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From this morning’s perusal of the fresh academic literature (the papers are gated, but worth perusing should you track down a free version). In my less bloggy retired days I’d pull out excerpts for you.

  1. Poverty in the developing world is very likely falling much faster than previously thought (and it was falling fast already). The paper is simply about measuring poverty, and does so with a clever instrument. It says nothing about causes. How does this result fit your preferred narrative?
  2. Surprise – we vote because we want to tell other people about it. What policy would the nudgers recommend in response?
  3. I was especially surprised by this, or should I have been: “there is a strong social gradient in maternal drinking, with mothers in higher socio-economic groups more likely to drink.’ Paper is here, on the impact of in-utero alcohol exposure on learning outcomes
  4. The entire blogosphere has commented on this. A lot. It was released by NBER today. Mobility seems to have NOT declined at all on 50 years. What does this do to your preferred narrative? Don’t forget, this still means that it’s pretty awesome to be born into a well-off family.
  5. Are clean energy mandates (more like input standards) more efficient, in some cases, than market-like emissions trading programs?
  6. And speaking of the hedonic treadmill, remember that my old Professor Robert Frank tells us that one reason inequality is bad because when poor little Wintercalf sees the Big Bull across the street with a $5,000 barbecue, I end up buying a giant BBQ that I don’t need either, just to keep up with the Joneses. Such is the case made for a progressive consumption tax, to make all of us better off on our own terms – all the resources wasted in these positional arms races leave the distribution of top versus bottom unchanged, but now we end up with a lot more steel and titanium in barbecues than in (our planners’ preferred) other forms of capital and technology. Here is a bump in the road for that story: “Using household level data on debt accumulation during 2001-2012, we show that low-income households in high-inequality regions accumulated less debt relative to income than their counterparts in lower-inequality regions, which negates the hypothesis. I’m sure this will be widely reported, especially by the esteemed Gray Lady.
  7. Is this evidence to oppose more liberal immigration policies: ” Migrants from low-trust environments are especially affected by the low trust in their country of origin even after migration, while migrants from high-trust environments are less likely to import the high trust of their country of origin to their current country of residence?”
  8. This definitely surprised me: ” Using an age-based regression-discontinuity design applied to restricted-use data from several sources, we find no evidence that legal access to alcohol has effects on motor vehicle accidents of any type in New South Wales, despite having large effects on drinking and on hospitalizations due to alcohol abuse.”
  9. Getting dirt and particulates out of the air saves lives. That should not be surprising, and indeed this is where the big gains from cleaning up coal come from (how does this alter your preferred narrative?). In any case, here is the latest finding on the impact of the Clean Air Act Amendments, ” In present value, the gains from being born into a county affected by the 1970 Clean Air Act amount to about $4,300 in lifetime income for the 1.5 million individuals born into these counties each year.” Of course, the 1970 Amendments themselves did very little, if anything. The real bite came in 1977.
  10. Are inner-city school age kids doomed? Not according to this randomized trial (small sample) – indeed, using these interventions has the ability to improve test score performance by half a standard deviation (that’s a big result). And the experiment seems to have been very cost effective. How does this fit your preferred narrative?

9 Responses to “Things Which May Surprise You”

  1. Greg says:

    I suspect #6 can be explained by the relative cost of living, which I imagine is higher in high-inequality areas. Remember that wealth is perceived, and perception is relative. If I get some free time today I’ll look for data on this.

    • wintercow20 says:

      Hi Greg, that was my first reaction. But the paper seems to have included specifications with AND without those controls, so it’s been accounted for, and it seems pretty well …

      Here is the text from one part of their paper (there are other controls in there that seem to pick up cost of living too):

      “A second concern one might have is that regional inequality is correlated with other regional economic characteristics and that it is the latter that are most relevant for household debt accumulation decisions. We control for this possibility in several ways. First, we include an additional vector of zip-level control variables:

      where ܹ௖ is the set of location-specific controls. The set of location-specific controls includes the median expected income in the zip code in 2001, the median of (log of) the household’s total debt in 2001, and the median of (log of) the household’s mortgage debt in 2001. Results are presented in Panel C of Table 3. Again, our baseline estimates of the effects of household rank, local inequality and their interaction are almost unchanged. This is also illustrated graphically in Panel B of Figure 5: our estimates with both
      household and regional controls suggest that increasing inequality by one standard deviation is associated with households at the 80th percentile increasing borrowing relative to income by almost 13 percentage points, at the 50th percentile households increase borrowing over income by 3.5 percentage points, and at the 20th percentile households decrease borrowing over income by almost 6 percentage points. The
      difference between high- and low-rank households is essentially the same as before.”

  2. Harry says:

    Thanks once again from one freeloading on your efforts to keep up. I was surprised, and I will read more..

    The progressive income tax people have been sore ever since Reagan lowered rates, giving me and my doctor big raises, relatively speaking. I thought if you worked hard you were supposed to get ahead, and keeping forty percent of the next dollar earned made it worth the effort.

  3. Alex says:

    Wow. That educational (well, social-cognitive) intervention is a HUGE result! Thanks for sharing.

    Looking forward to the Chetty/inequality article.

  4. Harry says:

    Mobility has not changed for fifty years? Before I throw in my two cents, please let me observe I was taught by a great company I worked for not to believe anything you hear and only half of what you see, practical advice that through experience has proven wise.

    Given that preposterous assertion, what does it say about the Progressives and the a Communists who were supposed to save us from this impossibly unfair world, where now our president exhorts us to eliminate inequality?

    Not that I thought that eliminating inequality was such a great idea, even when I was husbanding my pocket change. If you are hungry, the object is to make yourself not equal to other hungry people, and this is accomplished by working.

    I question that assertion about mobility not changing since 1954; it runs counter to intuition, and forgets the period after the Jimmy Carter recession, post 1982, when a rising tide lifted all boats.

    • wintercow20 says:

      Harry, the reason this is making the rounds is that the general belief is that mobility has DECREASED. So saying it is unchanged is the surprising (so we say) result, in a “good” sense. By the way, this just came out too: http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/29/everyone-likes-the-idea-of-equal-opportunity-this-economist-thinks-its-a-fantasy/

      • Harry says:

        I should have read more closely, WC.

        Thanks for the link to the WP blog, where it seems each author cites his own previous inferences, a tautological appeal to authority. Sorry that I could not read through the piece, but I get your point. Maybe we can promote a logical cage fight between the author and WC.

        You have often written that the world today, in comparison to 3,000 years ago, or 200 years ago, or maybe yesterday is far better off because of liberty. I know “better off” may have its own hidden assumptions that would be challenged in the faculty salon, but it is absurd to argue that economic mobility has decreased or remained static unless one is referring to New York license Nazis shutting down little girls’ cupcake enterprises.

  5. Scott says:

    a few amateur reactions…

    1. the metric is indeed quite creative, and I imagine a cost-effective form of legitimate data collection.

    2. Surprise!

    4. Someone please tell the commander in speech.

    7. I don’t see why ‘trust’ as described in number 7 should really impact immigration policy. Perhaps I am missing something? Immigrants from high environment may be more likely to invest with new partners, more friendly, etc. But couldn’t someone who trust the world less be just as well off, by being more likely to fend for themselves? I guess I don’t understand why ‘trust and generosity’ and inherently ‘good’ for the country.

    8. Could be a sign that the folks down under have built a much higher alcohol tolerance than folks up here, or it could mean they have more access to public transportation…or it could mean that perhaps intoxicated driving, or just drinking for that matter, isn’t as evil as we are meant to believe. I once had a professor tell me that during the majority of American history the majority of people were drunk.

    10. I find to be the most ‘exciting’ surprising fact. But this highlights the importance of individual responsibility in a way that would make supporters of progressive policy uncomfortable.

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