Economics & Marginalia: May 19, 2023

Hi all,

Many apologies for the unscheduled break in the Links last Friday. It’s long been a point of pride that, excepting planned holidays, I never miss a Friday. Last week’s sudden absence was—to the best of my recollection—the first since the 24^th of June, 2016; as the votes were tallied that morning and it became apparent that the UK had voted to leave the European Union, I was struggling to articulate anything beyond a stream of swear words and sighs. Last Friday wasn’t quite that bad—a 48 hour bug was sweeping through the household (I was the only one spared) and I was called upon to lay down the pen and hyperlinker and take up bold mop and bucket. The two things they don’t tell you enough about parenting before you have kids is how much fun it is (not always, but often) and how rewarding it makes the most mundane acts. Anyway, there’s a lot of economics and assorted geekery to get through from the last couple of weeks. Let’s start.

1. Is ‘Global Development’ dead? David Oks and Henry Williams think so, and Ken Opalo says we should all read and reflect on their argument, though he finds weaknesses in it and doesn’t endorse it all. Ken finds merit in two particular parts of their argument: that focus on precise answers to measurable questions has ignored more important, but harder-to-answer questions of historical, geographic and political questions; and that the path to rapid economic transformation has closed off and there is insufficient attention in global development work to reopening it. He points out the very obvious flaw in their argument, that—by virtually any metric available—developing countries have done very well on the whole over the period that apparently heralds the death of global development, but I think there are at least three further problems with their argument. The first is that if development policy is in the doldrums, it’s because of its own dramatic success: the fundamentals of economic management, even as debt crises emerge, are so much better than they were in the 1980s and 1990s that there’s little point spending ages talking about basic macroeconomics. Everyone knows. That, by necessity, leaves only much harder problems or more specific ones. Second, policymakers don’t follow researcher trends; they respond to local political and socioeconomic pressures. If trends in university research don’t reflect some big questions that need to be resolved for development, that doesn’t mean they aren’t being thought about, responded to and discussed (and as an aside, we are surely entering a new golden age in ‘big idea’ books on development: Dercon, Acemoglu and Johnson, Blattman, Ken’s own and Alice Evans’ forthcoming book all fit that bill). And lastly, the idea that the one true path to prosperity has been closed off is overblown. I’ll have more to say about that this summer in a forthcoming paper with colleagues.
2. This, by Alex Tabarrok, on how important the idea of economic substitutes is to understanding the ways in which the economy changes and can be unexpectedly resilient, is very good. He says policymakers often underestimate the existence of substitutes that they have not yet thought of. I will add: they often imagine things are substitutes when they are most certainly not.  
3. On CGD’s own blog, Pam Jakiela summarises her research on the long term effects of a multifaceted employment support programme on young women in Nairobi (an intervention she compares with a cash transfer). She finds both interventions had significant, lasting effects on the likelihood of women become entrepreneurs, but the effects on incomes disappeared relative to the control group by year two. In other words, beneficiaries change the kind of work they do for good, but do not become lastingly better off in income terms than non-beneficiaries. And yet, they continue in self-employment for a simple, and very important, reason: they prefer it. These interventions had a significant impact on wellbeing, because—at least in this setting—people prefer not to work for others. It’s an important, under-appreciated (including, sometimes, by me) point.
4. David McKenzie summarises his forthcoming work with Dean Yang setting out the ways in which migration policy interventions can improve outcomes (and welfare) even in the absence of government policy changes. It’s an excellent, clearly structured approach, and important: some funders think that working on migration is a dead end because the politics are difficult, but not all the paths to impact need to run straight through politics. And as a reminder of why this matters so much, Mushfiq Mobarek and co-authors demonstrate, again, the truly massive, transformational benefits migration can bring.
5. Robert Lucas, one of the great economists of his (indeed, any) generation, died this week. Two good appreciations: this one, by the Argentine macroeconomist Ivan Werning, is excellent, but perhaps requires a slightly higher baseline level of knowledge to get the most from. And this, on Planet Money, caters to those who know much less about Lucas’s work (transcript).
6. Andrew Gelman on p-values, and rather more importantly, that they are a symptom of a problem in science and not the problem itself.
7. Much like Tim Harford, I love board games. He writes something of a love letter to them here, regardless of whether they aim to teach skills or morals or just to be fun for their own sake. But I need recommendations. My wife and I were playing Pandemic: Legacy as 2019 turned to 2020 and the game became real life. Since then she’s vetoed any return to it: still too triggering. Scrabble is usually out, since a 2 and half year old who doesn’t sleep well usually reduces our brains to mush by 9pm so a game and a bottle of wine would likely descend into a war of two-letter words. What else should we play? It needs to have a quick on-ramp, so we can enjoy it quickly after starting. We don’t have the patience for a slow burn anymore. Monopoly is terrible, Pandemic is banned, I’ve been banned from Trivial Pursuit because a photographic memory makes it unfair, and Pictionary needs more people than we usually have. What are we missing?

Have a great weekend, everyone!

R