Economics & Marginalia: May 3, 2024

Hi all,

We’re now two weeks into our return from Argentina, and the adjustment has been difficult for all concerned. My son has been deeply unimpressed with his return to nursery (he has suggested that we all quit our jobs and stay at home and play all day, to which I replied that my job is already as close to being allowed to play for a living as someone with my interests can get); the lack of sunshine has made us all a bit miserable; and I’ve even caught myself wondering why there was no longer a thin film of dulce de leche on everything pastry I was eating, before remembering that it’s probably a great public health benefit not to constantly have a pot of the stuff at arms reach, and to have (almost) exhausted our supply of alfajors. Nevertheless, the incessant rain and lack of sweet stuff is made up for by having an absolute bumper crop of good writing to report on this week, some of which is still me catching up from leave. On to it:

1. One of the things I missed last week was Jishnu Das’s excellent, heartfelt piece about the state of development economics. But he’s not talking about causal identification or taking potshots in the war on randomization, but about the deeper values that he suggests have gone missing from the discipline. I’m probably of a similar age to Jishnu and much of what he writes resonates. When I was young, and just starting in the field, what drew me to it was not that the research being done was at the cutting edge of the discipline or that it was being published in the best journals (it mainly wasn’t), but the fact that the questions it was asking were the ones I thought were most important, and that the places it was asking them were the ones which most needed new ideas. By and large, I think these things are both largely true about the discipline, but not quite as much; and I think its success as an academic discipline has changed something of what motivates the work done in it. I don’t know how much (if at all) this undermines the quality or usefulness of the work, but it does change its nature in some way, and like Jishnu, that can leave me feeling uncomfortable.

2. I recently co-authored on a paper on the economics of antimicrobial resistance (read it, it’s one of the best things I’ve worked on for a while); one of the overarching economic problems we identified was that working antibiotics are a common pool resource: a finite good many actors draw down on, with no mechanism to moderate use. For common pool resources, the rational action is to draw down the pool as much as you want to, because you know others will use it up if you don’t. The end result is a fully-depleted resource, even though we all know we could make it last if we could only coordinate on moderation. Hannah Ritchie identifies the same dynamic in a number of environmental problems, but she describes them as Moloch Traps. These are situations where there is a similarly destructive competitive outcome, even though it reduces welfare of all players, and they all know it. These problems are notoriously difficult to solve, but not impossible. Hannah describes some of the ways to do so.

3. I had an exchange this week about the importance (indeed, primacy) of economic growth in development. I’ve had many such exchanges over the last few years, and at some point they all turn to the same point: even if this is true, what can we do about it? I used to say that growth is hard, not complicated: more like playing the trumpet than building a spaceship. The difficulty means that even if you know where your fingers go and how to blow, you can still fail to get a good tune out; and that’s if you’re trying to play the thing in the first place. But that was always an unsatisfying answer: people wanted concrete suggestions, not stories about how we know a lot, but not enough. Open Philanthropy recently commissioned a piece by Stefan Dercon to provide a more satisfying response: what can we do to help others play the trumpet a bit better? It’s long, but very good, and highly recommended. Each section explains a general category of problem, what we can do about it, and what specific investments might look like. It’s still more a list of ingredients than a recipe, but a step forward.

4. I missed this one while I was away: a typically excellent piece by Michael Clemens offering a practical policy to reduce illegal border crossings: to offer more legal ones. It’s well-written, documents a serious problem, brings new evidence and insight to it, and offers a solution. Just a model of what valuable research should look like.

5. “Superman does not inspire me to try flying.” It’s worth linking to this piece about motivation by Tim Harford just for the line, but the whole piece is good. At heart, his message is simple: people are motivated by a range of things, some of them rather complex and which have very little to do with money. This is, or should be, self-evident to most people: we all have that one hobby that everyone else thinks is mad and joyless, and that leaves you standing in stinging nettles motionless for fifteen minutes while the agony creeps up your legs just so you can get a glimpse of the Ross’s Turaco skulking in the trees above you (yes, this did happen to me, why do you ask, and no, I didn’t see it—it flew off when I finally had to move). But the implications are possibly not quite so well understood, for individuals as well as organizations.

6. Dan Rogger and co-authors have a nice write-up of their recent research in Mexico about the role of public investment in residential neighbourhoods in stimulating private investment. As they put it, “Better lighting and proper pavement mean a better economy… One year after the programme investments, we find that wage spending has increased by 18% in study neighborhoods, and about 3% of firms have been pushed out and replaced by smaller, faster-growing firms (on top of the natural level of turnover).” It once again brings to mind one of my favourite ever comments on an FT blog: “it is pointless to be privately wealthy but publicly impoverished.”

7. What is the greatest album of all time? This is obviously a subjective question (though if your answer is Bubblegum by Mark Lanegan, Quarter Moon in a Ten Cent Town by Emmylou Harris or Let it Be by The Replacements, you’re correct), but the choices are not totally idiosyncratic to individuals. Men and women tend to choose differently (unsurprisingly, men are more likely to choose male-only lists; women are more likely to choose mixed lists); people from different countries or ethnic backgrounds tend to choose differently (until Ghost World came out, I didn’t know a single non-Asian who knew Jaan Pehechan Ho) and young people and old people have different taste (as do people of different generations). All of which means that the Rolling Stone rankings of the top 100 albums of all time have change *a lot* since 2003 (there have been three editions, ten years apart). Pudding have an incredible analysis of the changes, which looks beautiful, is fascinating from beginning to end (who knew Trout Mask Replica is not on Spotify?!). Highly, highly recommended. And on that note...

Have a great weekend, everyone!

R