Economics & Marginalia: June 18, 2021

Hi all,

Some weeks, it’s a huge struggle to think of a good intro to the links. Other weeks, the sheer absurdity of the world around us gifts me more material than I can possibly use. I don’t watch football anymore, so I’m not referring to the Euros (I can’t even seem to work out what country they’re being played in); rather, the Olympics and the cricket have filled that gap for me. In a turn of events that perfectly sums up the joy of cricket, the entire first day of the World Test Cricket final was rained off; yet fans were cheerfully keeping track of the raindrops on the Grauniad’s live blog. Meanwhile, the Tokyo Olympics organisers have demonstrated hitherto undreamt-of incompetence, by providing competing athletes with 160,000 free condoms, before declaring them ‘ceremonial’ and not to be used so as to comply with Covid guidelines. Just for clarity: the organiser have taken hundreds of the fittest, most wound-up human beings on the planet, billeted them in common accommodation, plan to subject them to the most intense competition imaginable, plied them with condoms, and then requested them to remain celibate. Good luck, all concerned! That is one competition I expect a completely empty podium for.

1. Anyone who has followed these emails for long enough knows that I’m a birder and a big FiveThirtyEight fan, so imagine my joy when the two interests aligned, even if fleetingly. This really fun piece by Karleigh Rogers and Jasmine Mithani is the site of this rare confluence of interests, and it’s not a statistical investigation of what the most beautiful bird in the world is (you don’t need numbers for that, it’s the Southern Carmine Bee-Eater). Rather, they investigate conspiracy theories, and specifically the cognitive biases that are associated with greater likelihood of believing in them. They put you through three games which test your susceptibility to specific biases that are – in some way – associated with less ‘slow thinking’ as Daniel Kahneman might call it, the first of which involves a spot of birdwatching. I’m now generally sceptical of many cognitive biases, so I’m not sure how much I believe these associations, but they’re fun, and plausible.
2. I was criticised for recently suggesting that economists are not the most romantic people in the world – one colleague reminded me that her wedding vows were basically entirely drawn from economic theory – but when Markus Goldstein challenges The Beatles by suggesting that money really can buy you happiness, I have to say that the weight of the evidence is on my side. That aside, you should always read Markus when he summarises a paper, as he does here with Johannes Haushofer’s work with co-authors on the impact of cash transfers and psychotherapy (and both!) on mental wellbeing. It turns out that cash works best in this context, which puts rather a dampener on the existing model for psychotherapy, which involves both going to the therapist and becoming poorer in the process.
3. I enjoyed this piece on CGD’s blog by one of Non-Resident Fellows, Shahid Yusuf, arguing that Bangladesh’s relative economic success has perhaps a little less to it than meets the eye. In particular he suggests that despite its recent success, the portents for further progress are weak: investment is low, and important non-cost determinants of investment (in particular quality, compliance and reliability of production) are weak. He suggests that while Bangladesh offers some lessons in how to develop rapidly, that following that path too religiously may be lead to a dead-end with a middle-income trap.
4. This is quite a cool idea: Paul Gertler and Brett Green on the use of ‘digital collateral’ for lending in low-income settings, leading to higher loan take-up and repayment.
5. Who on earth are the people responding to Nick Bloom’s survey saying they prefer large meetings in person? Can I hit them? Is it allowed? Stop ruining things. Large meetings are a disaster in person; they should stay on zoom where it’s much easier for the chair to keep control and keep the discussion focused; and my God I don’t miss straining every sinew trying to hear what the person with a voice like Beaker in the Muppet Show is saying on the other side of the room. I can’t wait to get back to the office. For one thing, I still have a whole bunch of stuff in my locker in Whitehall I need to pick up. I miss my Zanzibari door pencil case.
6. Charles Kenny and George Yang argue that the rich world needs more migrants to maintain their accustomed standard of living, and that the future may hold a race for more migrants rather than the current unbecoming struggle to keep them out. I rather suspect that over time, as some inputs become relatively more or less expensive, certain goods and services will simply disappear rather than be sustained by migration (just think how many labour-intensive services existed in the early 1900s that are now niche concerns), but that’s not because Charles and George are wrong about how things are changing or what would be the optimal response; rather it’s because I’m constantly amazed by the staying power of stupidity in migration policy.
7. Lastly, the new Pixar movie, Luca – named after my son, it seems – is released today. To celebrate, The Ringer have released an absurdly incorrect ranking of every Pixar movie made so far; the main mistake, an unforgivable one, is that Up is not ranked number 1. Choosing Wall-E doesn’t make it as wrong as it might have been, but it’s wrong nevertheless. That left a bad taste in my mouth; to rinse it out, here’s Tom Hardy reading a bedtime story on CBeebies. I am disappointed he doesn’t do it in full Venom voice and outfit, but we can’t have everything.

Have a great weekend, everyone!

R