 35% and 30% respectively on the 2024 election news
https://x.com/Jon_Hartley_/status/1854278771546968569
2. Retail, solar and cannibis stocks all down.
https://x.com/Jon_Hartley_/status/1854286070000861638
While the overall stock market today gained on election news of market friendly regulatory and tax policies in the coming Trump Admin and Republican Senate & House (S&P500 +2.53%, Russell 2000 +5.84%), retail stocks, solar stocks and cannabis stocks all declined today amidst expectations of new tariffs, receding green energy subsidies, and failed cannabis legalization: Retail stocks: DLTR -6.5%, DG -5.1%, NKE -3.4%, YETI -3.0%, FIVE -9.9% Solar stocks: RUN -29.6%, SEDG -22%, ENPH -17%, FSLR -10% Cannabis stocks: CURA -30%, CGC -21%, TLRY -13%, CRON -7.1%
That is from Jon Hartley.
What I’ve been reading
1. Edwin Frank, Stranger Than Fiction: Lives of the Twentieth Century Novel. Very good short portraits of various classic novels, including Machado de Assis, Mann’s Magic Mountain, Dr. Moreau, Carpentier, Perec, and others. At this point I am usually sick of such books but this one I stuck with as it is rewarding throughout.
2. Peter Doggers, The Chess Revolution: From the Ancient World to the Digital Age, is a good book, though it is mostly interior to my current knowledge set.
3. Rebecca Charbonneau, Mixed Signals: Alien Communication Across the Iron Curtain. This book fit well into my recent “Soviet science” reading program. This is more of a “Cold War” book than a “UFO book.” And I learned the full saga behind the Byrds song “C.T.A. – 102” for the first time.
4. Geoffrey Wawro, The Vietnam War: A Military History, is the single best book on its topic and is both intelligent and highly readable.
Coming in 2025 is David Spiegelhalter, The Art of Uncertainty: How to Navigate Chance, Ignorance, Risk and Luck.
The Legacy of Robert Higgs, edited by Christopher J. Coyne, is a very good collection for those interested in the topics Bob worked on.
Louis Kaplow, law and economics professor at Harvard, rethinks merger analysis in Rethinking Merger Analyses.
I have not yet had a chance to start Agustina S. Paglayan, Raised to Obey: The Rise and Spread of Mass Education.
John Cassidy has a forthcoming collection of readings, Capitalism and its Critics, A History: From the Industrial Revolution to AI.
The market price reactions
The dollar surged by its most in two years and Wall Street was poised for big gains as Donald Trump’s historic US election victory sent investors around the world scrambling to price in a new regime of trade tariffs and tax cuts.
The US currency raced higher against the euro, the yen and the pound on Wednesday as traders returned to so-called “Trump trades” in expectation that the president-elect’s plans on tariffs and taxes would boost stocks, push up inflation and reduce the pace of interest rate cuts.
Wall Street was also on course for firm gains at Wednesday’s open, with futures on the S&P 500 index climbing 2 per cent and the Nasdaq 100 up 1.3 per cent.
That is from the FT. Bitcoin is up, and VIX is down.
Rising in status
1. Prediction markets
2. Competitive primary elections
3. Elon
4. French whales
5. The integrity of the American electoral system
6. J.D. Vance
7. The word “trifecta”
8. Twitter
9. Podcasts
10. Long podcasts
11. The Amish
12. Men
What else?
You don’t have to like all of those outcomes, but that is my assessment. Sometimes I do a “Falling in Status” companion post, but I feel any reasonable approach to that one would be mean-spirited, so I will leave it aside.
Political Sorting in the U.S. Labor Market
That is the central topic of the job market paper of Sahil Chinoy from Harvard University. Here is the abstract:
We study political sorting in the labor market and examine its sources. Merging voter file data and online résumés to create a panel of 34.5 million people, we show that Democrats and Republicans choose distinctive career paths and employers. This leads to marked segregation at the workplace: a Democrat or Republican’s coworker is 10% more likely to share their party than expected. Then, we ask whether segregation arises because jobs shape workers’ politics or because workers’ politics shape their job choices. To study the first, we use a quasi-experimental design leveraging the timing of job transitions. We find that uncommitted workers do adopt the politics of their workplace, but not workers who were already registered Democrats or Republicans. The average effect is too small to generate the segregation we document. To study the second, we measure the intensity of workers’ preferences for politically compatible jobs using two survey experiments motivated by the observational data. Here, we find that the median Democrat or Republican would trade off 3% in annual wages for an ideologically congruent version of a similar job. These preferences are strong enough to generate segregation similar to the observed levels.
Co-authored with Martin Koenen, also a job market candidate from Harvard. Koenen’s other papers, at the link, look very interesting too.
Artificial Intelligence, Scientific Discovery, and Product Innovation
This paper studies the impact of artificial intelligence on innovation, exploiting the randomized introduction of a new materials discovery technology to 1,018 scientists in the R&Dlab of a large U.S. firm. AI-assisted researchers discover 44% more materials, resulting in a 39% increase in patent filings and a 17% rise in downstream product innovation. These compounds possess more novel chemical structures and lead to more radical inventions. However, the technology has strikingly disparate effects across the productivity distribution: while the bottom third of scientists see little benefit, the output of top researchers nearly doubles. Investigating the mechanisms behind these results, I show that AI automates 57% of “idea-generation” tasks, reallocating researchers to the new task of evaluating model-produced candidate materials. Top scientists leverage their domain knowledge to prioritize promising AI suggestions, while others waste significant resources testing false positives. Together, these findings demonstrate the potential of AI-augmented research and highlight the complementarity between algorithms and expertise in the innovative process. Survey evidence reveals that these gains come at a cost, however, as 82% of scientists report reduced satisfaction with their work due to decreased creativity and skill underutilization.
That is from a new paper by Aidan Toner-Rodgers. Via Kris Gulati.