Economics & Marginalia: March 17, 2023

Hi all,

A week into the house move there are definite signs of progress: we have a sofa, which has been thoroughly colonised by my son, who has mastered the art of arranging his four rather small limbs and body in such a fashion as to occupy as large a surface area as possible; the boxes have graduated from being obstacles to having semi-permanent status as we shilly-shally over furniture purchases, and I’ve discovered nearby cafes I can nurse coffee in while burning through their wifi bandwidth. We still don’t have an internet connection at home. Some might think that would bring a certain mental equilibrium. I instead find my rage increasing exponentially as I search for the three square centimetres of the house in which I can secure a hotspot from my phone to my laptop. If I’m out-of-focus or short tempered when you see me, that will be why. Still, by hotspot, café, or reading over someone’s shoulder, the links continue.

  1. Most of my career has been spent, in some fashion, trying to bring good research to policymakers, or good policy questions to researchers—often both at the same time. Paddy Carter at BII also spends an inordinate amount of his time thinking about exactly these challenges, and has written extremely well about what policymakers want from researchers. There is a lot to like in his piece. He talks about the need for good descriptive statistics, proper cost analysis (difficult though it may be), and the need to express what should change on the basis of individual papers and whole bodies of work. He also considers the challenges of being a policymaker in an uncertain world: “It is easy to answer big policy questions with brash overconfidence – reaching subjective conclusions carefully and with good reason is different and not something academia trains you for.” Being a policymaker often requires you to express confidence over small margins, which inevitably also entails being wrong and being willing to own up to it and rectify and revisit your past advice—neither things that academics are widely known for.
  2. As a Nigeria bear, it’s useful for me to see the counterargument from Ken Opalo. All of his arguments are good, and should shift you more towards his bullish position, though I suspect some of the discrepancy in my view and his is in how we define expectations. I think Nigeria will be well below where it could be given endowments for at least a generation and maybe two, no matter how quickly improvements are made. It seems like his bullish case is primarily that such improvements can (and probably will) be made.
  3. On the topic of how defining concepts determines judgements, I very much liked this piece by Branko Milanovic, which starts as a discussion of how different historical conceptions of what the economy is for can affect how we analyse it, and in the second half looks at how this translates into alternative ways of measuring economic activity, and how these conceptions affect them.
  4. Two good ones from VoxDev (again, what a service it provides—which I don’t think we make nearly enough of a fuss about). First Victoire Girard and co-authors use data on gold mine suitability to demonstrate the—frankly enormous—effect of artisanal mining on deforestation, finding that 28% of deforestation in mining-appropriate areas can be explained by global gold price fluctuations. And second, a really interesting paper by Katrina Kosec and Cecilia Hyungjun Mo which shows that perceptions of relative inequality and deprivation have materially important effects on support for social protection policy.
  5. If you need a primer on the SVB banking collapse a little more sophisticated than “lol, tech bros eat dust and beg for help”, this in the Planet Money newsletter is a good one. I equivocate less on who is to blame here; there is definitely some culpability in the rules because they put the Government in a position where realizing a moral hazard was virtually unavoidable, but this is primarily a fault of weak risk management by a bank. The fact that it didn’t cause problems till now, or that it took mildly unusual policy action to undo their position should not mask that. Also from Planet Money, a very good show on the human stories behind the labour force participation decline in the US (transcript). We use abstract terms to describe aggregate phenomena, but it is always useful to remember that economics is a science about humanity.
  6. Ana Palacios makes the case for Ajay Banga—assuming, as is more or less guaranteed, that he actually becomes the next World Bank President—making substantial reforms to the World Bank. It boils down to ‘get bigger and listen to developing countries more’, and sadly that would actually be quite a radical change. Perhaps if they start listening to the poor countries more they will also stop giving the top job to the Americans every single time.
  7. If you’re a basketball fan, this is the most wonderful time of year: March Madness, when college basketball becomes, briefly, far more widely watched than the NBA. The quality of play is high, the emotions go crazy and a bunch of massively economically-exploited teenagers produce some of the most compelling sporting drama in the US. For those of you allergic to sports, please luxuriate in the most hysterical Hollywood casting decision of the decade: Oscar Isaac will play Kurt Vonnegut in a forthcoming movie. This Oscar Issac, and this Kurt Vonnegut. Short of casting Chris Hemsworth as Fernando Pessoa, I don’t see how they can top this.

Have a great weekend, everyone!



CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.