Poor New Jersey the benefits of self-service gasoline
Most of the world’s population lives in countries that ban the self-service sale of gasoline. Causal effects of this regulation can hardly be assessed in these countries due to a lack of policy changes, but a recent quasi-experiment in the state of Oregon allows us to analyze the impact of the ban. From 1992 to 2017, the state of Oregon was one of two US states that banned self-service at gasoline stations. Oregon adjusted regulations at the start of 2018 to allow self-service at gasoline stations in counties with populations below 40,000 individuals. I examine the repeal of this self-service ban and its effects on gasoline prices. I apply a difference-in-differences design using high frequency data of gasoline prices and find that repealing the self-service ban reduced gasoline prices by 4.4 cents per gallon in affected Oregon counties. This effect represents approximately $90 in expected annual savings for a household with three licensed drivers. The results are statistically significant in all specifications and are essential to the policy debate on whether to keep self-service bans in U.S. states and countries with the same regulation.
That is from Vitor Melo at Clemson University, via the excellent Kevin Lewis.
Air Pollution and Student Performance in the U.S.
We combine satellite-based pollution data and test scores from over 10,000 U.S. school districts to estimate the relationship between air pollution and test scores. To deal with potential endogeneity we instrument for air quality using (i) year-to-year coal production variation and (ii) a shift-share instrument that interacts fuel shares used for nearby power production with national growth rates. We find that each one-unit increase in particulate pollution reduces test scores by 0.02 standard deviations. Our findings indicate that declines in particulate pollution exposure raised test scores and reduced the black-white test score gap by 0.06 and 0.01 standard deviations, respectively.
That is from Michael Gilraine and Angela Zheng. Maybe you, like me, do not find any one of these studies to be a real clincher. But please do reread Alex on the sum total of the evidence…and here.
And yet another part of Colombia’s political spectrum
Earlier I considered the leading left-wing candidate, here (FT) is the insurgent, 77-year-old populist right-wing candidate Rodolfo Hernández:
Straight-talking and sometimes abrasive, Hernández is prone to gaffes. In an interview in 2016 he described himself as “a follower of a great German thinker, Adolf Hitler”, only to correct himself later and say he confused Hitler with Albert Einstein. As mayor, he angered Bucaramanga’s firefighters by lambasting them as “fat and lazy”.
Perhaps in the broader world something structural is afoot?
Job security is not getting worse
There is a widespread belief that work is less secure than in the past, that an increasing share of workers are part of the “pprecariat”. It is hard to find much evidence for this in objective measures of job security, but perhaps subjective measures show different trends. This paper shows that in the US, UK, and Germany workers feel as secure as they ever have in the last thirty years. This is partly because job insecurity is very cyclical and (pre-COVID) unemployment rates very low, but there is also no clear underlying trend towards increased subjective measures of job insecurity. This conclusion seems robust to controlling for the changing mix of the labor force, and is true for specific sub-sets of workers.
That is from Alan Manning and Graham Mazeine, forthcoming in the Review of Economics and Statistics. Via the excellent Kevin Lewis.
Sunday assorted links
Testing Freedom
I did a podcast with Brink Lindsey of the Niskanen Center. Here’s one bit on the FDA’s long-history of banning home tests:
Brink Lindsey: …it’s on the rapid testing that we had inexplicable delays. Rapid tests, home tests were ubiquitous in Europe and Asia months before they were in the United States. What was going on?
Alex Tabarrok: So I think it’s not actually inexplicable because the FDA has a long, long history of just hating people testing themselves. So the FDA was against pregnancy tests, they didn’t like that, they said women they need to consult with a doctor, only the physician can do the test because literally women could become hysterical if they were pregnant or if they weren’t pregnant, this was a safety issue. There was no question that the test itself was safe or worked. Instead what the FDA said, “We can regulate this because the user using it, this could create safety issues because they could commit suicide or they could do something crazy.” So they totally expanded the meaning of safety from is the test safe to can somebody be trusted to use a pregnancy test?
Then we had exactly the same thing with AIDS testing. So we delayed personal at-home tests for AIDS for literally 25 years. 25 years these tests were unavailable because the FDA again said, “Well, they’re dangerous.” And why are they dangerous? “Well, we don’t know what people will do with this knowledge about their own bodies.” Now, of course, you can get an HIV test from Amazon and the world hasn’t collapsed. They did the same thing with genetic tests from companies like 23andMe. So I said, “Our bodies ourselves, our DNA ourselves.” That people have a right to know about the functioning of their own bodies. This to me is a very clear violation of the Constitutions on multiple respects. It just stuns me, it just stuns me that anybody could think that you don’t have a right to know, we’re going to prevent you from learning something about the operation of your own body.
Again, the issue here was never does the test work. In fact, the labs which produce these tests, those labs are regulated outside of the FDA. So whether the test actually works, whether yes, it identifies this gene, all issues of that nature, what is the sensitivity and the specificity, are the tests produced in a proper laboratory, I don’t have a lot of problem with that because that’s all something which the consumers themselves would want. What I do have a problem with is then the FDA saying, “No, you can’t have access to this test because we don’t know what you’re going to do about it, what you’re going to think about it.” And that to me is outrageous.
Here’s the full transcript and video.
The stuff of horror movies?
Though the trend is a positive one:
We study the intergenerational persistence of inequality by estimating grandmother-mother associations in the loss of a child, using pooled data from 119 Demographic and Health Surveys in 44 developing countries. Compared with compatriots of the same age, women with at least one sibling who died in childhood face 39% higher odds of having experienced at least one own-child death, or 7 percentage points at age 49. Place fixed effects reduce estimated mortality persistence by 47%; socioeconomic covariates explain far less. Within countries over time, persistence falls with aggregate child mortality, so that mortality decline disproportionately benefits high-mortality lineages.
That is from a new NBER working paper by Frances R. Lu and Tom Vogl.
Baby bust in India?
One of the most consequential statistic passed by without much noise.
India's total fertility rate fell below population replacement rate to 2.0, with many states far below that level, thanks to effective campaigns around family planning & contraception. https://t.co/hN65hiFEsc pic.twitter.com/fDSIMl3j5F
— Arvind P. Ravikumar (@arvindpawan1) May 19, 2022
Via Noah Smith.
Saturday assorted links
1. A curanto!
2. Does altruism predict mating success in humans?
4. Patrick McKenzie on stablecoins.
5. Podcast with Josh Barro on Talent.
6.What is the best way to find a talented four-year-old? (NYT)
7. Apollo Academic Surveys. Shall we give higher status to the opinions of academics?
Interland: A New Type of Government
Max Tabarrok has an interesting new idea for governance, Interland:
Interland takes the intersection of the law codes of a large group of nations. This will produce a minimal reasonable set of laws which is highly resistant to lobbying and growth.
Anyone who wants to add a new agricultural subsidy, building height limit, or immigration restriction has to convince everyone in this group to add it before it passes in Interland. This makes the institutions of the country consistent and durable.
Durability is only good if the thing that’s lasting is also good. We have several reasons to expect this to be the case for Interland’s institutions. First, Interland will have a shorter list of statutes and regulations than any other country in its group. This isn’t unconditionally good, but since the mechanisms of democracy are likely to overproduce rules it’s the directionally correct adjustment. Even better is that all of the laws that Interland does have will be more universally supported than most of the laws in other nations, since they are by definition the set of laws that many nations agree on. As more countries are added to the intersection, Interland’s law code would be further distilled into human universals. Finally, Interland will be the freest nation on earth. Anything which is allowed by any member of the intersection will also be allowed in Interland.
Importantly, Interland’s constitution will be positively constructed. This means it will be a list of all of the things the government can do, and anything not listed is not within the government’s authority. This is in contrast to parts of the American constitution and Bill of Rights which define government authority by tracing the negative space that its authority cannot cross, but there was significant debate over which method was best during the drafting of the American constitution.
So what sorts of laws would Interland have? All nations share a lot of their basic criminal code. Murder, theft, and rape are all illegal in every country so they’d be illegal in Interland. Abortion, homosexuality, multi-family, and multi-use construction would not be illegal although many countries outlaw them. Nuclear power construction would be much easier thanks to the laws of France and South Korea, and almost all drugs would be legal or at least decriminalized.
…Interland’s taxation and spending would be minimal, mirroring nations like Hong Kong, Singapore, and Luxemburg. But by all accounts these nations have effective and comprehensive public services. Unfortunately in the eyes of some and thankfully for others, Interland would have a state police force, a public road network (although toll roads would be allowed), public parks, and libraries.
Read the whole thing for some discussion of other issues and limitations.
I think this is a compelling idea. Establishing a new country is difficult, of course, but the ideas of interland can be applied to already existing countries or sub-countries. A US state, for example, could declare itself an interland–Interland: New Mexico–and pledge to adopt only those laws that every other state has adopted. A country in the OECD or EU could declare itself an interland and so forth.
The code of Interland could also be useful in and of itself as a reference point. If we had an Interland database one could compare how close or far countries are to Intereland and in what respects they differ. Interland could be a virtual country and a model code–a country and code to which other countries can aspire to much like the Uniform Law Code.
Viva Interland!
Should art prices be booming?
That is the topic of my latest Bloomberg column, here is one bit:
Recently an Andy Warhol painting sold at auction for $195 million, the highest price ever for a 20th century artwork. A dance hall-themed painting by Ernie Barnes went for $15.3 million, 76 times the original estimate. The Macklowe collection sold at Sotheby’s for $246.1 million, the most ever for a single collection.
And:
First, savings are still high due to stinted consumption from the pandemic. And many of the wealthy have been buying additional homes and wish to furnish them with art.
Second, the recent run-up in inflation rates around the world has intensified the search for hedges. There are few true inflation hedges, and crypto now has been knocked out of that role. But art can serve as an inflation hedge in almost any environment.
Art gives its owners the pleasure of looking at it on their wall, and no rate of inflation can take that away. It is both an investment and a form of consumption, and the latter is quite protected against any macroeconomic conditions. When all else fails, spending money is one surefire inflation hedge. Art also happens to be a durable asset, so the expenditure is not entirely wasteful.
Art isn’t always about the enjoyment of the buyer. Many art collectors, especially in the upper tiers of the market, keep their art in tax-free storage and use it to make questionable donations to charity, “flip” it for a fast profit or resell it on the “gray market.” I don’t approve of these methods, but they too can be lucrative in a volatile market where valuations are more subjective.
Scheduled Maintenance
Expect some temporary issues as we undergo scheduled maintenance.
Addendum: All done! Do see Elon’s news in the comments.
Colombian sentences to ponder
His close colleague, fellow senator Iván Cepeda, says Petro’s ideas transcend traditional left-right boundaries. “He has been inspired by many sources . . . he has a solid Marxist foundation but has also read a lot of French post-structuralism and other political traditions. He is also a serious economist . . . who has read thinkers like Naomi Klein and is in dialogue with [French economist Thomas] Piketty”.
And this:
If Petro wins in Colombia and if, as recent polls suggest, former Brazilian president Luiz Inácio Lula da Silva pulls off what would be a momentous comeback victory in October, the seven most populous nations in Latin America — Brazil, Mexico, Colombia, Argentina, Peru, Venezuela and Chile — will all be under leftwing rule.
Here is more from the FT.
Friday assorted links
The Demand and Supply of Misinformation
Bryan Caplan reminds us that misinformation wouldn’t work well if people weren’t so irrational.
The [standard misinformation] story focuses exclusively on the flaws of speakers, without acknowledging the flaws of the listeners. Misinformation won’t work unless the listeners are themselves naive, dogmatic, emotional, or otherwise intellectually defective. In economic jargon, the problem is that the story mistakes an information problem for a rationality problem.
The motivation for this crucial omission is fairly obvious. Blaming listeners for their epistemic vices sounds bad. It makes the accuser sound elitist, if not arrogant. Blaming a few high-status liars for the world’s problems is a lot more compatible with Social Desirability Bias than blaming billions of low-status fools who fail to choose to exercise their common sense.
I agree but it’s an equilibrium process. The demand and supply of misinformation both matter. Moreover, it’s not implausible that social media has increased the supply of misinformation, essentially because it has greatly accelerated the evolution of memes. As Dawkins taught us, memes evolve like genes but in the past memes evolved like rabbits, more rapidly than human beings but not so rapid that we couldn’t keep up. Now memes evolve like viruses, mind viruses. Even worse we have made improving memes profitable so we have capitalist energy added to faster random mutation.
I am somewhat hopeful that social media hit us hard because it was novel. A generation raised on social media may have more natural immunity–assuming we survive the infection. I also encourage (as does Bryan) institutions like betting markets to raise the price of misinformation (a bet is a tax on bullshit). Betting markets and expert aggregation markets like Metacuulus can help. We should invest more in the support and prestige of tools for developing rational consensus. More generally, if we can’t raise the cost of misinformation, better tools to aid our limited rationality could reduce the demand.