{"feed":"Marginal-REVOLUTION","feedTitle":"Marginal REVOLUTION","feedLink":"/feed/Marginal-REVOLUTION","catTitle":"Business","catLink":"/cat/bussiness"}

A few points: 1. Facebook can now claim it is truly addressing the problems (way exaggerated in my opinion) associated with the 2016 election.  This looks decisive, and the company can present it as a turning point. 2. In essence, they are blaming the media, without having to throw the stones themselves.  Americans respond positively to attacks on the media, so this is a strong public relations move.  Facebook retains the option of blaming the media more explicitly for its previous troubles, if need be. 3. The news feed can always be reintroduced under another name or guise.  Two years from now, the entire dialogue about the major web companies is likely to be different, one way or another. 4. I do understand this may devastate some marginal media outlets, and in fact many media outlets are marginal these days in economic terms.  Still, in the longer run I prefer a scenario where other web sites try to compete with Facebook rather than being co-opted by it and dependent on it. 5. Does this mean more ads will turn up on Instagram, chat apps, Facebook Messenger, and other Facebook services? There is also this angle (NYT, speculative): Facebook’s pulling back from the news — which necessarily depends on conflict — and elevation of homier material may bolster the company’s attempt to enter China, where it has been met with stiff resistance. “Facebook is just desperate to get into China, and it will never...

The World Bank repeatedly changed the methodology of one of its flagship economic reports over several years in ways it now says were unfair and misleading. The World Bank’s chief economist, Paul Romer, told The Wall Street Journal on Friday he would correct and recalculate national rankings of business competitiveness in the report called “Doing Business” going back at least four years. The revisions could be particularly relevant to Chile, whose standings in the rankings have been especially volatile in recent years and potentially tainted by the political motivations of World Bank staff, Mr. Romer said. …Over time, World Bank staff put a heavy thumb on the scales of its report by repeatedly changing the methodology that was used to calculate the country rankings, Mr. Romer said. The focus of the World Bank’s corrections will be changes that had the effect of sharply penalizing the ranking of Chile under the most recent term of Chile’s outgoing president, Michelle Bachelet. “I want to make a personal apology to Chile, and to any other country where we conveyed the wrong impression,” Mr. Romer said. The problems with the report, he said, were “my fault because we did not make things clear enough.” That is by Josh Zumbrun and Ian Talley at the (gated) WSJ.

The post The Doing Business Index is being recalibrated appeared first on Marginal REVOLUTION.

1. IKEA does price discrimination. 2. Chinese plans for the 2022 Winter Olympics. 3. The Bush administration, diplomacy, and North Korean nukes. 4. Will simulating empathy through VR help or hurt? 5. Russian economic history postdoc, working under John Nye.  And be a Hoover National Fellow. 6. How much did late marriage boost the Industrial Revolution? 7. Two-day shipping boosts the price of industrial land.

The post Saturday assorted links appeared first on Marginal REVOLUTION.

That is the topic of my latest Bloomberg column, here is one bit: Or consider Nigerian-Americans, Nigeria being the most populous nation in Africa. Their education levels are among the very highest in the U.S., above those of Asians, with 17 percent of Nigerian migrants having a master’s degree. And: Economist Edward Lazear suggests a simple experiment. Consider immigrants to the U.S. from Algeria, Israel and Japan, and rank them in order of most educated to least educated. The correct answer is Algeria, Israel then Japan. Although that’s counterintuitive at first glance, it’s easy enough to see how it works. If you are Algerian and educated, or aspire to be educated, your prospects in Algeria are relatively poor and you may seek to leave. A talented, educated person in Japan or Israel can do just fine by staying at home. These kinds of considerations explain about 73 percent of the variation in the educational outcomes of migrants. Do read the whole thing.

The post Let’s have more African immigrants appeared first on Marginal REVOLUTION.

1. Extreme peak-load pricing for London restaurant. 2. History of Henry George, NYC, and the single land tax. 3. Economics lessons from the career of Andre Agassi? 4. If you would like to attend my NYC Conversation with Matt Levine. 5. WSJ review of Hanson and Simler. 6. “Butcher breaks out of own freezer using black pudding.”  Beef and lamb prove to be inferior escape tools. 7. Is there any argument whatsoever for having the pages of your books, rather than the title spines, facing outwards?

The post Friday assorted links appeared first on Marginal REVOLUTION.

Scott Alexander at SlateStarCodex riffs off my post on how we laugh at Oregonians afraid to pump their own gas while not looking at our own absurd restrictions on cutting hair, for example, and adds a few of his own: There are way too many discrepancies in approved medications between countries to discuss every one of them, but did you know melatonin is banned in most of Europe? (Europeans: did you know melatonin is sold like candy in the United States?) Did you know most European countries have no such thing as “medical school”, but just have college students major in medicine, and then become doctors once they graduate from college? (Europeans: did you know Americans have to major in some random subject in college, and then go to a separate place called “medical school” for four years to even start learning medicine?) Did you know that in Puerto Rico, you can just walk into a pharmacy and get any non-scheduled drug you want without a doctor’s prescription? (source: my father; I have never heard anyone else talk about this, and nobody else even seems to think it is interesting enough to be worth noting). Scott then strikes at the heart of the issue: So maybe the scary thing about Oregon is how strongly we rely on intuitions about absurdity. If something doesn’t immediately strike us as absurd, then we have to go through the same plodding motions of debate that we do with everything else – and...

Maybe not, as I argue in my latest Bloomberg column: The numbers instead indicate that lobbying hurts the underlying capital values of the corporations. Lobbying doesn’t increase the chance that favored bills are passed by Congress, and it isn’t associated with the company receiving more government contracts. Those are the key results from a new study by Zhiyan Cao, Guy D. Fernando, Arindam Tripathy and Arun Upadhyay, published in the Journal of Corporate Finance and considering 1,500 S&P companies over the period 1998 to 2016. Neither spending money at all on lobbying nor spending more money on lobbying over those years seem to help companies, and for that matter contributions to political action committees don’t work either. And: If corporate lobbying is an unprofitable use of money, why does it happen? One possibility is that corporate leaders are using company resources to indulge their own ideological preferences. Other researchers have found that companies with weaker governance and more entrenched management are those more likely to spend on lobbying. This study finds that lobbying expenditures are higher when the percentage of CEO perks is higher and when the board of the company is larger. It’s also possible lobbyists are ripping off companies with slick sales pitches, or that incompetent CEOs are spending money on lobbying so they seem to be doing something constructive. Do read the whole thing, I also consider under what kind of hypothesis the lobbying actually might be paying off.

The post...

The title of the paper is “The Churches’ Bans on Consanguineous Marriages, Kin-Networks and Democracy” and the author is Jonathan F. Schulz, here is the abstract: This paper tests the hypothesis that extended kin-groups, as characterized by a high level of cousin marriages, impact the proper functioning of formal institutions. Consistent with this hypothesis I find that countries with high cousin marriage rates exhibit a weak rule of law and are more likely autocratic. Further evidence comes from a quasi-natural experiment. In the early medieval ages the Church started to prohibit kin-marriages. Using the variation in the duration and extent of the Eastern and Western Churches’ bans on consanguineous marriages as instrumental variables, reveals highly significant point estimates of the percentage of cousin marriage on an index of democracy. An additional novel instrument, cousin-terms, strengthens this point: the estimates are very similar and do not rest on the European experience alone. Exploiting within country variation support these results. These findings point to the importance of marriage patterns for the proper functioning of formal institutions and democracy. I recall reading related ideas in the MR comments section from Steve Sailer and others.  For the pointer I thank Alexander B.

The post Is marrying your cousin bad for democracy? appeared first on Marginal REVOLUTION.

A company which supplied lingerie to the Queen has lost its royal warrant over a book which revealed details of royal bra fittings. Rigby & Peller, a luxury underwear firm founded in London, had held the royal warrant since 1960. It was withdrawn after June Kenton, who fitted bras for the Queen, released a book called ‘Storm in a D-Cup’. Mrs Kenton said there was “nothing” in the book to “be upset about”, adding that it was an “unbelievable” decision. Buckingham Palace said it did not “comment on individual companies”. A statement from Rigby & Peller said it was “deeply saddened” by the decision, adding it was “not able to elaborate further on the cancellation out of respect for her Majesty the Queen and the Royal Warrant Holders Association”. The Royal Warrants Association says 20 to 40 Royal Warrants are cancelled every year – and a similar number granted. File under “elsewhere in the cosmos.”  And for the pointer I thank M.

The post “Queen’s bra fitter Rigby & Peller loses royal warrant” appeared first on Marginal REVOLUTION.

A Twitter battle over the size of each “nuclear button” possessed by President Donald Trump and North Korea’s Kim Jong-un has spiked sales of a drug that protects against radiation poisoning. Troy Jones, who runs the website, said demand for potassium iodide soared last week, after Trump tweeted that he had a “much bigger & more powerful” button than Kim — a statement that raised new fears about an escalating threat of nuclear war. “On Jan. 2, I basically got in a month’s supply of potassium iodide and I sold out in 48 hours,” said Jones, 53, who is a top distributor of the drug in the United States. His Mooresville, N.C., firm sells all three types of the product approved by the Food and Drug Administration. No prescription is required. Here is the full piece, via the excellent Mark Thorson.

The post Is this the market working or the market failing? appeared first on Marginal REVOLUTION.

Not long ago, over lunch, I asked Robin who he wanted to see rise and fall in status, as a result of his book with Kevin Simler.  As for who should rise, he cited the book’s epigram to me: To the little guys, often grumbling in a corner, who’ve said this sort of thing for ages: you were right more than you knew. —Robin So yes the little guys, but I also stress the cynics as well, or maybe it is the gentle cynics who go through life with a smile. And who should decline in status?  Robin’s lunch answer was again to the point: policy analysts.  Policy analysis, while it often incorporates behavioral considerations, when studying say health care, education, and political economy, very much neglects the fact that often both the producers and consumers in these areas have hypocritical motives.  For that reason, what appears to be a social benefit is often merely a private benefit in disguise, and sometimes it is not even a private benefit.  Things that feel good aren’t always good for you, or for the broader world.  Here is Robin’s take on that: Our new book, The Elephant in the Brain, can be seen as taking one side in a disagreement between disciplines. On one side are psychologists (among others) who say of course people try to spin their motives as being higher than they are, especially in public forums. People on this side find our basic book thesis, and...

1. Macron challenges farm subsidies. 2. Bitcoin conference stops accepting Bitcoin. 3. Bloomberg reports on five papers from the AEA meetings.  And Tankersley and Scheiber cover bias against women in the economics profession (NYT). 4. Gourmet chocolate becomes economic lifeline in Venezuela crisis. 5. Targeted attacks on speech-to-text. 6. Drones that play the piano.

The post Thursday assorted links appeared first on Marginal REVOLUTION.

That is a new paper (try the second link) by Nicholas Bloom, Faith Guvenen, Benjamin S. Smith, Jae Song, and Till Von Wachter.  Here is one significant bit: We see a strongly declining relationship between firm size and wages, dropping from around 0.09 in 1980 to under 0.04 in 2013. This is a sizable drop, and implies that in 1980 working for a large rm with 10,000 employees (about the 75th percentile of employment-weighted fi rm size distribution) compared to a small rm of 100 employees (about the 25th percentile) would be associated with about 60% higher earnings, while by 2013 this premium would have dropped to around 25%. Therefore, the LFWP [large firm wage premium] has been roughly cut in half since the early 1980s. And why? Our main results are that the LFWP is declining due to reductions in firm pay premiums that largely occur within industries. One hypothesis which is consistent with these findings is that a broad trend towards rising outsourcing has reduced the size of the largest, most sucessful fi rms and hence distorted the relationship between fi rm size and fi rm wage premiums. Goldschmidt and Schmieder (2017) fi nd evidence that workers employed in business service jobs face a 10-15% decline in wages when their jobs are outsourced to contractors or temp agencies. This result suggest that large fi rms outsource to reduce labor costs. Consequently, firms that pay large premiums may be reducing their size. Katz and Summers (1989) fi nd a large increase in the incidence of alternative...

1. Markets in everything: Sol LeWitt sports bra.  And there is no great stagnation. 2. Canadian documentary about Jordan Peterson.  Covers gnosticism, the Heideggerian side, Jung, etc.  Not so much about the anti-PC stuff or the personality psychology. 3. Virtual reality gyms. 4. Chetty’s on-line Stanford class. 5. The drone wars heat up, this time in Syria and against Russia. 6. Dylan Matthews on Auten and Splinter and inequality debates.

The post Wednesday assorted links appeared first on Marginal REVOLUTION.

That is the topic of my latest Bloomberg column, here is one excerpt: In essence, earmarks give congressional leaders more control over individual members. Recalcitrant representatives can be swayed by the promise of a perk for their district. That eases gridlock and gives extreme members of Congress something to pursue other than just ideology. But is more legislation always a good result? Advocates of smaller government should keep in mind that reforming spending and regulation requires some activism from Congress. Gridlock today is not the friend of fiscal responsibility, coherent policy, or a free, well-functioning capitalist economy. But what if you’re a Democrat? In these days of Republican rule, you might have discovered a newfound love for stasis. Still, earmarks make it harder for, say, far-right party members to hold legislation hostage to their demands. In other words, party leadership can put up a more centrist bill and then buy off the extremists with local benefits rather than policy concessions. There is much more at the link.  Addendum: I thank Garett Jones for spurring my interest in this topic.

The post In praise of earmarks appeared first on Marginal REVOLUTION.

The Guardian…Kelly the dolphin has built up quite a reputation. All the dolphins at the institute are trained to hold onto any litter that falls into their pools until they see a trainer, when they can trade the litter for fish. In this way, the dolphins help to keep their pools clean. Kelly has taken this task one step further. When people drop paper into the water she hides it under a rock at the bottom of the pool. The next time a trainer passes, she goes down to the rock and tears off a piece of paper to give to the trainer. After a fish reward, she goes back down, tears off another piece of paper, gets another fish, and so on. …Her cunning has not stopped there. One day, when a gull flew into her pool, she grabbed it, waited for the trainers and then gave it to them. It was a large bird and so the trainers gave her lots of fish. This seemed to give Kelly a new idea. The next time she was fed, instead of eating the last fish, she took it to the bottom of the pool and hid it under the rock where she had been hiding the paper. When no trainers were present, she brought the fish to the surface and used it to lure the gulls, which she would catch to get even more fish. After mastering this lucrative strategy, she taught her calf, who taught other calves, and...

Here in the land of technology leadership and free-market enterprise, American regulation has more than doubled the cost of solar. The regulation comes in three un-American guises: permitting, code and tariffs — and together they are killing the U.S. residential market. Modernizing these regulations, primarily at the local and state level, is the greatest opportunity for U.S. solar policy in 2018. To highlight the opportunity, let’s look at Australia, where nearly 2 million solar systems have been successfully and safely installed. As of early December, installed costs in the main Australian markets were at $1.34 per watt, compared to $3.25 per watt in the U.S. What does that difference stem from? In Australia, there is no permitting process. You simply lodge your request for interconnection online and go install it. The figure below highlights the relative mass of valueless work required to satisfy current city-level bureaucracy in the U.S., which adds between two and six months to delivery time and 47 cents per watt of cost directly to the installed system. That’s more than the cost of the panels themselves! …the U.S. National Electrical Code dictates a best practice that more than doubles the installation time relative to Australia, and adds incremental hardware expense — together adding 49 cents per watt to the cost of solar. There is no discernable difference in the quality and safety of solar installations overseas relative to the U.S. …There are no tariffs on imported hardware in Australia because it’s obvious to all that the jobs in solar are...

1. Update on Chinese credit and social ranking schemes. 2. Ross Douthat on Last Jedi, and Cass Sunstein on same. 3. Caplan and Noah debate education. 4. Yuval Levin digs into the CDC “banned words” story and it is not what you were told at first.

The post Tuesday assorted links appeared first on Marginal REVOLUTION.

That is the topic of my latest Bloomberg column, here is one excerpt: Virtual reality technology can create vivid multiprojected environments, designed to feel real in some ways. In essence, with virtual reality we will be able to manage our empathetic and emotional reactions in a manner currently beyond us. The technology may make our medical treatments seem less painful by providing distractions. It could help alleviate post-traumatic stress disorder, by allowing sufferers relive the bad experience in a way that helps them get over it. Athletes and test-takers might use simulations to get over “choking” and other performance problems. There are plenty of other uses we probably haven’t much thought of — I was struck by a recent report of a virtual reality “death simulation machine,” to help prepare people for their passing. In this future, we will be able to steer and manage our emotional reactions to a greater degree. Do you think you don’t care enough about starving babies around the globe? There probably will be a virtual reality program to fix that, at least temporarily. You will be able to enter their world and experience their suffering in a manner that will seem almost real, perhaps in preparation for writing a check to your favorite charity. One key question is which emotions we will decide to have more of. It would be nice to...

Here is the abstract to The Geography of Poverty and Nutrition: Food Deserts and Food Choices Across the United States (free version) by Allcott, Diamond, and Dubé: We study the causes of “nutritional inequality”: why the wealthy tend to eat more healthfully than the poor in the U.S. Using two event study designs exploiting entry of new supermarkets and households’ moves to healthier neighborhoods, we reject that neighborhood environments have economically meaningful effects on healthy eating. Using a structural demand model, we find that exposing low-income households to the same food availability and prices experienced by high-income households would reduce nutritional inequality by only 9%, while the remaining 91% is driven by differences in demand. In turn, these income-related demand differences are partially explained by education, nutrition knowledge, and regional preferences. These findings contrast with discussions of nutritional inequality that emphasize supply-side issues such as food deserts. This is a good paper with a credible research design and impressive data from some 35,000 supermarkets covering 40% of the United States. Moreover, because of the widespread attention given to “food deserts” this paper probably had to be written. But color me un-surprised. The results are obvious. Indeed, I feel that in recent years I am reading a lot of papers that aim massive firepower on weak hypotheses. As an explanation for obesity and poor eating habits, the idea of “food deserts” was absurd. The reasons are manifold. Even in food deserts it’s actually not that difficult to get healthy...