Results for “concentration” 182 found
Didn’t everyone used to wish for more and better cooperation? The 1960s left in particular, but pretty much everyone. And isn’t that what we got? And didn’t that — in fact — lead to rather spectacular rises in income inequality?
Consider one implication of the Garett Jones model, which is that more talented people gain more, in percentage terms, from cooperating and working with each other than do less talented people. The mere existence of a (non-universal) export sector is enough to establish this conclusion, but you can see why it is true using other arguments as well. If there are non-linear synergies from bringing together talent, those synergies with be stronger with greater amounts of talent by the very nature of the initial assumptions.
Organizing a high school band brings a modest boost in quality entertainment, but forming the Beatles or Rolling Stones a much much larger gain, again in both absolute and percentage terms. So if it is easier to organize bands of all sorts, income inequality likely will rise.
You are probably aware of the results that the higher wages in super-firms — clusters of lots of talent — relative to normal firms, account for a major share of income inequality. In other words, additional cooperation boosted income inequality.
Or maybe you saw the recent stories “90 percent of growth in high-tech jobs happened in just 5 metro areas.” That too is an instance of greater cooperation, and it has led to more income inequality, with the biggest gains coming in New York City and the Bay Area and a few other places.
More cooperation → → greater income inequality. Think about it.
Be careful what you wish for! Though I very much appreciate the virtues of additional cooperation.
The number and quality of studies showing that air pollution has very substantial effects on health continues to increase. Patrick Collison reviews some of the most recent studies on air pollution and cognition. I’m going to post the whole thing so everything that follows is Patrick’s.
Air pollution is a very big deal. Its adverse effects on numerous health outcomes and general mortality are widely documented. However, our understanding of its cognitive costs is more recent and those costs are almost certainly still significantly under-emphasized. For example, cognitive effects are not mentioned in most EPA materials.
World Bank data indicate that 3.7 billion people, about half the world’s population, are exposed to more than 50 µg/m³ of PM2.5 on an annual basis, 5x the unit of measure for most of the findings below.
- Substantial declines in short-term cognitive performance after short-term exposure to moderate (median 27.0 µg/m³) PM2.5 pollution: “The results from the MMSE test showed a statistically robust decline in cognitive function after exposure to both the candle burning and outdoor commuting compared to ambient indoor conditions. The similarity in the results between the two experiments suggests that PM exposure is the cause of the short-term cognitive decline observed in both.” […] “The mean average [test scores] for pre and post exposure to the candle burning were 48 ± 16 and 40 ± 17, respectively.” – Shehab & Pope 2019.
- Chess players make more mistakes on polluted days: “We find that an increase of 10 µg/m³ raises the probability of making an error by 1.5 percentage points, and increases the magnitude of the errors by 9.4%. The impact of pollution is exacerbated by time pressure. When players approach the time control of games, an increase of 10 µg/m³, corresponding to about one standard deviation, increases the probability of making a meaningful error by 3.2 percentage points, and errors being 17.3% larger.” – Künn et al 2019.
- A 3.26x (albeit with very wide CI) increase in Alzheimer’s incidence for each 10 µg/m³ increase in long-term PM2.5 exposure? “Short- and long-term PM2.5 exposure was associated with increased risks of stroke (short-term odds ratio 1.01 [per µg/m³ increase in PM2.5 concentrations], 95% CI 1.01-1.02; long-term 1.14, 95% CI 1.08-1.21) and mortality (short-term 1.02, 95% CI 1.01-1.04; long-term 1.15, 95% CI 1.07-1.24) of stroke. Long-term PM2.5 exposure was associated with increased risks of dementia (1.16, 95% CI 1.07-1.26), Alzheimer’s disease (3.26, 95% 0.84-12.74), ASD (1.68, 95% CI 1.20-2.34), and Parkinson’s disease (1.34, 95% CI 1.04-1.73).” – Fu et al 2019. Similar effects are seen in Bishop et al 2018: “We find that a 1 µg/m³ increase in decadal PM2.5 increases the probability of a dementia diagnosis by 1.68 percentage points.”
- A study of 20,000 elderly women concluded that “the effect of a 10 µg/m³ increment in long-term [PM2.5 and PM10] exposure is cognitively equivalent to aging by approximately 2 years”. – Weuve et al 2013.
- “Utilizing variations in transitory and cumulative air pollution exposures for the same individuals over time in China, we provide evidence that polluted air may impede cognitive ability as people become older, especially for less educated men. Cutting annual mean concentration of particulate matter smaller than 10 µm (PM10) in China to the Environmental Protection Agency’s standard (50 µg/m³) would move people from the median to the 63rd percentile (verbal test scores) and the 58th percentile (math test scores), respectively.” – Zhang et al 2018.
- “Exposure to CO2 and VOCs at levels found in conventional office buildings was associated with lower cognitive scores than those associated with levels of these compounds found in a Green building.” – Allen et al 2016. The effect seems to kick in at around 1,000 ppm of CO2.
Alex again. Here’s one more. Heissel et al. (2019):
“We compare within-student achievement for students transitioning between schools near highways, where one school has had greater levels of pollution because it is downwind of a highway. Students who move from an elementary/middle school that feeds into a “downwind” middle/high school in the same zip code experience decreases in test scores, more behavioral incidents, and more absences, relative to when they transition to an upwind school”
Relatively poor countries with extensive air pollution–such as India–are not simply choosing to trade higher GDP for worse health; air pollution is so bad that countries with even moderate air pollution are getting lower GDP and worse heath.
Addendum: Patrick has added a few more.
5. David McCabe at NYT: “The debate can take on a heated and personal tone. At a conference this spring, the soft-spoken legal academic Tim Wu responded to doubts raised by Tyler Cowen, an economist, about whether America has dangerous levels of corporate concentration by saying it was like arguing with someone who believes the earth is flat.”
4. Fukushima: “We estimate that the increase in mortality from higher electricity prices outnumbers the mortality from the accident itself, suggesting the decision to cease nuclear production has contributed to more deaths than the accident itself.”
Fed data show large banks are keeping a disproportionate amount in reserves, relative to their assets. The 25 largest US banks held an average of 8 per cent of their total assets in reserves at the end of the second quarter, versus 6 per cent for all other banks. Meanwhile, the four largest US banks — JPMorgan Chase, Bank of America, Citigroup and Wells Fargo — together held $377bn in cash reserves at the end of the second quarter this year, far more than the remaining 21 banks in the top 25.
Since the financial crisis, large banks have been obliged to meet a liquidity coverage ratio (LCR) — a portion of high-quality assets such as cash reserves and Treasuries that can be sold quickly to keep the lights on for a month in a crisis. But regulations also require them to track intraday liquidity — cash they can immediately access — which does not include Treasuries. This additional requirement can vary depending on their business models, which in turn inform supervisors’ and examiners’ bank-specific demands. Executives at several large banks say this puts a de facto premium on reserves that varies by bank..
Second-quarter data from the four largest reserve holders show Wells Fargo held 39 per cent of its high-quality liquid assets in reserves. JPMorgan held 22 per cent, Bank of America held 15 per cent and Citigroup 14 per cent.
“If you have a very large concentration in a few institutions and you lose one or two on any day, then you are losing a major portion of your funding,” said Jim Tabacchi, chief executive at South Street Securities, a broker dealer active in short-term debt markets. “Rates have to skyrocket. It’s simple math.”
Here is the full FT article.
One in five properties in the historic centre is advertised as a short-term rental, according to researchers at the University of Siena, a 60 per cent growth since 2015. It is the highest concentration in Italy, more than Rome (12 per cent) and Venice (11.8 per cent).
Here is the full Aleksandra Wisniewska FT piece on how Airbnb is transforming many European cities.
Here is a new and neat paper which, to the extent it is true, would appear to address several significant puzzles at once. From Brent Neiman and Joseph S. Vavra:
We show that over the last 15 years, the typical household has increasingly concentrated its spending on a few preferred products. However, this is not driven by “superstar” products capturing larger market shares. Instead, households increasingly focus spending on different products from each other. As a result, aggregate spending concentration has in fact decreased over this same period. We use a novel heterogeneous agent model to conclude that increasing product variety is a key driver of these divergent trends. When more products are available, households can select a subset better matched to their particular tastes, and this generates welfare gains not reflected in government statistics. Our model features heterogeneous markups because producers of popular products care more about maximizing profits from existing customers, while producers of less popular niche products care more about expanding their customer base. Surprisingly, however,our model can match the observed trends in household and aggregate concentration without any resulting change in aggregate market power.
This is related to what I called “matching” in The Complacent Class.
That is the new book by Thomas Philippon, and perhaps the title is a bit misleading, as the book covers both regulatory barriers and natural economic forces behind higher concentration levels. I am a big fan of Philippon’s work, but I am not so convinced by his arguments in this book. Most of all, he is trying to argue for systematically greater monopoly power in the American economy, but he is reluctant to provide much evidence for output restriction, the sine qua non of market power.
First note that market power does not seem to be up at the level of actual market competition. And capital’s share of income does not seem to be rising in a manner consistent with the monopoly theory, see here and here.
I agree with him about health care, and also (highly regulated) cable television and thus internet connections. I agree with all of his suggestions for removing regulatory barriers to entry, for instance by allowing foreign airlines to serve domestic U.S. markets. From a policy point of view, I am quite close to his perspective.
But when it comes to monopoly power too much of his evidence is circumstantial. OK, there is greater stability for market leaders in many sectors, and weak investment aggregates, but all the time antitrust suits find evidence for output restrictions — so why doesn’t this book offer more of such evidence? Here is one passage (p.39) that caught my attention:
…we see a sharp increase in concentration in the airline industry after 2010. That is enough to trigger our interest, but not enough to conclude that competition has weakened. We must first check that concentration has also increased at the route level. We find that it has. We can further show that it came together with higher prices and higher profits.
I have only a pre-publication copy, and perhaps some of the book is missing in my edition, but I don’t see the cited evidence presented, nor is it in the airlines section starting on p.137 (which does document increasing concentration at the national level). To consider the contrary evidence, here is an excerpt from an earlier MR post:
As for output restrictions, here is the DOT series on aggregate miles flown. No doubt, there are problems around the time of 9/11 and also the Great Recession, with 2008-2012 being a period of slight quantity contraction. But in 1985 there were 275,864 [million] total miles flown, in 2006 it was 588,471, and 641, 905 in 2015. I’ll ask again: if there is so much extra monopoly, where are the output restrictions?
Or look at the price index. Overall prices are down considerably since 2008, and from about 2000 to 2016 they run from about 250 (eyeballing) to about 270, noting 1998-2010 saw a huge run-up in oil prices.
Since I wrote that post there is clearer evidence for a steady price decline since 2012 (he is claiming higher concentration since 2010), just look at the price index, which is FRED channeling BLS. Now maybe those are the wrong numbers for some reason, but I don’t see anything in the Philipson book to counter them. I don’t see output restriction considered at all. I don’t see a price series presented at all.
That is only one sector, but it reflects my deeper worries about the book. I just don’t see the evidence for output restrictions, or, in many cases I don’t see the evidence for higher prices.
The most sustained discussion of prices comes on pp.114-122, where it is shown that PPP-adjusted prices are higher in America than in Europe, and furthermore the gap is growing. That is far too much aggregation for my tastes (“Europe”), PPP adjustments are not exactly scientific, it is not very direct evidence for market concentration being the culprit, and furthermore if I understand him correctly, the Big Mac index also has the United States becoming relatively more expensive, even though McDonald’s clearly has faced massive competition in recent years.
To be sure, if you believe in a productivity slowdown, as I do, you also have to feel that America’s economic sectors, in some counterfactual sense, could be much more dynamic, more prone to disruption, and yes more competitive. It is a great disappointment to me that is not the case. But that is far from the view that monopoly power is increasing in the American economy in an economically significant manner, across a wide variety of sectors (health care caveat noted, and even that is selective, as there has been a significant cost slowdown).
So I remain skeptical about the main claims in this book.
…we find that total employment rises substantially in industries with rising concentration. this is true even when we look at total employment of the smaller firms in these industries. This evidence is consistent with our view that increasing concentration is driven by new ICT-enabled technologies that ultimately raise aggregate industry TFP. It is not consistent with the view that concentration is due to declining competition or entry barriers…as those forces will result in a decline in industry employment.
That is from a new paper by Chang-Tai Hsieh and Esteban Rossi-Hansberg. The paper presents a larger picture too:
…the secular changes the U.S. economy has experienced for the last four decades…amount to a new industrialization process. One that allows firms to expand geographically and deliver its goods and services to customers locally. We have argued that this evolution was the result of an underlying technological change that led to reductions in variable costs (and establishment-level fixed costs) in exchange for larger firm-level fixed costs.
The author is Ana Fifield, and the subtitle is The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un. I’ve never read a book that has so much actual information about Kim, most of all about his early time in Switzerland. Or how about this?:
Kim Jong Un’s efforts to clamp down on illegal drugs did not work.
At the time he left North Korea, Mr. Kang estimated that about 80 percent of the adults in Hoeryong were using ice [meth], consuming almost two pounds of the highly potent drug every single day…
For many North Koreans, taking meth became an essential part of daily life, a way ot ease the grinding boredom and deprivations of their existence. For that reason, drugs can never be eradicated, he said.
Men are not allowed to have long hair, the concentration camps are reputed to be worse than those of the Nazis, and there is a detailed account of the rise of the “new rich” class in Pyongyang. Plastic surgery has arrived as well.
Definitely recommended, the book also serves up the inside story on the Dennis Rodman visit to North Korea. By the way, Kim hates the showiness of the Harlem Globetrotters.
…modest genetic selection/concentration was evident for teen pregnancy and poor educational outcomes, suggesting that neighbourhood effects for these outcomes should be interpreted with care.
Findings argue against genetic selection/concentration as an explanation for neighbourhood gradients in obesity and mental health problems.
Here is the full piece, via K.
1. Ruby Warrington, Sober Curious: The Blissful Sleep, Greater Focus, Limitless Presence, and Deep Concentration Awaiting Us All on the Other Side of Alcohol. Both the title and content make it self-recommending.
2. Jonathan Bate, How the Classics Made Shakespeare. “One key argument is that Shakespeare’s form of classical fabling was profoundly antiheroic because it was constantly attuned to the force of sexual desire.” Bate is very smart and this book shows it.
3. Henry Farrell and Abraham L. Newman, Of Privacy and Power: The Transatlantic Struggle over Freedom and Security. An important contribution to political science, expanding on their concept of “weaponized interdependence,” namely how the U.S. (and sometimes other political actors) uses access to international networks, such as SWIFT, to push other nations around. See #weaponizedinterdependence on Twitter for an introduction.
4. Andrew Lambert, Seapower States: Maritime Culture, Continental Empires and the Conflict that Made the Modern World. Covers the Phoenicians, Venice, the Dutch Golden Age, the rise of the British empire, and more. Interesting throughout, but I most liked the final section on why there are no seapowers today, and why China and Russia never will be seapowers. Overall a nice integration of geopolitics and culture.
5. Rucker C. Johnson and Alexander Nazaryan, Children of the Dream: Why School Integration Works. A good summary of what the subtitle promises, though I was hoping for more attention on the costs and losers from those arrangements.
6. Guzel Yakhina, Zukeikha. Translated from the Russian by Lisa C. Hayden, a Tatar woman is sent into exile in the Soviet Union of the 1930s. This is one of the novels I enjoyed this year, several others I know concur.
More workers ought to be in larger firms, as those firms are afraid to hire more, knowing that bids up wages for everyone. Therefore (ceteris paribus) the large firms in the economy ought to be larger.
Raising the legal minimum wage also reallocates workers into larger firms, and again makes them larger.
Tough stuff if you worry a lot about both monopoly and monopsony at the same time — choose your poison!
I have adapted those points from a recent paper by David Berger, Kyle Herkenhoff, and Simon Mongey, “Labor Market Power.” On the empirics, they conclude: “Our theory implies that this declining labor market concentration increase labor’s share of income by 2.89 percentage points between 1976 and 2014, suggesting that labor market concentration is not the reason for a declining labor share.” So the paper makes no one happy (good!): monopsony is significant, but has been declining in import.
4. A claim that 95 percent of Bitcoin trading is fake — can any of you speak to this?
5. Video of my economics vs. philosophy debate/dialogue with Agnes Callard at University of Chicago. Long (three hours), lots of content not available elsewhere in any other form.
No, there isn’t much evidence for that now-common claim:
As I show below, the claim that big business contributed to the rise of the Nazi Party is simply inconsistent with the consensus among German historians. While there is some evidence industrial concentration contributed in Hitler’s ability to consolidate power after he was appointed chancellor in 1933, there is no evidence monopolists financed Hitler’s rise to power, and ample evidence showing industry leaders opposed his ascent.
Here is the longer essay, with much more additional detail, from the soon-to-be-better-known Alec Stapp.