Results for “becker”
166 found

Money lending and the origins of anti-Semitism

We study the role of economic incentives in shaping the coexistence of Jews, Catholics, and Protestants, using novel data from Germany for 1,000+ cities. The Catholic usury ban and higher literacy rates gave Jews a specific advantage in the moneylending sector. Following the Protestant Reformation (1517), the Jews lost these advantages in regions that became Protestant. We show (i) a change in the geography of anti-Semitism with persecutions of Jews and anti-Jewish publications becoming more common in Protestant areas relative to Catholic areas; (ii) a more pronounced change in cities where Jews had already established themselves as moneylenders. These findings are consistent with the interpretation that, following the Protestant Reformation, Jews living in Protestant regions were exposed to competition with the Christian majority, especially in moneylending, leading to an increase in anti-Semitism.

That is from a new AER piece by Sascha O. Becker and Luigi Pascali.

How Much Time Do Criminals Really Serve?

Many people were surprised at Paul Manafort’s relatively light sentencing for bank fraud, filing fake tax returns, and failure to report foreign assets and compared his sentence of 47 months to other cases of seemingly lesser crimes given longer prison terms. A viral tweet thread from public defender Scott Hechinger began:

For context on Manafort’s 47 months in prison, my client yesterday was offered 36-72 months in prison for stealing $100 worth of quarters from a residential laundry room.

Anecdotes, however, run the risk of misleading if they are not representative. The Bureau of Justice Statistics just released Time Served in State Prison 2016. Stealing laundry quarters sounds like larceny (no break in). The average time served for larceny was 17 months and the median time served was 11 months.

Hechinger also notes this outrageous case:

15 years in prison for drug possession. You shouldn’t need more info than that to be outraged. But then learn: Juanita is a mother of 6. Her 18 year old is now head of household. Raising 5 kids. Crime is not even a felony in Oklahoma anymore.

The average time served for drug possession was 15 months and the median time 10 months. Arguably too long but a far cry from 15 years.

For a serious violent crime like robbery, taking property by force or threat of force, the average time served was considerably higher, 4.7 years and the median time served 3.2 years.

You can see the table below for more data. Judge for yourselves, but for most crimes mean and median time served don’t seem to me to be obviously too high. Moreover, keep in mind that most crimes do not result in an arrest let alone a conviction or time served.

In 2017, for example, victims reported 2,000,990 serious violent crimes (rape or sexual assault, robbery, and aggravated assault). In the same year there were approximately 446,510 arrests for these crimes (crime definitions may not line up exactly). In other words, the chance of being arrested for a serious violent crime was only 22%. Data on convictions are harder to obtain but convictions are far fewer than arrests. In 2006 (most up-to-date data I could find but surely lower today) there were 175,500 convictions for serious violent crimes. Thus, considerably fewer than 10% of violent crimes result in a conviction (175,500/2,000,990=8.7%).

Put differently, the expected time served for a serious violent crime is less than 5 months*. Do you want to reduce expected time served? What I would like to do is put more police on the street to increase the certainty of arrest and conviction. If we double the conviction rate, I’d happily halve time served.

I support decriminalization of many crimes, shorter sentences for some crimes and fewer scarlet letter punishments. I want to reduce bias and variability in the criminal justice system. But I do not want to return to the crime rates of the past. Even as crime rates fall, we should be careful about declaring the war won and going home. We are under policed in the United States and despite anecdotes that rightly shock the conscience, average time served is not that high, especially given very low arrest and conviction rates.

* Using the normalized percent of total releases for rape, robbery and assault to form the weighted average. Corrected from an early version that said 14 months.

Thursday assorted links

1. Church forests in south Gonder.

2. What is it like to live without Google?

3. Classical liberalism in Venezuela.

4. Price theory summer camp at University of Chicago.

5. The welfare effects of social media, a new paper by Hunt Allcott, Luca Braghieri, Sarah Eichmeyer, and Matthew Gentzkow.  (On the road, have not had a chance to read it yet.)  And the NYT summary.  My guess is this is the best paper on social media/Facebook so far.

“Displacement in the Criminal Labor Market: Evidence from Drug Legalizations”

Legalizing drugs harms some black markets but spurs activities in others:

It is widely hypothesized that legalization disrupts illicit markets and displaces illegal suppliers,  but the consequences for those who are displaced remain poorly understood. In this paper, I use comprehensive administrative data from three states that legalized marijuana covering all individuals released from prison in the years immediately before and after the policy change to estimate the effect of legalization on the subsequent criminality of convicted dealers. I find that marijuana legalization increased the 9-month recidivism rate of marijuana offenders by 6 percentage points relative to a baseline rate of 10 percent. The increased recidivism is largely driven by a substitution to the trafficking of other drugs, which is consistent with a Becker-style model where individuals develop human capital specific to the drug industry. To learn about potential mechanism behind these results, I use detailed drug transaction price data to estimate the effect of legalization on average prices and price dispersion, and I find suggestive evidence that both the average level and residual variance decline following legalization, which is consistent with legalization eroding rents earned in the illicit marijuana market. Lastly, I explore the generalizability of my findings in a distinct legalization experiment from history: the end of National Prohibition. I replicate the main insights at an organizational level and show that, in response to the repeal of Prohibition, the Italian-American Mafia shifted personnel from bootlegging to narcotics. Overall, the results in this paper suggest that an unintended consequence of drug legalization is a re-allocation of drug criminals to other illicit activity.

That is from Heyu Xiong, who is currently on the job market from Northwestern.

My Fall Industrial Organization reading list

This is only part one for the class, do not panic over whatever you think might be completely left out. That said, suggested additions are welcome, here goes:

Competition

Bresnahan, Timothy F. “Competition and Collusion in the American Automobile Industry: the 1955 Price War,” Journal of Industrial Economics, 1987, 35(4), 457-82.

Bresnahan, Timothy and Reiss, Peter C. “Entry and Competition in Concentrated Markets,” Journal of Political Economy, (1991), 99(5), 977-1009.

Asker, John, “A Study of the Internal Organization of a Bidding Cartel,” American Economic Review, (June 2010), 724-762.

Whinston, Michael D., “Antitrust Policy Toward Horizontal Mergers,” Handbook of Industrial Organization, vol.III, chapter 36, see also chapter 35 by John Sutton.

“Benefits of Competition and Indicators of Market Power,” Council of Economic Advisors, April 2016.

Jan De Loecker and Jan Eeckhout, “The Rise of Market Power and its Macroeconomic Implications,” http://www.janeeckhout.com/wp-content/uploads/RMP.pdf.  My comment on it is here: https://marginalrevolution.com/marginalrevolution/2017/08/rise-market-power.html

Me on intangible capital, https://marginalrevolution.com/marginalrevolution/2017/09/intangible-investment-monopoly-profits.html.

Traina, James. “Is Aggregate Market Power Increasing?: Production Trends Using Financial Statements,” https://research.chicagobooth.edu/-/media/research/stigler/pdfs/workingpapers/17isaggregatemarketpowerincreasing.pdf

Shapiro, Carl. “Antitrust in a Time of Populism.” UC Berkeley, working draft from 24 October 2017, forthcoming in International Journal of Industrial Organization.

Klein, Benjamin and Leffler, Keith. “The Role of Market Forces in Assuring Contractual Performance.”  Journal of Political Economy 89 (1981): 615-641.

Breit, William. “Resale Price Maintenance: What do Economists Know and When Did They Know It?” Journal of Institutional and Theoretical Economics (1991).

Bogdan Genchev, and Julie Holland Mortimer. “Empirical Evidence on Conditional Pricing Practices.” NBER working paper 22313, June 2016.

Sproul, Michael.  “Antitrust and Prices.”  Journal of Political Economy (August 1993): 741-754.

McCutcheon, Barbara. “Do Meetings in Smoke-Filled Rooms Facilitate Collusion?”  Journal of Political Economy (April 1997): 336-350.

Crandall, Robert and Winston, Clifford, “Does Antitrust Improve Consumer Welfare?: Assessing the Evidence,”  Journal of Economic Perspectives (Fall 2003), 3-26, available at http://www.brookings.org/views/articles/2003crandallwinston.htm.

FTC, Bureau of Competition, website, http://www.ftc.gov/bc/index.shtml., an optional browse, perhaps read about some current cases and also read the merger guidelines.

Parente, Stephen L. and Prescott, Edward. “Monopoly Rights: A Barrier to Riches.”  American Economic Review 89, 5 (December 1999): 1216-1233.

Demsetz, Harold.  “Why Regulate Utilities?”  Journal of Law and Economics (April 1968): 347-359.

Armstrong, Mark and Sappington, David, “Recent Developments in the Theory of Regulation,” Handbook of Industrial Organization, chapter 27, also on-line.

Shleifer, Andrei. “State vs. Private Ownership.” Journal of Economic Perspectives (Fall 1998): 133-151.

Xavier Gabaix and David Laibson, “Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=728545. 

Strictly optional most of you shouldn’t read this: Ariel Pakes and dynamic computational approaches to modeling oligopoly: http://www.economics.harvard.edu/faculty/pakes/files/Pakes-Fershtman-8-2010.pdf

http://www.economics.harvard.edu/faculty/pakes/files/handbookIO9.pdf

 

Economics of Tech 

Farrell, Joseph and Klemperer, Paul, “Coordination and Lock-In: Competition with Switching Costs and Network Effects,” Handbook of Industrial Organization, vol.III, chapter 31, also on-line.

Weyl, E. Glenn. “A Price Theory of Multi-Sided Platforms.” American Economic Review, September 2010, 100, 4, 1642-1672.

Tech companies as platforms, Tyler Cowen chapter, to be distributed.

Gompers, Paul and Lerner, Josh. “The Venture Capital Revolution.” Journal of Economic Perspectives (Spring 2001): 145-168.

Paul Graham, essays, http://www.paulgraham.com/articles.html, and on Google itself, http://www.slate.com/blogs/blogs/thewrongstuff/archive/2010/08/03/error-message-google-research-director-peter-norvig-on-being-wrong.aspx

Acemoglu, Daron and Autor, David, “Skills, Tasks, and Technologies: Implications for Employment and Earnings,” http://econ-www.mit.edu/files/5607

Robert J. Gordon and Ian Dew-Becker, “Unresolved Issues in the Rise of American Inequality,”http://www.people.fas.harvard.edu/~idew/papers/BPEA_final_ineq.pdf

Song, Jae, David J. Price, Fatih Guvenen, and Nicholas Bloom. “Firming Up Inequality,” CEP discussion Paper no. 1354, May 2015.

Andrews, Dan, Chiara Criscuolo and Peter N. Gal. “Frontier firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries.”  OECD working paper, 2015.

Mueller, Holger M., Paige Ouimet, and Elena Simintzi. “Wage Inequality and Firm Growth.” Centre for Economic Policy Research, working paper 2015.

Readings on blockchain governance, to be distributed.

Haltiwanger, John, Ian Hathaway, and Javier Miranda. “Declining Business Dynamism in the U.S. High-Technology Sector.” Ewing Marion Kauffman Foundation, February 2014.

 

Organization and capital structure

Ronald Coase and Oliver Williamson on the firm, if you haven’t already read them, but limited doses should suffice.

Gibbons, Robert, “Four Formal(izable) Theories of the Firm,” on-line at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=596864.

Van den Steen, Eric, “Interpersonal Authority in a Theory of the Firm,” American Economic Review, 2010, 100:1, 466-490. 

Lazear, Edward P. “Leadership: A Personnel Economics Approach,” NBER Working Paper 15918, 2010.

Oyer, Paul and Schaefer, Scott, “Personnel Economics: Hiring and Incentives,” NBER Working Paper 15977, 2010.

Tyler Cowen chapter on CEO pay, to be distributed.

Cowen, Tyler, Google lecture on prizes, on YouTube.

Ben-David, Itzhak, and John R. Graham and Campbell R. Harvey, “Managerial Miscalibration,” NBER working paper 16215, July 2010.

Glenn Ellison, “Bounded rationality in Industrial Organization,” http://cemmap.ifs.org.uk/papers/vol2_chap5.pdf 

Miller, Merton, and commentators.  “The Modigliani-Miller Propositions After Thirty Years,” and comments, Journal of Economic Perspectives (Fall 1988): 99-158.

Myers, Stewart. “Capital Structure.” Journal of Economic Perspectives (Spring 2001): 81-102.

Hansemann, Henry.  “The Role of Non-Profit Enterprise.” Yale Law Journal (1980): 835-901.

Kotchen, Matthew J. and Moon, Jon Jungbien, “Corporate Social Responsibility for Irresponsibility,” NBER working paper 17254, July 2011.

Strictly optional but recommended for the serious: Ponder reading some books on competitive strategy, for MBA students.  Here is one list of recommendations: http://www.linkedin.com/answers/product-management/positioning/PRM_PST/20259-135826

 

Production

American Economic Review Symposium, May 2010, starts with “Why do Firms in Developing Countries Have Low Productivity?” runs pp.620-633. 

Dani Rodrik, “A Surprising Convergence Result,” http://rodrik.typepad.com/dani_rodriks_weblog/2011/06/a-surprising-convergence-result.html, and his paper here http://www.hks.harvard.edu/fs/drodrik/Research%20papers/The%20Future%20of%20Economic%20Convergence%20rev2.pdf

 Serguey Braguinsky, Lee G. Branstetter, and Andre Regateiro, “The Incredible Shrinking Portuguese Firm,” http://papers.nber.org/papers/w17265#fromrss. 

Nicholas Bloom, Raffaella Sadun, and John Van Reenen, “Recent Advances in the Empirics of Organizational Economics,” http://cep.lse.ac.uk/pubs/download/dp0970.pdf.

Nicholas Bloom, Raffaella Sadun, and John Van Reenen, the slides for “Americans do I.T. Better: US Multinationals and the Productivity Miracle,” http://www.people.hbs.edu/rsadun/ADITB/ADIBslides.pdf, the paper is here http://www.stanford.edu/~nbloom/ADIB.pdf but I recommend focusing on the slides.

Bloom, Nicholas, Raffaella Sadun, and John Van Reenen. “Management as a Technology?” National Bureau of Economic Research working paper 22327, June 2016.

Syerson, Chad “What Determines Productivity?” Journal of Economic Literature, June 2011, XLIX, 2, 326-365.

David Lagakos, “Explaining Cross-Country Productivity Differences in Retail Trade,” Journal of Political Economy, April 2016, 124, 2, 1-49.

Casselman, Ben. “Corporate America Hasn’t Been Disrupted.” FiveThirtyEight, August 8, 2014.

Decker, Ryan and John Haltiwanger, Ron S. Jarmin, and Javier Miranda. “Where Has all the Skewness Gone?  The Decline in High-Growth (Young) Firms in the U.S. National Bureau of Economic Research working paper 21776, December 2015.

Furman, Jason and Peter Orszag. “A Firm-Level Perspective on the Role of Rents in the Rise in Inequality.” October 16, 2015.

http://evansoltas.com/2016/05/07/pro-business-reform-pro-growth/

Furman, Jason. ”Business Investment in the United States: Facts, Explanations, Puzzles, and Policy.” Remarks delivered at the Progressive Policy Institute, September 30, 2015, on-line at https://m.whitehouse.gov/sites/default/files/page/files/20150930_business_investment_in_the_united_states.pdf.

Scharfstein, David S. and Stein, Jeremy C.  “Herd Behavior and Investment.”  American Economic Review 80 (June 1990): 465-479.

Stein, Jeremy C. “Efficient Capital Markets, Inefficient Firms: A Model of Myopic Corporate Behavior.” Quarterly Journal of Economics 104 (November 1989): 655-670.

 

Sectors: finance, health care, education, others

Gorton, Gary B. “Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007,” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1401882, published on-line in 2009. 

Erel, Isil, Nadault, Taylor D., and Stulz, Rene M., “Why Did U.S. Banks Invest in Highly-Rated Securitization Tranches?” NBER Working Paper 17269, August 2011. 

Healy, Kieran. “The Persistence of the Old Regime.” Crooked Timber blog, August 6, 2014.

More to be added, depending on your interests.

A Fine Theorem on Parag Pathak, the recent Clark winner

This award strikes me as the last remaining award, at least in the near term, from the matching/market design boom of the past 20 years. As Becker took economics out of pure market transactions and into a wider world of rational choice under constraints, the work of Al Roth and his descendants, including Parag Pathak, has greatly expanded our ability to take advantage of choice and local knowledge in situations like education and health where, for many reasons, we do not use the price mechanism. That said, there remains quite a bit to do on understanding how to get the benefits of decentralization without price – I am deeply interested in this question when it comes to innovation policy – and I don’t doubt that two decades from now, continued inquiry along these lines will have fruitfully exploited the methods and careful technique that Parag Pathak embodies.

The post is excellent throughout.

How can families afford children?

Collin asks:

Answer me the riddle: The richer the society becomes the less families can afford children? (Note look at India being at replacement level fertility and it is the rich areas bringing the average down.)

I have three boys and wonder how they are ever going to be able to afford a family of more than 1 children in 2030.

“Afford” is a tricky word here.  If the goal is simply to avoid bankruptcy, at the expense of the life satisfaction of the main child rearer (usually the wife), that isn’t so difficult for most Americans and Europeans.  But of course people wish to maximize utility.  And so here are some trends operating against having large numbers of children:

1. Jobs for women are higher-paying and more satisfying than ever before, and that raises the opportunity cost of having large families.

2. Divorce is these days socially imaginable, and for many people desirable if feasible.  The larger the number of children, the harder it is to take advantage of the divorce option, and so that too encourages smaller families.

3. Living space has become especially costly in so many of the major Western cities and suburbs.

4. Given the connection between where you live and your public school system, the very best neighborhoods have become very costly positional goods, in part because of their school systems and the embedded social peers for your kids (even if they bus away to private schools.)

5. Child care is subject to some version of the cost disease, as is higher education.  Those services have risen in relative prices and some would say they also have decreased in reliability.

6. These days, there is much more you can do for your single kid (or two), including fancy SAT tutors and unending extracurricular activities.  You thus are less likely to arrive at the “I can’t do any more for this kid, let’s summon up another to keep me busy” point than formerly was the case.  In Beckerian language, you always have the option of a greater investment in quality, in lieu of boosting quantity.

7. Daughters are no longer less popular than sons and arguably they have become somewhat more popular (NYT).  So the notion that you must keep on having kids until a son arrives is weaker than it used to be.  The first child is already a “quality child,” no matter what the gender.

8. Most Westerners are on the whole less religious, and this too diminishes the motives for having a larger number of children, for whatever reasons.

9. The decline of the extended family, with babysitting grandparents, is hardly new news.  Still, I suspect both work and leisure opportunities for the elderly have improved, which lowers their desire to babysit.  Some prefer watching those same babies on Facebook.

That’s a lot of weight operating against multiple children — praise to those who manage nonetheless!

Why don’t cities grow without limit?

In other words, why don’t they put everything into Atlanta or Los Angeles?  Paul Krugman has a good blog post on that topic, here is one of his points:

…once upon a time dispersed agriculture ensured that small cities serving rural hinterlands would survive. But for generations we have lived in an economy in which smaller cities have nothing going for them except historical luck, which eventually tends to run out.

Krugman suggests that eventually many smaller cities will indeed fade away, although the process of equilibration may be a long and slow one.  All of his points are well-founded, nonetheless I can see a few factors favoring the continuing existence of small cities on a greater scale than many might be expecting:

1. As Alex points out on Twitter, rents are permanently lower, and many people don’t value big city amenities very much.

2. Congestion is likely to be lower.  Why should the larger city have worse traffic if it has proportionately more roads?  That may require a blog post of its own, but part of the problem is geographic specialization within the larger city, which is not simply some number of smaller cities placed side by side.  In other words, sometimes you have to drive all the way across town.  Many people don’t like geographic specialization, but wish to find most everything in a small downtown or Walmart (or on Amazon).   From this point you can see that Amazon may favor larger cities more than small towns.  If it bugs you that in a large city all the shopping of a particular kind is on the other side of town, just order those goods on-line and stay within your cozy neighborhood.

3. Governance may become worse in a very large city.  Furthermore, separate and specialized lobbies, as would correspond to geographically specialized parts of a large city, may be a bad influence.  Here is a paper on the public choice of mega-city governance.

4. Very large, rich, and famous cities tend to become financial centers, or perhaps movie-making centers, and that is not in the interest of all city residents.  Some of this is a matter of rents, in other regards a matter of culture and ethos.  Anonymity also increases with size, as does (I think) sexual promiscuity.  Smaller locales will have more faux conformism and more real conformism too, which some people prefer.  People not wanting to live amongst all the specialization of major cities really is a significant and enduring factor in these comparisons.

5. If you are building a firm for eventual export success, you will prefer to put that firm in a larger city to begin with (“built to scale”).  That in turn tends to price out companies and people with less interest in exporting.  The larger city will become all that much more globally oriented, which not everyone will wish to pay for or even wish to have at zero price.

6. If I were offered an extra 50% of total salary (nominal, to make this comparison in real terms across all goods and services eliminates the very difference in locales) to move from Fairfax to Washington, D.C. (15-20 miles away), I would decline the offer.

7. The very fact that smaller cities are used to consume non-pecuniary amenities suggests their inhabitants are more diversified than it may appear at first.  The shift of gdp into services further enhances this diversification, and the new crop of semi-small cities may be more resilient than the older lot dependent on manufacturing.

8. A significant and enduring trend is the move into warmer and sunnier climates.  So while Rochester and Flint decline, Chattanooga and Birmingham are on the rise.  I predict the more time you spend in the South, the more optimistic you will be about small and mid-size cities.

9. Here is a good Duranton and Puga piece on the costs and benefits of city size.  Here is a short McKinsey piece on complexity as a limit on size.  Here is a discussion of city size in Civilization VI.

*An Economic Tour of the Weird: WTF?!*

That is the new Peter Leeson book, and it is just out.  Here is the Amazon summary:

This rollicking tour through a museum of the world’s weirdest practices is guaranteed to make you say, “WTF?!” Did you know that “preowned” wives were sold at auction in nineteenth-century England? That today, in Liberia, accused criminals sometimes drink poison to determine their fate? How about the fact that, for 250 years, Italy criminally prosecuted cockroaches and crickets? Do you wonder why? Then this tour is just for you!

Here are the book’s rather spectacular blurbs.  Here is a short Peter piece on medieval ordeals.  Here is a Reddit thread on whether medieval ordeals actually were an effective test of guilt.  And he has this piece on superstition and Friday the 13th in Newsweek.  I would like to see a media outlet excerpt his piece on the rationality of gypsy culture.

I would say that Peter has written a very effective book within the Beckerian tradition, namely trying to explain economic phenomena in terms of a neoclassical rational actor model.  Nonetheless I am much less of a Beckerian than Peter is, at least for the socially-oriented issues he is considering.  Here is a simple typology of approaches:

1. Beckerians and the rational actor model.  I slot Peter in here, along with many Chicago School economists, Marvin Harris, and much of public choice economics.  An explanation shows how a social outcome stems from the interaction of means-end maximizing individuals, translated into some aggregate result.

2. Behavioral economics.  By now this is old news, but these researchers find what I consider to be relatively small deviations from the rational actor model.  This is usually done by measurement, rather than through more complete models.

3. Cultural economics, anthropologists, and many sociologists.  Peer effects are paramount, and Frenchmen see the world differently than do Americans, not to mention Bantus or Pygmies.  This is due to a social contagion of perception that does not boil down to rationality in the sense that economists understand it (you can build a model in which social mimicry at young ages is rational, but that model won’t generate much insight into the particular phenomena we are trying to explain, nor does that model pick up the mimicry mechanism very well).  Historical study plus thick description plus economic rationality at various margins (but margins only) plus some statistics is the way to go.  Mostly we’re trying to understand how and why other groups of people see the world in fundamentally different terms.

The economists who can best grasp other points of view thus are the masters of explaining macro-phenomena (by which I mean something quite distinct from traditional macroeconomics).

I am much closer to #3 than are most economists.  Furthermore, I view economists as patting themselves excessively on the back for #2, when #3 is far more important.  Peter has written a very good book mostly in the tradition of #1, though due to his Austrian background with periodic forays into #3.  I once wrote to Peter: “Gypsy culture rational?  How about Episcopalian investment bankers in Connecticut being rational?”  Probably neither are.

What ever happened to “Feminist economics”?

I suspect most of you have followed (to varying degrees) the recent controversies over gender hostility in economics.  What I find striking is that hardly anyone has mentioned the movement known as “Feminist economics.”  And yes that is a formal thing, here is Wikipedia on “Feminist economics”:

Feminist economics is the critical study of economics including its methodology, epistemology, history and empirical research, attempting to overcome androcentric (male and patriarchal) biases. It focuses on topics of particular relevance to women, such as care work or occupational segregation (exclusion of women and minorities from certain fields); deficiencies of economic models, such as disregarding intra-household bargaining; new forms of data collection and measurement such as the Gender Empowerment Measure (GEM), and more gender-aware theories such as the capabilities approach.[1] Feminist economics ultimately seeks to produce a more gender inclusive economics.

There is much more to a very long, thoughtful, and well-documented entry, and feminist economics has been a recognized field or subfield since at least the early 1990s.  There is an entire refereed journal called…Feminist Economics.  There is a significant International Association for Feminist Economics.

Obviously “feminist economics” is a diverse area, but frequently I have seen the claim made that the very nature of economics keeps out women.  It is claimed there is too much emphasis on male modes of production, and sometimes also “male ways of thinking,” and thus economics must itself first reform before it has any chance at achieving gender parity.  There is also a common tendency to criticize Becker’s and other neoclassical theories of the family for reflecting so many implicit, underlying “male” assumptions about how families work or are supposed to work.

So yes, there is plenty awareness of overt discrimination, but writers coming from this approach see a lot of the problems as quite structural, and embedded in how economics is done.  It’s not only the attitudes of some of the male jerks.

Now you may or may not agree, or also you might feel uncomfortable with some of the levels of generalization you find in talk of “male ways of [xxxx].”  Still, many of those in Feminist economics see the structural point as very important.

It is striking to me that most of the major contributors to Feminist economics are women.  And from what I can tell, virtually all of you are ignoring them, even though we have been debating their main issue for weeks now, and they have been at this for decades.

Perhaps you are unaware of them.  The only very recent coverage I have seen is this Edwin Hadas piece, but still it doesn’t mention “Feminist economics” by name.  Here is a short, good Economist piece by S.K. (Soumaya Keynes?)  from March 2016.

The biases run deeper than you think, and they’re not just about gender discrimination.  We’ve set up a profession with super-high entry barriers for clearing the “this deserves my attention” hurdle (“top journals,” “top schools,” you can go on down the list), and then we’re befuddled when there is so much other collateral damage along the way.

CEA update, Tomas Philipson to join

President Donald Trump named Tomas Philipson, an economist at the University of Chicago who has specialized in health-care policy, to the three-member Council of Economic Advisers on Monday.

Mr. Philipson briefly served as an adviser to the Trump transition team last fall on health-care matters and was a senior economic adviser to the head of the Food and Drug Administration and the Centers for Medicare and Medicaid Services during the George W. Bush administration. Mr. Philipson is the co-founder of Precision Health Economics, a consultancy. He is professor of public policy at the University of Chicago’s Harris School of Public Policy and a director of the Health Economics Program at the university’s Becker Friedman Institute for economic research.

Mr. Trump’s nominee to lead the CEA, Kevin Hassett, hasn’t been confirmed by the Senate. His nomination cleared the Senate Banking Committee with only one lawmaker, Sen. Elizabeth Warren (D., Mass.), voting against him in June.

The two other members of the CEA aren’t subject to Senate confirmation and typically serve for around two years. Mr. Trump hasn’t announced the third member of the council, which has advised presidents for over seven decades on the economic impact of their policies.

That is from the WSJ.

My Fall 2017 Ph.d Industrial Organization reading list

It is long, and thus below the fold…

  1. Competition

 

Einav, Lira and Levin, Jonathan, “Empirical Industrial Organization: A Progress Report,” Journal of Economic Perspectives, (Spring 2010), 145-162.

Bresnahan, Timothy F. “Competition and Collusion in the American Automobile Industry: the 1955 Price War,” Journal of Industrial Economics, 1987, 35(4), 457-82.

Asker, John, “A Study of the Internal Organization of a Bidding Cartel,” American Economic Review, (June 2010), 724-762.

Bresnahan, Timothy and Reiss, Peter C. “Entry and Competition in Concentrated Markets,” Journal of Political Economy, (1991), 99(5), 977-1009.

Whinston, Michael D., “Antitrust Policy Toward Horizontal Mergers,” Handbook of Industrial Organization, vol.III, chapter 36, see also chapter 35 by John Sutton.

“Benefits of Competition and Indicators of Market Power,” Council of Economic Advisors, April 2016.

Klein, Benjamin and Leffler, Keith.  “The Role of Market Forces in Assuring Contractual Performance.”  Journal of Political Economy 89 (1981): 615-641.

Bogdan Genchev, and Julie Holland Mortimer. “Empirical Evidence on Conditional Pricing Practices.” NBER working paper 22313, June 2016.

Sproul, Michael.  “Antitrust and Prices.”  Journal of Political Economy (August 1993): 741-754.

McCutcheon, Barbara. “Do Meetings in Smoke-Filled Rooms Facilitate Collusion?”  Journal of Political Economy (April 1997): 336-350.

Crandall, Robert and Winston, Clifford, “Does Antitrust Improve Consumer Welfare?: Assessing the Evidence,”  Journal of Economic Perspectives (Fall 2003), 3-26, available at http://www.brookings.org/views/articles/2003crandallwinston.htm.

FTC, Bureau of Competition, website, http://www.ftc.gov/bc/index.shtml.  Read about some current cases and also read the merger guidelines.

Parente, Stephen L. and Prescott, Edward. “Monopoly Rights: A Barrier to Riches.”  American Economic Review 89, 5 (December 1999): 1216-1233.

Demsetz, Harold.  “Why Regulate Utilities?”  Journal of Law and Economics (April 1968): 347-359.

Armstrong, Mark and Sappington, David, “Recent Developments in the Theory of Regulation,” Handbook of Industrial Organization, chapter 27, also on-line.

Shleifer, Andrei. “State vs. Private Ownership.” Journal of Economic Perspectives (Fall 1998): 133-151.

Farrell, Joseph and Klemperer, Paul, “Coordination and Lock-In: Competition with Switching Costs and Network Effects,” Handbook of Industrial Organization, vol.III, chapter 31, also on-line.

Xavier Gabaix and David Laibson, “Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets,” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=728545. 

 Strictly optional: Ariel Pakes and dynamic computational approaches to modeling oligopoly: http://www.economics.harvard.edu/faculty/pakes/files/Pakes-Fershtman-8-2010.pdf

http://www.economics.harvard.edu/faculty/pakes/files/handbookIO9.pdf

 

2. Organization

Gibbons, Robert, “Four Formal(izable) Theories of the Firm,” on-line at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=596864.

“Make Versus Buy in Trucking: Asset Ownership, Job Design, and Information,” by George P. Baker and Thomas N. Hubbard, American Economic Review, (June 2003), 551-572.

Van den Steen, Eric, “Interpersonal Authority in a Theory of the Firm,” American Economic Review, 2010, 100:1, 466-490.

 Miller, Merton, and commentators.  “The Modigliani-Miller Propositions After Thirty Years,” and comments, Journal of Economic Perspectives (Fall 1988): 99-158.

Myers, Stewart. “Capital Structure.” Journal of Economic Perspectives (Spring 2001): 81-102.

Hansemann, Henry. “The Role of Non-Profit Enterprise.” Yale Law Journal (1980): 835-901.

Optional: Charness, Gary and Kuhn, Peter J. “Lab Labor: What Can Labor Economists Learn From the Lab?” NBER Working Paper, 15913, 2010, Lazear, Edward P. “Leadership: A Personnel Economics Approach,” NBER Working Paper 15918, 2010, Oyer, Paul and Schaefer, Scott, “Personnel Economics: Hiring and Incentives,” NBER Working Paper 15977, 2010.

Cowen, Tyler, Google lecture on prizes, on YouTube.

 

3. Production 

American Economic Review Symposium, May 2010, starts with “Why do Firms in Developing Countries Have Low Productivity?” runs pp.620-633. 

Nicholas Bloom, Raffaella Sadun, and John Van Reenen, “Recent Advances in the Empirics of Organizational Economics,” http://cep.lse.ac.uk/pubs/download/dp0970.pdf.

Nicholas Bloom, Raffaella Sadun, and John Van Reenen, the slides for “Americans do I.T. Better: US Multinationals and the Productivity Miracle,” http://www.people.hbs.edu/rsadun/ADITB/ADIBslides.pdf, the paper is here http://www.stanford.edu/~nbloom/ADIB.pdf but I recommend focusing on the slides. 

Bloom, Nicholas, Raffaella Sadun, and John Van Reenen. “Management as a Technology?” National Bureau of Economic Research working paper 22327, June 2016.

Syerson, Chad “What Determines Productivity?” Journal of Economic Literature, June 2011, XLIX, 2, 326-365.

Diego Restuccia and Richard Rogerson, “The Causes and Costs of Misallocation,” Journal of Economic Perspectives, Summer 2017, 31, 3, 151-174. 

Dani Rodrik, “A Surprising Convergence Result,http://rodrik.typepad.com/dani_rodriks_weblog/2011/06/a-surprising-convergence-result.html, and his paper here http://www.hks.harvard.edu/fs/drodrik/Research%20papers/The%20Future%20of%20Economic%20Convergence%20rev2.pdf

Serguey Braguinsky, Lee G. Branstetter, and Andre Regateiro,The Incredible Shrinking Portuguese Firm,” http://papers.nber.org/papers/w17265#fromrss.

David Lagakos, “Explaining Cross-Country Productivity Differences in Retail Trade,” Journal of Political Economy, April 2016, 124, 2, 1-49.

Casselman, Ben. “Corporate America Hasn’t Been Disrupted.” FiveThirtyEight, August 8, 2014.

Decker, Ryan and John Haltiwanger, Ron S. Jarmin, and Javier Miranda. “Where Has all the Skewness Gone?  The Decline in High-Growth (Young) Firms in the U.S. National Bureau of Economic Research working paper 21776, December 2015.  NB: This paper and the three that follow have some repetition, so read them selectively rather than exhaustively.

 Decker, Ryan and John Haltiwanger, Ron S. Jarmin, and Javier Miranda. “The Secular Business Dynamism in the U.S.” Working paper, June 2014.

Haltiwanger, John, Ian Hathaway, and Javier Miranda. “Declining Business Dynamism in the U.S. High-Technology Sector.” Ewing Marion Kauffman Foundation, February 2014.

Haltiwanger, John, Ron Jarmin and Javier Miranda. Where Have All the Young Firms Gone? Ewing Marion Kauffman Foundation, May 2012.

Song, Jae, David J. Price, Fatih Guvenen, and Nicholas Bloom. “Firming Up Inequality,” CEP discussion Paper no. 1354, May 2015.

Andrews, Dan, Chiara Criscuolo and Peter N. Gal. “Frontier firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries.”  OECD working paper, 2015.

Furman, Jason and Peter Orszag. “A Firm-Level Perspective on the Role of Rents in the Rise in Inequality.” October 16, 2015.

Mueller, Holger M., Paige Ouimet, and Elena Simintzi. “Wage Inequality and Firm Growth.” Centre for Economic Policy Research, working paper 2015.

http://evansoltas.com/2016/05/07/pro-business-reform-pro-growth/

Furman, Jason. ”Business Investment in the United States: Facts, Explanations, Puzzles, and Policy.” Remarks delivered at the Progressive Policy Institute, September 30, 2015, on-line at https://obamawhitehouse.archives.gov/sites/default/files/page/files/20150930_business_investment_in_us_facts_explanations_puzzles_policies_slides.pdf

Scharfstein, David S. and Stein, Jeremy C.  “Herd Behavior and Investment.”  American Economic Review 80 (June 1990): 465-479.

Chen, Peter, Loukas Karabarbounis, and Brent Neiman. “The Global Rise of Corporate Saving.” National Bureau of Economic Research Working Paper 23133, February 2017.

 

4. Incentives

Edmans, Adam, Xavier Gabaix, and Dirk Jenter, “Executive Compensation: A Survey of Theory and Evidence,” NBER Working Paper 23596, July 2017.

Kaplan, Steven N. “Executive Compensation and Corporate Governance in the U.S.: Perceptions, Facts and Challenges.” Working paper, July 2012. 

Robert J. Gordon and Ian Dew-Becker, “Unresolved Issues in the Rise of American Inequality,” http://www.people.fas.harvard.edu/~idew/papers/BPEA_final_ineq.pdf

Stein, Jeremy C. “Efficient Capital Markets, Inefficient Firms: A Model of Myopic Corporate Behavior.” Quarterly Journal of Economics 104 (November 1989): 655-670.

https://marginalrevolution.com/?s=short-termism

Ben-David, Itzhak, and John R. Graham and Campbell R. Harvey, “Managerial Miscalibration,” NBER working paper 16215, July 2010.

 

5. Sectors: finance, health care, tech, others

 Gorton, Gary B. “Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007,” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1401882, published on-line in 2009. 

Erel, Isil, Nadault, Taylor D., and Stulz, Rene M., “Why Did U.S. Banks Invest in Highly-Rated Securitization Tranches?” NBER Working Paper 17269, August 2011. 

Philippon, Thomas. “Has the U.S. Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation.” Working paper, September 2014. 

Gompers, Paul and Lerner, Josh.  “The Venture Capital Revolution.” Journal of Economic Perspectives, Spring 2001, 145-168.

Paul Graham, essays, http://www.paulgraham.com/articles.html.

Optional: consider subscribing to Ben Thompson’s Stratechery, periodic emails on the tech industry, note it is expensive.

Friedman, Milton. “The Social Responsibility of Business is to Increase its Profits.” The New York Times Magazine, September 13, 1970.

Healy, Kieran. “The Persistence of the Old Regime.” Crooked Timber blog, August 6, 2014.

More to be added, depending on your interests.

Sunday assorted links

1. In one study, young children learn how to deceive in ten days.

2. “A new kind of elevator uses linear motors, similar to those in maglev trains and HyperLoop, to whiz its cabins through shafts, and will be able to move people up, down, left, or right.” Link here.

3. New Chinese movie stars Stephon Marbury as Stephon Marbury (NYT).  And this: “There is indeed a statue of Marbury in Beijing. “People say it doesn’t look like me,” Marbury said. “But I know it does, because I know the face I made when they made the statue.””

4. Boris Becker is now bankrupt (no Beijing statue).

5. Employees committed to family are more motivated and productive (WSJ).

6. Flying ability helps determine egg shape.

The Italian Job

Each year there are more bank robberies in Italy (approximately 3,000) than in the rest of Europe combined, with a 10 percent chance of victimization on average.

…The average robbery lasts 4.27 minutes and leads to a haul of approximately 16,000 euros. Given that more than half of all bank robberies involve two or more perpetrators, the average haul per criminal is approximately equal to 8,700 euros.

…only about 40 percent of all bank robbers disguise themselves when robbing a bank.

Those are a few interesting facts from a bold new paper, Optimizing Criminal Behavior and the Disutility of Prison. The authors, Mastrobuoni and Rivers, use extensive data on bank robberies to model bank robbery as a second by second optimization problem:

The key insight of our model is that bank robbers face a trade-off when deciding how long to stay in the bank. By staying an extra minute, the robbers can collect more money, but they also run the risk of getting caught and sent to prison. The cost of being apprehended is a function of the disutility each individual places on going to prison. By equating the marginal benefit with the marginal cost of time spent in the bank, we can back out the unobserved disutility that robbers assign to prison.

The authors create a sophisticated model of optimizing behavior which they estimate using extensive data. In their conclusion, they focus attention on their finding that higher ability bank robbers have a higher disutility of prison. Thus higher ability offenders can be (especially) deterred by longer sentences. The authors focus attention on high-ability offenders because those are the offenders most likely to fit the assumptions of their rational-actor model. I think it’s actually better to focus on the contra-positive conclusion: its hard to deter idiots.

Moreover, there are plenty of idiots:

Not surprisingly, traveling to the robbery by foot and targeting a bank with a security guard are both consistent with lower ability offenders….

The existence of idiots, however, calls into question the optimizing assumptions of the model. As I argue in What was Gary Becker’s Biggest Mistake? the poorly-socialized-child theory of crime can suggest other approaches to combatting crime (e.g. cognitive behavioral therapy):

Here’s a simple test for whether crime is in a person’s rational interest. In the economic theory if you give people more time to think carefully about their actions you will on average get no change in crime (sometimes careful thinking will cause people to do less crime but sometimes it will cause them to do more). In the criminal as poorly-socialized-child theory, in contrast, crime is often not in a person’s interest but instead is a spur of the moment mistake. Thus, even a small opportunity to reflect and consider will result in less crime.

The guy who robs a bank that has a security guard and then attempts to run away seems like a poor fit for a rational actor model. Perhaps more thinking would have led a better planned bank robbery but more plausibly it would have led to no robbery at all. Thus, I’d frame the author’s contributions in this path-breaking paper as telling us not just about rational bank robbery but about the limits and bounds of rational bank robbery.

“If only there were a vast empirical literature…”

Paul Krugman blogged on that, with initial impetus from Noah Smith.  Here is Noah:

If you and your buddies have a political argument, a vast literature can help you defend your argument even if it’s filled with vague theory, sloppy bad empirics, arguments from authority, and other crap. If someone smart comes along and tries to tell you you’re wrong about something, just demand huffily that she go read the vast literature before she presumes to get involved in the debate. Chances are she’ll just quit the argument and go home, unwilling to pay the effort cost of wading through dozens of crappy papers. And if she persists in the argument without reading the vast literature, you can just denounce her as uninformed and willfully ignorant. Even if she does decide to pay the cost and read the crappy vast literature, you have extra time to make your arguments while she’s so occupied. And you can also bog her down in arguments over the minute details of this or that crappy paper while you continue to advance your overall thesis to the masses.

…My solution to this problem is what I call the Two Paper Rule. If you want me to read the vast literature, cite me two papers that are exemplars and paragons of that literature. Foundational papers, key recent innovations – whatever you like (but no review papers or summaries). Just two. I will read them.

If these two papers are full of mistakes and bad reasoning, I will feel free to skip the rest of the vast literature. Because if that’s the best you can do, I’ve seen enough.

Those are both interesting posts, but my perspective is different, probably more as a matter of temperament than thinking they are objectively wrong.  Here are a few comments:

1. The best two papers on ethics are not very convincing.  Nonetheless people who have worked their way through a good amount of that literature are much better at ethical reasoning than those who have not.

2. The best two papers on global warming are not very convincing.  What is convincing is how many different perspectives and how many different branches of science point toward broadly similar conclusions.  In fact the aggregate effect here is quite overwhelming (don’t debate gw in the comments, not today; I’ll delete).  It is a question of many moats, not all of them being entirely muddy.

3. I see the Smith-Krugman standard as fairly economistic, and fairly MIT-late 20th century at that.  It is one vision of what a good literature looks like, and a fairly narrow one.  It will elevate simple answers in status, whether or not that is deserved.  It discriminates against dialogic knowledge, book-based knowledge, historical knowledge, and knowledge when the answers and methods are not very exact.  There is the risk of ending up too certain about one’s knowledge.

That all said, I do understand that specialized top researchers, including Nobel Laureates, often may do better holding relatively narrow methodological visions.  Look at all the Nobel Prizes that have been awarded to Chicago.  It might be entirely correct to insist that Becker’s treatise on the family pay more attention to anthropology, but that doesn’t mean he should have followed that advicee.

4. The standard seems to discourage reading, and I would not want to teach it to my students.  I teach something more like “always read more, unless you are writing or doing relevant quantitative work.  And one reason you write is to improve the quality of your reading.  Read more and write more, all the time.”  I still think that is better advice for most (not all) people.

5. Isn’t there a lot to be said for deferring to the opinions of those who have read through the “muddy moat”?  By no means are they all partisans, and the non-partisan ones care most of all about the truth.  After all, they did all that reading!  Defer, rather than trust so much in your ability to pick you the right two papers, or have someone pick them out for you.  I have a much more positive view of survey articles than does Noah, while understanding they do often leave you fairly agnostic on major issues.

6. If the truth of the matter is in fact muddy, you may need to dip into the muddy moat to learn that.

7. The difference between total value and marginal value may be relevant.  You might conclude a field literature has low total value, but the marginal value of learning more about that area still could be quite high.  That is in part because muddy fields and results don’t spread so readily, and so dipping into the muck can yield some revelations.  That is another reason why I would not offer the “two paper standard” as practical advice.

8. If anything, I would put the reading pressure on the other side, namely more rather than less.  Rather than encouraging readers to dismiss or downgrade fields, I would urge them to consult different disciplines altogether, including political science, sociology, and anthropology, others too.  This is much easier to do if you take a more positive attitude toward survey articles.

9. This is quite a subjective impression, but I worry that the dogmatic will use the two paper standard to dismiss or downgrade particular lines of investigation.

10. I don’t know if Noah and Paul were referring to my colleague Garett Jones, who frequently tweets “…if only there were a vast empirical literature” when he sees claims that he regards as empirically false.  Now, I am not the Garett Jones oracle, but I always took his use of the word “vast” to be slightly sarcastic.  Usually these are cases where even a fairly cursory knowledge of the literature in question would indicate something is wrong with the claim at hand.  In my view, Garett is not demanding “vastness” of effort, rather he is criticizing those who don’t grasp what the effort space looks like in the first place.