New developments in the economics of fertility

The economics of fertility has entered a new era because these stylized facts no longer universally hold. In high-income countries, the income-fertility relationship has flattened and in some cases reversed, and the cross-country relationship between women’s labor force participation and fertility is now positive. We summarize these new facts and describe new models that are designed to address them.

That is from a new NBER paper by Matthias Doepke, Anne Hannusch, Fabian Kindermann, and Michèle Tertilt . Another result is that quality vs. quantity tradeoff models for children no longer perform very well.  And fertility-education relationships are greatly weakened, just as the income-fertility relationships are.  The marketization of childcare is likely an important cause of this shift.

Italy and Spain are two countries where the income-fertility relationship is not being reversed.

Father contribution rates to child-raising are growing in importance for fertility.  Fathers seem most interested in their children in Norway, and least interested in Russia, of the countries sampled.

If a couple disagrees on having another kid, the chance they do is relatively small.

In Denmark in 2015, six percent of all births occurred with some kind of medical help related to conception.

There are now positive correlations between public childcare provision, though I do not in this paper see any reliable causal estimate.

The paper has a section on social norms, but it oddly fails to consider religion.

There is some evidence for peer effects mattering for fertility, for instance in a workplace.

98 pp. of text, perhaps no huge revelations, but interesting throughout.

A devil may care attitude?

A Pennsylvania school district has voted against a parent’s request to launch a satanic group’s After School Satan Club at an elementary school for students who want to participate in an extracurricular program that is non-religious.

In an 8-1 vote Tuesday, the Northern York County School Board based in Dillsburg, Pennsylvania, rejected the request to establish an “After School Satan Club” at the district’s Northern Elementary School.

The agenda for Tuesday’s meeting indicates that Samantha Groome sought to establish the club on a “probationary basis.” A video clip of the school board meeting, obtained by the York Daily Record, shows parents and others gathered in the crowd standing up and erupting into applause after the effort to create the satanic club was defeated.

Groome said she wanted her children to be able to participate in extracurricular activities, but sought a secular alternative to the Joy El Christian club, which operates at nine of the 16 school districts in the county and offers off-campus activities.

And:

The flyer touted some of the activities participants would engage in, including “science projects,” “puzzles games,” and “arts and crafts projects,” and listed “benevolence and empathy,” “critical thinking,” “problem solving,” “creative expression” and “personal sovereignty” as concepts children will learn there. It also asserted that the United States Constitution protects the After School Satan Club’s right to distribute flyers on public school grounds.

Here is the full story, via a loyal MR reader.

There is No Pink Tax

The so-called pink tax is an alleged tendency for products consumed by women to be more expensive than similar products consumed by men. In 2015 NYC put out a study under mayor Bill DeBlasio alleging a 7% pink tax across a range of goods. The pink tax is implausible. Products produced in competitive markets will be close to marginal cost. Even if firms have monopoly power it’s not obvious that women have systematically more inelastic demand curves–indeed, the stereotype tends to be that women are the more careful shoppers. Preferences differ systematically across genders leading to subtly different products even in categories which appear similar on the surface. To give just one example, the NYC study compared the price of a single 2-in-1 men’s shampoo+conditioner product to the combined price of a women’ shampoo plus a women’s conditioner (oz per oz). Give me a break. There are reasons why a one-and-done hair product appeals to men more than to women and why this will also be correlated with other characteristics which make the all in one product different and likely of lower quality.

In anycase, economists Sarah Moshary, Anna Tuchman and Natasha Bhatia have done a much more complete and careful study and they find that once you control for ingredients and compare like-to-like there is no pink tax. Indeed, sometimes men pay a bit more. Overall, there are no big savings from cross-buying. Women and men could save money by buying products primarily marketed to the opposite gender–like 2-in-1 shampoo+conditioner–but only by buying products that they prefer less than the products they choose to buy.

We find that the pink gap is often negative; men’s products command higher per-product prices in six of nine categories that we study and higher unit prices in three of nine categories. We then estimate the pink tax via a comparison of products manufactured by the same firm and comprising the same leading ingredients. Men’s products are more expensive in three of five categories when we control for ingredients. These findings do not support the existence of a systematic price premium for women’s products, but our results do reveal that gender segmentation in personal care is pervasive and operates through product differentiation. A back-of-the-envelope calculation implies that the average household would save 1% by switching to substantially similar products targeted to a different gender.

The doctrine of nuclear deterrence must evolve

That is the theme of my latest Bloomberg column, about 3x the normal length.  Here is one excerpt:

From the vantage point of 2022, it is clear that the norms doctrine, while it served useful functions for decades — just as did the MAD doctrine — has its limitations. The most obvious is that norms tend to weaken and eventually collapse.

Once the use of nuclear weapons became classified as “unthinkable,” political actors tried to extend that designation to other kinds of weapons. In doing so, they weakened the concept of unthinkability. The broader category of “weapons of mass destruction,” for example, was also supposed to be unthinkable. Yet Iraqi leader Saddam Hussein used them against Iran in the Iran-Iraq war of the 1980s. This led some countries to support Iran, but Saddam remained in power until former President George W. Bush led the war against Iraq roughly two decades later.

In 2012, former President Barack Obama told Russian President Vladimir Putin that they should agree that chemical weapons should not be deployed in Syria, as that would constitute a “red line.” Syria went ahead and used them, and there was no major kinetic U.S. military response, thereby erasing that red line and possibly others.

The pattern is evident: Once the category of “unthinkable” weapons is created, it is expanded so much that it loses its credibility. Politicians tend to spend down the reputational capital that their predecessors build up.

And:

Another problem with the norms doctrine is that, sooner or later, there is value in breaking a norm — precisely because the norm was successful.

Think back to your high school. Your teachers probably set up behavioral norms that most everyone followed. That left room for a rebel who dared to defy those norms, if only for attention and to signal non-conformity.

With nuclear weapons, it’s not as if Putin or some other political “rebel” would use a bomb to make a point or to seem cool. Rather, Putin has been finding it useful to threaten the West and NATO with possible nuclear weapons use. If enough scary threats are issued, the use of nuclear weapons no longer seems unthinkable. And as the unthinkability norm erodes, eventually someone — Putin or not — may use nukes.

Finally, as mentioned above, the norms doctrine assumed the major nuclear powers all had a stake in a status quo…

Cameo by Thomas Schelling!

Those now-automated service sector jobs?

Arshia Khan asked a group of older adults in Minnesota what they would like in a nursing home, and their answer surprised her. They wanted standup comedy, but not just any comedy: They wanted off-color jokes.

Dr. Khan, a professor of computer science at the University of Minnesota Duluth, programs robots to work in nursing homes.

On a March afternoon in her lab, surrounded by a dozen robots of different sizes and designs, Dr. Khan asked one to show off its stuff. The robot, a four-foot-tall white plastic figure named Pepper, with a tablet screen in its chest, blinked its eyes and wiggled its hips.

“So, which one of you requested the dirty jokes?” Pepper asked, in a computer voice.

There followed a risqué joke about the robot’s relationship with its charging plug, and another about an unhappy date with a Tesla (too conceited). After each, the robot giggled. “I went on a date with a Roomba last week,” the robot said, gesticulating with its arms. Pause. “It totally sucked.”

But alas:

Later this year, pending approval from the university’s institutional review board, 16 of Dr. Khan’s robots will go to eight nursing homes around the state — though without the off-color jokes.

Here is the full NYT story, via a loyal MR reader.

Polyester facts of the day

Four decades later, polyester rules the textile world. It accounts for more than half of global fiber consumption, about twice that of second-place cotton. Output stands at nearly 58 million tons a year, more than 10 times what it was in the early ’80s. And nobody complains about polyester’s look and feel. If there’s a problem today, it’s that people like polyester too much. It’s everywhere, even at the bottom of the ocean.

Here is more from Virginia Postrel.  That is from the new issue of Works in Progress, which has many interesting pieces, recommended.

My excellent Conversation with Thomas Piketty

Lots of disagreement in this episode, though always polite.  Here is the transcript, video, and audio.  Here is part of the summary:

He joined Tyler to discuss just how egalitarian France actually is, the beginning of the end of aristocratic society, where he places himself within French intellectual history, why he’s skeptical of data from before the late 18th century, how public education drives economic development, why Georgism isn’t sufficient to address wealth inequality, the relationship between wealth and cultural capital, his proposal for a minimum inheritance, why he turned down the Legion of Honor, why France should give reparations to Haiti despite the logistical difficulties of doing so, his vision for European federalism, why more immigration won’t be a panacea for inequality, his thoughts on Michel Houellebecq’s Submission, and more.

Here is one excerpt:

COWEN: If I visit every major country in Europe, what I observe is the highest living standard is arguably in Switzerland — Norway and Luxembourg aside. Switzerland has one of the smallest governments, and they attempt relatively little redistribution. What is your understanding of Switzerland? What if someone said, “Well, Europe should try to be more like Switzerland. They’re doing great.” Why is that wrong?

PIKETTY: Oh, Switzerland. It’s a very small country, so it’s about the size. . . . Actually, it’s smaller than Île-de-France, which is a Paris region. Now, if you were to make a separate country out of Île-de-France, GDP per capita, I think, would actually be higher than Switzerland. Of course, you can take a wealthy region in your country and say, “Okay, I don’t want to share anything with the rest of the country. I’m going to keep my tax revenue for me. I’m going to be a tax haven based on bank secrecy.” That’s going to make you 10 percent or 20 percent richer. I’m not saying —

COWEN: It’s been a long time since Switzerland relied on bank secrecy, right? Following 9/11, that Swiss advantage largely went away.

PIKETTY: Oh, that’s wrong. Oh, you’re wrong on this.

We talk about Matt Rognlie and Greg Clark as well.  Recommended, this was fun for me to reread.

Further jobs with your voice

I’m a re-recording mixer and sound mixer so I can confirm that the people who provide such specialized voice talents are amazing. There are also many more varieties: one of the films I mixed featured a dog as a lead character. There are two people who are known for their abilities to mimic dogs and make between 5 and 10 thousand dollars a day.

There are also the amazing people who work in “loop groups”. They provide the background chatter that you hear in any scene with more than a few people. Whether it’s a scene with a few people in an office, or a large group in a restaurant, they have to provide talking without actually saying any identifiable words. It’s particularly important as many countries, especially Germany, will block any films that have identifiable English in the sound files. These background vocals are known as “walla”.

That is from Michael Farnan in the comments.

More Guns, Less Burglaries

In December 2008, a Memphis, TN newspaper published a searchable online database of names, zip codes, and ages of Tennessee handgun carry permit holders. We use detailed crime and handgun carry permit data for the city of Memphis to estimate the impact of publicity about the database on burglaries. We find that burglaries increased in zip codes with fewer gun permits, and decreased in those with more gun permits, after the database was publicized.

From a new NBER working paper by Alessandro Acquisti & Catherine Tucker. I’ve also been struck by the fact that compared to other industrialized countries the US has low robbery rates and especially so relative to burglaries.

Additive Growth

That is a new and quite interesting paper by Thomas Philippon.  Here is the abstract:

Growth theory is based on the assumption of exponential total factor productivity (TFP) growth. Across countries and time periods I find that TFP growth is actually linear. Unlike the exponential model, the additive growth model provides useful medium-term forecasts of TFP. It also explains the TFP slowdown and the volatility puzzle, and predicts falling real interest rates. For the distant future the model predicts ever increasing increments in standards of living but with growth rates that converge to zero. For the distant past the model suggests that the size of TFP increments has changed in the late 1600’s, the early 1800’s, and around 1930.

Or consider this presentation:

Initial trend growth is around 2.5%. After 40 years, TFP doubles, and since increments are constant, the trend growth rate is half of what it used to be. After 60 years later, it is only one percent.

And:

…the process of US TFP increments has only one break over the past 130 years, around 1930, following the large-scale implementation of the electricity revolution…For the UK, I find two breaks between 1600 and 1914. The first is between 1650 and 1700, when growth becomes positive. The second is around 1830. These breaks are consistent with historical research on the first and second industrial revolutions…

The author argues that linear TFP growth holds for Thailand, Taiwan, and Korea as well, and indeed for all recent countries with data for TFP.

As Philippon puts it informally “New ideas add to our stock of knowledge; they do not multiply it.”

As stated above a very interesting paper, but I do have some worries.  First, his model fits “TFP” better than gdp growth per se, which (at least until recently) does appear to be exponential in advanced economies.  If I read the author’s pp.21-22 correctly, he is suggesting (speculatively) that 20th century gdp growth received an artificial inflation from improvements in educational achievement that perhaps are unlikely to be replicated.  Maybe, but the broader predictions of the theory — including on gdp growth — require further consideration.

Second, is TFP even “a real thing”?  Or is it a meaning-poor residual, based on arbitrary distinctions between “innovation” and “investment”?  Maybe the ongoing trend is simply that more innovation is embodied in concrete investments, thus causing TFP to measure lower?  Too much of the paper takes the TFP concept for granted.

Nonetheless worth a real ponder.

Solve for the equilibrium

Google Docs could soon suggest ways to improve the quality of your writing in addition to fixing straightforward grammar and spelling errors, the company has announced. A purple squiggly line will appear under suggestions to help make your writing more concise, inclusive, active, or to warn you away from inappropriate words.

Here is the full story.  Just as Google and Amazon search have become worse, the more general point is that franchise values tend to be cashed in at some point.