Blogwatch: December 2023🍋
Blogwatch: December 2023🍋
Nobel ideas, Covid, nudges, flourishing, ranking, dollarisation & Phillips curves
Noble, and Nobel, endeavors
This year’s Nobel Prize in Economics went to Professor Claudia Goldin, the Henry Lee Professor of Economics at Harvard University.
“For having advanced our understanding of women’s labor market outcomes”.
Kevin Bryan at the A Fine Theorem blog writes
“Not entirely unfairly, she will be described in much of today’s coverage as an economist who studies the gender gap. This description misses two critical pieces. The question of female wages is a direct implication of her earlier work on the return to different skills as the structure of the economy changes, and that structure is the subject of her earliest work on the development of the American economy. Further, her diagnosis of the gender gap is much more optimistic, and more subtle, than the majority of popular discourse on the topic”.
The end of Covid? And a nudge toward second thoughts
Timothy Taylor at the Conversable Economist blog writes on “End of Covid pandemic in the US? The excess deaths measure”.
Taylor argues that when it comes to Covid and deaths during the pandemic, one way to sidestep many of the questions of categorisation and classification is to just look at the total “excess deaths” – that is, the number of deaths above the usual statistical prediction. Looking at the US data he says that the Covid pandemic is obvious but it seems that excess deaths have gone to zero over the past six months, and thus the Covid pandemic is over in the United States.
Taylor also has second thoughts about nudge-based behavioral policies. He writes,
“However, a couple of active researchers in behavioral economics are now expressing some doubts about the role of “nudges” in public policy. Nick Chater and George Loewenstein have written “The i-frame and the s-frame: How focusing on individual-level solutions has led behavioral public policy astray” “
He explains that Chater & Loewenstein's make the argument that while behavioural interventions often do have some positive effect, the size of the effect is often small.
“In short, nudges based on research studies in behavioral economics have an positive effect, but in the real world, the average effect is pretty close to zero”.
Chater & Loewenstein continue by applying the behavioural economics concept of how a question is framed to the thinking behind public policy choices. They argue that behavioural economics has an emphasis on nudging individuals to make better choices. But once the problem and solution are framed in that way, it is harder for policies that focus on systemic changes to be adopted, or even considered.
Taylor says that in theory, there is no contradiction between, say, a policy of discouraging smoking with warning labels and images on cigarette packages, and having policies like taxes on cigarettes and bans on smoking in workplaces and restaurants. But, he notes, Chater & Loewenstein cite research evidence that, for example, when people and policy-makers first consider a “nudge” policy toward using carbon-free energy, they are then less likely to support a carbon tax. This implies that farmers who have taken steps to adapt to climate change may be less likely to support government steps to reduce climate change.
Will stakeholder capitalism flourish?
At the Freedom and Flourishing blog Winton Bates asks “does stakeholder capitalism contribute to human flourishing?” And, somewhat controversially, his answer seems to be no. Bates says that his recent reading on stakeholder capitalism is only adding to his concerns — specifically that the increased tendency of businesses to seek rewards from governments for the pursuit of environmental and social goals is leading liberal democracies more deeply into a corporatist quagmire.
Yet another journal ranking
Greg Mankiw at his Greg Mankiw’s Blog points us to a new journal ranking — and don’t economists just love journal ranking, especially one that ranks journals you publish in more highly — based on relevance for central banks! I must say I do not see how that is a particularly useful ranking criterion but, anyway, at the top is the Brookings Papers on Economic Activity, followed by the Quarterly Journal of Economics and the Journal of Monetary Economics.
Make of it what you will.
Three cheers for dollarisation
At his blog, The Grumpy Economist John Cochrane explains why he is “pro dollarization” for Argentina. His, rather long, blog post comes in several parts, with titles that outline his case: “Why not? A standard of value”, “Precommitment”, “The limits of precommitment”, “Transition” and “The standard answers”. (He has also made some updates to the post, which only adds to its length.)
Cochrane’s post ends with the simple but important practical point,
“Dollarization would obviously be a lot easier if it is worked out together with the US government and US banks. Getting cash sent to Argentina, getting banks to have easy payment systems in dollars and links to US banks would make it all easier. If Argentina gets rid of its central bank it still needs a payment system to settle claims in dollars. Accounts at, say, Chase could function as a central bank. But it would all be easier if the US cooperates”.
Worth the time to read, if this is your thing.
But what would Bill Phillips make of it?
At VoxEU Jennifer Castle & David Hendry try to unravel the instabilities in UK Phillips curves. Their column What a puzzle! Unravelling the instabilities in UK Phillips curves concludes that,
“UK Phillips curves relating nominal wage inflation to the unemployment rate are unstable with slopes that are up, down, and sideways in sub-periods over 1860–2021. But the puzzle of what caused these shifts in subsample Phillips curves is resolved as follows:
a) Mis-specification encompassing revealed that the subsample shifts could be matched by the fit of a constant parameter real-wage equation
b) Partialling out from nominal wage inflation the full-sample sum of the fitted regressors, other than the unemployment rate, revealed all the subsample equations had similar slopes in the range -0.67 to -0.85
c) Surprisingly, the unemployment rate was uncorrelated with that variable on the full sample but tests confirmed the validity and invariance of conditioning nominal wage inflation on the unemployment rate
d) Insignificance of variables in subsamples that were significant in the full-sample real-wage equation was because of little time-series variation
e) Imposing full-sample estimates on these insignificant subsample coefficients produced no deterioration in fit, identifying that the culprits behind the instability were their absence, not big shifts.”
By Paul Walker
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Re the blog on the covid pandemic - perhaps economists should leave it to actual experts to assess whether a pandemic is over or not.