THE YEAR IN ECONOMICS
Nominations from top economists, including selections by Raj Chetty, Sendhil Mullainathan, and Angus Deaton
One favorite from this excellent round-up is by Hulten and Nakamura on metrics, selected by Diane Coyle (we previously sent her Indigo Prize paper):
Accounting for Growth in the Age of the Internet: The Importance of Output-Saving Technical Change by Charles Hulten and Leonard Nakamura
Main finding: Living standards may be growing faster than GDP growth.
Nominating economist: Diane Coyle, University of Manchester
Specialization: Economic statistics and the digital economy
Why?: “This paper tries to formalize the intuition that there is a growing gap between the standard measure of GDP, capturing economic activity, and true economic welfare and to draw out some of the implications.”
Robert Allen's "Absolute Poverty: When Necessity Displaces Desire" is another metrics-related piece on the list.
Also noteworthy, on the future of work:
Valuing Alternative Work Arrangements by Alexandre Mas and Amanda Pallais
Main finding: The average worker does not value an Uber-like ability to set their own schedule.
Nominating economist: Emily Oster, Brown University
Specialization: Health economics and research methodology
Why? “This paper looks at a question increasingly important in the current labor market: How do people value flexible work arrangements? The authors have an incredibly neat approach, using actual worker hiring to generate causal estimates of how workers value various employment setups.”
Full piece by DAN KOPF here.
- Interesting that seven of the 13 aren’t particularly about economics: they’re sociology/social psychology/public policy done by economists.
- The Chetty/Hendren/Katz paper (one of those seven) is particularly interesting in what it suggests for public policy evaluation – the Clinton program was widely seen as an utter failure, because evaluators looked for effects in the wrong places and at the wrong times (overall performance rather than later performance of children). This highlights a severe limitation of means-testing as ordinarily conceived: politically convenient, “instant feedback” metrics won’t detect effects that are long-term and subtle, even when those effects are exceptionally strong.
- Furceci/Loungani/Ostry is absolutely astonishing coming from within the IMF – it seems to be a vindication of the 1990s anti-globalization movement’s critiques targeting the World Bank’s and IMF’s neoliberal approaches.
- Glover/Pallais/Pariente is an example of looping. See Ian Hacking’s “Making Up People.”
Two new stories on ISAs
From the Washington Post, on a number of ISA programs that emerged in 2017:
"'It sends a message to the student that we're in this with you,' said George Latter, vice president of finance and administrative services at Point Loma. ‘And unlike a grant, you have the prospect of these funds coming back in and creating a revolving form of financing.'"
Article by DANIELLE DOUGLAS-GABRIEL here.
From the Minneapolis Star Tribune, on Better Future Forward’s partnership with College Possible:
“At College Possible, officials say they were intrigued by the idea precisely because it doesn’t lock new graduates into fixed monthly payments, like traditional loans that can last 10 to 25 years.
“‘There are only so many options for how you can pay for college, and we wanted another option,’ said Traci Kirtley, chief program officer for College Possible, a Minnesota-based group that works with low-income students.”
Article by MAURA LERNER here.
Will comments: “If you stand these stories next to similar ones published in years past, you'll notice a shrinking number of column-inches devoted to D.C. think tanks and their theoretical objections to imagined ISA programs. Filling the gap are the voices of students, educators, social entrepreneurs, and non-profit leaders.”
- The Washington Post piece sparked a lot of discussion (and debate) on Twitter. One response was from Susan Dynarski, who linked to her 2016 op-ed comparing the US system to Australia’s. “In Australia, income inequality is much higher than in Sweden. Yet while students borrow about as much as they do in the United States (30,000 Australian dollars, or about 22,000 USD), the system works smoothly because borrowers pay nothing until their earnings reach about 40,000 USD. Above that threshold, borrowers pay 4 percent of their income until the debt is paid off. Payments rise and fall automatically with earnings, just as our Social Security payments do.” Link.
ANYONE CAN PLAY
Andrew Gelman on microstructure and nudges
"If you do one of these experiments and find a statistically significant pattern, it’s not enough for you to defend your own theory. You also have to make the case that just about everything else in the social psychology / behavioral economics literature is wrong. Cos otherwise your findings don’t generalize. But we don’t typically see authors of this sort of paper disputing the rest of the field: they all seem happy thinking of all this work as respectable."
Full post by ANDREW GELMAN here.
- Gelman's 2016 post on the same topic is recommended as well.
+ + +
- Jonathan Levy (who will be a JFI seminar speaker this spring) on the history of capitalism: “Engaging with many new works, my goal in this essay is to sketch out an alternative conceptualization of capital, which I believe is more adequate to the task of both writing the history of capitalism and illuminating the core dynamics of modern economic life. In this conceptualization, capital is not necessarily a material factor of physical production. Rather, capital is a particular kind of pecuniary process of valuation, associated with investment, in which capital may (or may not) become a factor of production.” Link. Adam Tooze on Twitter comments, “This is exciting. One of the foremost exponents of the new breed of ‘historians of capitalism’ J. Levy engages with capital theory.”
- Facebook is adjusting the way it presents fake news: “Academic research on correcting misinformation has shown that putting a strong image, like a red flag, next to an article may actually entrench deeply held beliefs – the opposite effect to what we intended. Related Articles, by contrast, are simply designed to give more context, which our research has shown is a more effective way to help people get to the facts. Indeed, we’ve found that when we show Related Articles next to a false news story, it leads to fewer shares than when the Disputed Flag is shown.” Link. ht Will. Jay comments: "There are two different stances you might take to deal with fake news without directly blocking it. One is the 'due diligence' approach: flag suspect articles so that users can use that added identification to inform their choices about whether and how to engage with them. But implicit here is a much stronger, and much more controversial, stance: Facebook is taking it for granted that its job is actually to alter people's beliefs--to fight the 'entrench[ment] of deeply held beliefs', and, presumably, to lead them to better ones based on accurate sources. In this case, this means taking information away from the end users. That's an incredibly bold position for the company to take."
- Brendan Nyhan et al have published a new study on fake news consumption during 2016 election cycle. Nyhan tweets the key findings: “heavily concentrated among [those with] most conservative info diets; Facebook key vector of exposure; fact-checks did not reach those exposed.” Related New York Times coverage.
- “There lies the Degrowth Fallacy: The fact that some countries have better social outcomes at a given level of mean income does not imply that richer countries can attain the same social outcomes at lower mean income.” Link.
- A new paper on labor market concentration, co-authored by Ioana Marinescu (a UBI researcher). Link. Noah Smith’s summary and context.
- A new paper titled “The importance of ‘extremely unlikely’ events: tail risk and the costs of climate change.” Link. Josh Quiggin, the author, gives brief context: “The IPCC convention is to use the phrase ‘extremely unlikely’ to refer to outcomes (in particular, values of climate sensitivity) in the range of 0–5 per cent. Most of the risks against which we act to protect and insure ourselves (for example, car crashes, premature death in any given year) are ‘extremely unlikely’ by this definition.”
- An announcement of a new research reproducibility study from the National Academies. Of note is the section on reproducibility in engineering: “Early in the meeting, committee members wondered how they should treat engineering, given that production of reliable designs is a primary goal of the field. David Sholl, an engineering professor at Georgia Tech, said that while in materials chemistry there is only “low-level concern” about R&R issues, meta-analysis has revealed that reported measurements are often unreliable.” Link.