Economics & Marginalia: October, 15 2021

Hi all,

Well, it’s a pretty dark day in the UK, both literally and figuratively. Another Member of Parliament, David Amess, was murdered doing their job, during a constituency surgery—a time he had made himself available to listen and respond to the problems and concerns of the people he represents. It brings back horrible memories of Jo Cox’s murder in the run up to the EU Referendum a few years ago, and there have been at least two other attempts on MPs’ lives in the last few years. Politics has been a depressing cesspit for a while now, and the electorate—that’s us, everyone—is a part of that. When did it become so difficult to disagree with people without hating them? I have an increasing sense that politics—on the part of both the elected and the electors—is less and less about trying to understand the world, and how to make it better and more and more about assertion and trying to diminish the people that disagree, rather than engage with (and dismantle if they’re wrong) the ideas behind those disagreements. And in case anyone thinks I’m making a thinly veiled party-political or Brexit related point here, I should be clear: it’s on all sides, even those I agree with. What a desperately sad, sorry state of affairs.

1. It feels odd to go from that slightly despairing introduction into a celebratory first link, but I can’t really lead with anything other than the Nobel in economics being awarded to three brilliant economists who have influenced virtually every economist in the world over the last thirty or so years: David Card, Josh Angrist and Guido Imbens. There has been a flood of good content about them, starting with the excellent long justification from the Nobel committee. I also really liked these videos: Guido Imbens discussing his work with his children (his wife, too, is a runner for the Nobel one day), and Josh Angrist explaining that econometrics is actually fun (it is when he teaches is: I have a friend whose video background features no fewer than three copies of Mostly Harmless Econometrics); and this interview with David Card. Planet Money interviewed the PhD advisor Card and Angrist shared, Orley Ashenfelter (transcript). The first few paragraphs of David McKenzie’s weekly links round up covers the Nobel, too, and is worth reading in full as well. And, of course, many also remembered Alan Krueger, who would have shared the award with Card were he still alive.
2. David Card wrote a fair bit about migration, but that’s not where you’ll look if you—like some of my friends—are slightly obsessive about understanding migration better. If you’re one of us, entranced by the magical economics of migration (seriously: huge supply shock? No problem, it came with a demand chaser! Wait, massive change in the skills composition of the labour force? Wait one moment while the economy updates its matches like a deck of cards being shuffled), you’re in luck, because Satish Chand and Michael Clemens have a new paper out. In it, they show that, even in the presence of an overall cap on migrant numbers, the optimal strategy is still a mixed of highly-educated and vocationally-skilled workers. The underlying economics is the presence of Leontieff production functions, in which complementary inputs are required, and no amount of extra from input A can make up for a lack of input B. As an aside, most sports teams can be understood in these terms (indeed most teams can). Unless you’re the West Indies in the 1970s, there comes a point where no number of new fast bowlers can make up for the fact that you need a spinner.
3. There is nary a Leontieff in sight, but I still think the paper I released this week was a pretty good read, too. In it, I try and go one step further than simply bemoaning that policy made in developed countries is a hopelessly contradictory mess; I try and understand why that is an equilibrium, and how we could start to shift it. There’s a thread, too, for the short-of-time.
4. You open a Tim Harford long read for sentences like “Late in 2019, the British people decided that Chaos Kong would make a good prime minister and elected Boris Johnson by a large margin.” But you keep reading because you’re learning with every paragraph. It’s not so much that every paragraph contains a knockout punch of economics—I don’t think he cites a single thing in this long piece on the economics of shortages and supply chains that I haven’t either read or read a summary of—but rather that he puts together amazing combinations. He effortlessly moves from Read to Thaler, from Keynes to Kremer, and he sees what links this vast body of work.
5. Want to make an economist sweat? Tell them that one of the most commonly used commands in their statistical package might be playing tricks on them. This is one for those who like the weeds, but worth it.
6. Making disaster response better is one of those things that is so obviously good, so obviously feasible and yet so hard to do that it makes you despair of the structures that tolerate failure for so long. This is the latest in a series of pieces that suggests changes to the system will save lives and money… and yet, they appear no nearer to becoming standard practice.
7. Lastly, The Many Saints of Newark has just been released—a prequel to the greatest TV show of all time (sorry McNulty), The Sopranos. I haven’t seen it yet, still getting through the whole of the Sopranos with my wife, who hasn’t seen it before, but the Ringer have made a definitive ranking of every episode of the show ever made. If you haven’t seen it all, you aren’t allowed to click through. These are the rules. If you have, please delight in one of the greatest artistic achievements of all time, and marvel at Pine Barrens not being number 1.

Have a great weekend, everyone!

R