Coal pollution and health before WWI

Research Design Meets Market Design: Using Centralized Assignment for Impact Evaluation
Date: 2016-12
By: Abdulkadiroğlu, Atila (Duke University) ; Angrist, Joshua (MIT) ; Narita, Yusuke (Yale University) ; Pathak, Parag A. (MIT)
Atmospheric pollution was an important side effect of coal-fired industrialisation in the nineteenth century. In Britain emissions of black smoke were on the order of fifty times as high as they were a century later. In this paper we examine the effects of these emissions on child development by analysing the heights on enlistment during the First World War of men born in England and Wales in the 1890s. We use the occupational structure to measure the coal intensity of the districts in which these men were observed as children in the 1901 census. We find strong negative effects of coal intensity on height, which amounts to difference of almost an inch between the most and least polluted localities. These results are robust to a variety of specification tests and they are consistent with the notion that the key channel of influence on height was via respiratory infection. The subsequent reduction of emissions from coal combustion is one factor contributing to the improvement in health (and the in-crease in height) during the twentieth century.

Posted in Economics and public policy, Environment | 3 Comments

From healthy youth to senescent decay: a list of examples and thoughts

Image result for everything old is new again

An incomplete series of thoughts beginning with a couple of paragraphs suggesting something with grander aspirations – which of course may be realised some day – but not in this blog post. Still I’m heading overseas now, and I’m not sure how the aspirations can be realised, so it’s a good time to pull the plug, sit on the plane and play “The bomb in the baby carriage” (something I always do) as the monster takes to the sky. These are the days of miracle and wonder.

I

Alexis de Tocqueville sought a mentor in political economy and sent a copy of the first volume of his Democracy in America to British political economist Nassau William Senior. Admiring the work, Senior nevertheless cavilled at Tocqueville’s suggestion that America was more egalitarian than England where, in law and in social experience “the welfare of the poor has often been sacrificed to that of the rich, and the rights of the greater number to the privileges of the few”. Senior argued that workers were better paid in England than elsewhere to which Tocqueville responded:

it seems to me that you give to the expression the good [le bien] of the poor a restricted meaning that I did not give to it: you translate it by the word wealth, which applies in particular to riches. I had wished to speak, myself, of all the things that can concur in the well-being of life: consideration, political rights, ease of obtaining justice, pleasures of the mind, and a thousand other things that contribute indirectly to happiness. I believe, until I have proof to the contrary, that in England the rich have little by little drawn to themselves all the advantages that the state of society furnishes to men.

In many ways Tocqueville’s comments anatomise some of the key benefits of America being a relatively young country. So long as social institutions were functioning tolerably – as they were in the US and Australia – things went along pretty swimmingly. Some of the most important are just the microeconomics of being a young country where the plenitude of resources leads to seemingly limitless expansion with labour scarcity underpinning a relatively egalitarian economy which itself underpins an egalitarian culture. Self-help author Mark Manson explains some of the microeconomics of being a young country in this fine bit of DIY economics.

Thomas Piketty has given us much food for thought on the way in which he argues the future will play out as our economy ages as income inequality works its way into even deeper levels of wealth inequality returning us to an age in which power returns to the rentier. For a country with our egalitarian traditions, we seem to have optimised at least two of our major institutions to smooth the path to Piketty’s dystopian vision. While our tax and social welfare system is one of the most redistributive in the world, our wealth management and education systems lead the world in their inequity. Thus our superannuation system contains around two trillion dollars of Australian wealth subject to (mostly) flat and very low taxation. And in schools, Australia is preeminent in moving quite rapidly towards greater educational inequity with good educations increasingly depending on the wisdom with which students choose parents who are willing and able to send them to private schools.

But Tocqueville was also talking about all those other ‘non-economic’ aspects of life that seemed to work out so much better in a young country.

II

Mancur Olson proposed the idea of ‘institutional sclerosis’ explained by Wikipedia thus: Continue reading

Posted in Cultural Critique, Economics and public policy, Innovation | 11 Comments

Linkbait and fakebait

Time was (I’m guessing, if it was it didn’t last long) when linkbait had standards. You (I’m obviously still guessing here) took some aspect of something and beat it up a bit. Anyway courtesy of ZergNet (who knew) I just saw this bit of linkbait.

George Michael’s Ex-Wham! Partner Breaks Silence Following Death

Thing is the tweet in question was published on the day after the event about which he was “breaking his silence”. Some silence.

Anyway, this gripe isn’t worth more than a tweet, but it took more than 140 characters to explain. So while I’m here I may as well add my plan to save the world from this kind of thing – or save it a little bit. Perhaps this already exists. Anyway you could have a plugin to your browser which is like an ad blocker on which you can occasionally indicate that you’re really unhappy with some bit of linkbait and then program your plugin to block further linkbait from the same source.

Oh and I know there are technical issues because the links to other stories are sometimes served differently to ads. But this post started as a tweet so all difficulties with my proposal are left for the reader to solve as an exercise.

 

Posted in IT and Internet | Leave a comment

Scaleability and the knowledge economy: or the micro-economics of hyper-bullshit

Image result for academic publishing racketsOne of the central contemporary critiques of the industrial revolution was its undermining of crafts and craftsmanship. Today this is happening within the world of ideas. And at least right now, it’s looking like this is not a very happy development. This was brought home to me viscerally recently as I went through the hoops of publishing my first article in an academic journal in a few years. It takes me about five years to forget how agonising the academic publishing is, and then I agree to do it again. (In case you’re interested, the article, which summarises a substantial chunk of my work on the lamentable history of Australian automotive industry policy is here.)

As you’re no doubt aware, over the last few decades a few dominant academic publishers have bought up most of the high-status academic journals. The business model is simple.

  • Freeload off the expertise of academics and those institutions that were built to solve the many free-riding problems of information, knowledge and know-how. Academics are overwhelmingly funded by the state and philanthropy but are now benchmarked like lab-rats in a Skinner box against their publication record in academic journals.
  • Automate by providing an IT platform on which this can be arranged.
  • Offshore lower-skill labour requirements.
  • Fund ‘public relations’ and ‘stakeholder relations’ to obfuscate and delay sensible action.

Continue reading

Posted in Bullshit, Economics and public policy, Information, Innovation, IT and Internet | 6 Comments

The long run benefits of Good Early Childhood Programs

This paper estimates the large array of long-run benefits of an influential early childhood program targeted to disadvantaged children and their families. It is evaluated by random assignment and follows participants through their mid-30s. The program is a prototype for numerous interventions currently in place around the world. It has substantial beneficial impacts on (a) health and the quality of life, (b) the labor incomes of participants, (c) crime, (d) education, and (e) the labor income of the mothers of the participants through subsidizing their childcare. There are substantially greater monetized benefits for males. The overall rate of return is a statistically significant 13.0% per annum with an associated benefit/cost ratio of 6.3. These estimates account for the welfare costs of taxation to finance the program. They are robust to a wide variety of sensitivity analyses. Accounting for substitutes to treatment available to families randomized out of treatment shows that boys benefit much less than girls from low quality alternative childcare arrangements.

By Garcia, Heckman, et al. Paper here.

Posted in Economics and public policy, Education | 6 Comments

Cold showers aren’t always invigorating

Foreign Competition and Domestic Innovation: Evidence from U.S. Patents by David Autor, David Dorn, Gordon H. Hanson, Pian Shu, Gary Pisano

Manufacturing is the locus of U.S. innovation, accounting for more than three quarters of U.S. corporate patents. The rise of import competition from China has represented a major competitive shock to the sector, which in theory could benefit or stifle innovation.  In this paper we empirically examine how rising import competition from China has affected U.S. innovation.  We confront two empirical challenges in assessing the impact.  We map all U.S. utility patents granted by March 2013 to firm-level data using a novel internet-based matching algorithm that corrects for a preponderance of false negatives when using firm names alone. And we contend with the fact that patenting is highly concentrated in certain product categories and that this concentration has been shifting over time.  Accounting for secular trends in innovative activities, we find that the impact of the change in import exposure on the change in patents produced is strongly negative.  It remains so once we add an extensive set of further industry- and firm-level controls.  Rising import exposure also reduces global employment, global sales, and global R&D expenditure at the firm level. It would appear that a simple mechanism in which greater foreign competition induces U.S. manufacturing firms to contract their operations along multiple margins of activity goes a long way toward explaining the response of U.S. innovation to the China trade shock.

Posted in Economics and public policy | Leave a comment

The paradoxes of shareholder primacy and ‘short-termism’

Image result for Wile E. CoyoteIn a recent speech “Who owns a company?”, Andy Haldane has this to say:

In the earlier period, dividends decreased as often as they increased.  This is as we would expect if profits fluctuate both up and down.  After 1980, however, we see a one-way street. Dividend payout ratios almost never fall.  This is evidence that the short-term quest for smoothing shareholder returns has come to dominate payout behaviour, almost irrespective of profitability.

Is short-termism quite the right expression for this phenomenon? 1 Even if you could divide a company’s share register into those with short and long-term investment horizons, there’s a paradox. Other things being equal, increasing the steadiness of the dividend stream doesn’t meet short-term shareholder needs. Firstly in a liquid share market, the distinction between income and capital value is pretty artificial. Shareholders generally seek the best return of income plus capital gain they can. And not only would you expect that. In a well-functioning market, the payment of a dividend would be reflected in an equal and opposite movement in the capital value of the companies’ shares, but that’s pretty much what you do see – at least on the day that shares go ex-dividend. 2

So it seems to me that this transition towards more steady payment of dividends can’t be explained by a move towards ‘short-termism’, or if it is, there’s something more to be explained – which is why such behaviour is more consistent with the interests of short-term than long-term investors. So I think we need to go looking for the real phenomenon here in the conditions under which the market might reward this kind of behaviour – which is clearly damaging to the wellbeing of companies in the market. It seems to me that the answer is tied up in the transition from some earlier form of capitalism towards managerial capitalism.  If the capital market acted rationally, then, other things being equal, it would mark down companies that maintained continuity in their dividend payments when profitability fell, because this suggests bad management and increases in the firm’s financial fragility. 3 Continue reading

  1. One preliminary point needs to be got out of the way for the purposes of discussion. There are two sides of the dividend transaction – the company and the shareholder. One possible legitimate reason for companies maintaining a more stable dividend policy is that their shareholders appreciate this and that shares are in competition with other assets like bonds and deposits and that therefore a more stable dividend policy represents a new compromise between the interests of the shareholders and ‘the company’ (ignoring the obvious fallacy of composition in that contrast). So to some extent, this development may not be pathological. I’m proceeding on the assumption that it’s not as simple as this – that this development suggests something fishy is going on.
  2. Indeed, in an efficient capital market, other things being equal, one can think of two reasons those with short-term time horizons might prefer capital gains to income. Dividends generate slow, steady gains whereas capital gains can come quickly as the market reevaluates its view of the long-term potential of a stock. And dividends are usually less tax-efficient than capital gains (though in Australia franking credits complicate this story.)
  3. Again I’m leaving aside the prospect that volatility of profits is likewise suppressed by management’s accounting decisions.
Posted in Bullshit, Economics and public policy | 4 Comments