Category Archives: Tyler Cowen is my Favorite Blogger

Recoveries and unemployment

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Robert E. Hall and Maryanna Kudlyak write,

We have developed a parsimonious statistical model of the behavior of observed unemployment. It describes: (1) occasional sharp upward movements in unemployment in times of economic crisis, and (2) an inexorable downward glide at a low but reliable proportional rate at all other times. The glide continues until unemployment reaches approximately 3.5 percent or until another economic crisis interrupts the glide.

Pointer from Tyler Cowen.

They think that the main implication of this is that it causes problems for the theory of the natural rate of unemployment. I think it discredits much more in macro.

For example, the various recoveries that they analyze had different amounts of “stimulus.” If the pace of recovery is the same in all cases, then what good was the “stimulus”?

I think that their stylized fact fits a PSST story quite well. A crisis suddenly breaks up a lot of patterns of specialization and trade. There is no equivalent process for quickly creating new patterns of sustainable specialization and trade. Instead, the entrepreneurial trial and error that is needed to create new patterns of specialization and trade seems to take place at a persistent, steady rate.

Increased longevity for victims of violence

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Roger Dobson writes,

a team from Massachusetts University and Harvard Medical School found that technological developments had helped to significantly depress today’s murder rates, converting homicides into aggravated assaults.

Pointer from Tyler Cowen. Some thoughts.

1. I give the study a less than 50 percent chance of holding up. The method seems unreliable.

The team looked at data going back to 1960 on murder, manslaughter, assault, and other crimes. It merged these data with health statistics and information on county level medical resources and facilities, including trauma centres, population, and geographic size. The researchers then worked out a lethality score based on the ratio of murders to murders and aggravated assaults.

2. As I understand it, many statistics on crime show a decline, not just murders. This analysis says the opposite, that the rate of violent crime has remained high, and better treatment has reduced murder.

My latest book review

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I review The WEIRDest People in the World, by Joseph Henrich.

The latest book by Joseph Henrich is the most ambitious analysis of social behavior that I have ever read. It attempts to cover essentially all human history and the entire spectrum of different societies, using the full range of disciplines of social science. To offer a review is difficult, and to attempt a summary is impossible.

I strongly recommend both the review and the book. The book made Tyler Cowen’s list of best non-fiction books of 2020.

Mental health, age, and political orientation

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Tyler Cowen writes,

I don’t think you can understand modern American discourse, most of all social media, without recognizing that “the intellectual Left” has higher neuroticism — as defined by Five-Factor personality theory — than say centrists. The Right of course has its own correlations, but that is a topic for another time.

He reproduces a chart based on a Pew survey that asks if someone was ever diagnosed with a mental health condition and breaks the respondents down by age and political orientation. I think that the main survey page is here, but I have not tried to download the data.

According to the chart, if you are young and liberal, there is a 46 percent chance that you have ever been told by a professional that you have a mental health condition (and admit it in the survey). If you are old and conservative, this chance is only 5 percent. If you are young and conservative, the chance is 15 percent. If you are old and liberal, the chance is 21 percent.

On the liberal-conservative difference: it could be that mental health conditions are equally prevalent across political orientation, but conservatives are more reluctant to seek a professional opinion and/or more reluctant to disclose to a survey researcher that they have been diagnosed.

On the age differences, the trend is dramatic. As you move from the 20-29 age cohort to the over-65 age cohort, liberals drop from 45 percent diagnosed to 15 percent, moderates go from 35 percent diagnosed to 17 percent, and conservatives go from 15 percent diagnosed to 5 percent.

Since the question is whether you were ever told that you have a mental health condition, all else equal this should go up with age, not down as in the chart. Again, there could be differences in willingness to seek an opinion or to disclose to a survey researcher.

But suppose that we take at face value the results that with each new cohort of white Americans, mental health is deteriorating. This would have a number of implications.

1. Mental health is unlikely to be mostly genetically determined. The gene pool cannot have changed that dramatically.

2. Jonathan Haidt’s claims about the harms of social media might explain the difference between the 20-29 cohort and the 30-49 cohort, but it seems unlikely to explain the trends in other cohorts. I suspect that the trend toward smaller and less stable families is the main factor in mental health deterioration.

Thoughts on the state of things

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Two essays by eminent observers.

1. David Brooks writes,

the values of the Millennial and Gen Z generations that will dominate in the years ahead are the opposite of Boomer values: not liberation, but security; not freedom, but equality; not individualism, but the safety of the collective; not sink-or-swim meritocracy, but promotion on the basis of social justice.

. . .The stench of national decline is in the air. A political, social, and moral order is dissolving. America will only remain whole if we can build a new order in its place.

Brooks argues that a decline in social trust does not just happen all by itself.

High national distrust is a sign that people have earned the right to be suspicious. Trust isn’t a virtue—it’s a measure of other people’s virtue.

Like Yuval Levin, the Brooks sees our only hope as building formal institutions.

Over the past 60 years, we have given up on the Rotary Club and the American Legion and other civic organizations and replaced them with Twitter and Instagram. Ultimately, our ability to rebuild trust depends on our ability to join and stick to organizations.

2. Francis Fukuyama writes,

The issue here is thus not whether progressive illiberalism exists, but rather how great a long-term danger it represents. In countries from India and Hungary to the United States, nationalist conservatives have actually taken power and have sought to use the power of the state to dismantle liberal institutions and impose their own views on society as a whole. That danger is a clear and present one.

Progressive anti-liberals, by contrast, have not succeeded in seizing the commanding heights of political power in any developed country. Religious conservatives are still free to worship in any way they see fit, and indeed are organized in the United States as a powerful political bloc that can sway elections. Progressives exercise power in different and more nuanced ways, primarily through their dominance of cultural institutions like the mainstream media, the arts, and large parts of academia. The power of the state has been enlisted behind their agenda on such matters as striking down via the courts conservative restrictions on abortion and gay marriage and in the shaping of public school curricula. An open question for the future is whether cultural dominance today will ultimately lead to political dominance in the future, and thus a more thoroughgoing rollback of liberal rights by progressives.

This is part of a new project of Fukuyama’s, called American Purpose. Pointer from Tyler Cowen.

I have quoted the paragraphs with which I most disagree. Fukuyama’s entire essay is excellent, and almost every paragraph was tempting to excerpt. But I put a greater weight on cultural breakdown–see the David Brooks essay–than political breakdown, and so I am more concerned with the threat from the left.

Virus update

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1. Kling was wrong. Regarding the drop in” deaths from the virus relative to cases, Tom Chivers writes,

it’s almost certainly not because the virus has mutated or anything. “There are some things we know are definitely not true,” says Beale. “We’re convinced that the virus itself isn’t substantially different, that there’s no ‘milder form’ of the virus.” The little package of RNA in its protein-and-lipid wrapper is essentially the same now as it was at the beginning of the outbreak.

Pointer from Tyler Cowen.

2. Maybe the high death rate in the U.S. is not something that would have been prevented by a different President (on this issue, my view is being reinforced). Andrew Biggs writes,

U.S. policymakers also suffered under the handicap that Americans entered the Covid pandemic in much poorer health than citizens of other developed countries. For instance, over 27,000 U.S Covid deaths list diabetes as a comorbidity, accounting for 16% of total Covid-related fatalities. But what if instead of having the highest diabetes rate among rich countries the U.S. had the same rate as Australia, with less than half the U.S. level? The same holds for obesity, listed as a comorbidity in 4% of Covid cases. Forty percent of Americans are obese, the highest in the developed world and over twice the OECD average. U.S. death rates from heart disease are also higher than most European and Asian countries. Hypertension is listed as a comorbidity in 22% of Covid deaths. If Americans simply had the same health status as other high-income countries, it is likely that tens of thousands of lives could have been saved.

Pointer from Bryan Caplan.

3. Timothy Taylor has links to more economics papers on the virus than anyone has time to read.

4. What if the virus had made its appearance in 1990?

–I don’t think people would have self-quarantined. We didn’t have the infrastructure for low-cost direct-to-home delivery. We didn’t have the technology to allow people to work from home.

–I don’t think we would have had lockdowns. We didn’t have a generation of people raised to believe that it was unsafe for children to play without adult supervision. Shelter-in-place orders from the government would have been too unpopular for elected leaders to contemplate.

–We would not have been promised a vaccine. No one could have announced “We already sequenced the virus genome!” as if that meant a vaccine was coming any day now.

–We would not have had all of the treatment options available today.

–Our population would have had a lower proportion of high-risk individuals–fewer elderly, obese, and diabetic individuals.

–We would not have had social media to fill our heads with statistics and model forecasts and expert pronouncements to keep the virus foremost in our minds.

In short, I suspect we would have come out about the same in terms of population death rate, maybe a little more or maybe a little less. The economic consequences would have been much less. And it would not have blown up into a national trauma. For the trauma, we can thank the fact that we now live in the Digital City.

UPDATE: after writing the foregoing, but before posting, I came across Vaclav Smil comparing the current pandemic to those in 1957 and 1968,

Why were things so different back then? Was it because we had no ­fear-reinforcing 24/7 cable news, no Twitter, and no incessant and instant case-and-death tickers on all our electronic screens? Or is it we ourselves who have changed, by valuing recurrent but infrequent risks differently?

Widespread statistical malpractice

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Alvaro de Menard writes,

It is difficult to convey just how low the standards are. The marginal researcher is a hack and the marginal paper should not exist. There’s a general lack of seriousness hanging over everything—if an undergrad cites a retracted paper in an essay, whatever; but if this is your life’s work, surely you ought to treat the matter with some care and respect.

You have to read the whole long post to see how he got to that point. Pointer from Tyler Cowen.

The latest virus puzzle

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Tyler Cowen writes,

many of the herd immunity theorists strike back and ask “where are the deaths“? But that is not the right question for testing herd immunity claims. Those claims were about transmission slowing down, and those claims should be true about Covid-19 cases whether or not more people are surviving in the hospital.

Why are cases spiking but deaths not spiking? Here is a set of hypotheses, in my subjective order of likely importance.

1. The strains that are circulating are less deadly.

2. The people who are getting it are less frail. See the discussion of “dry tinder” in Daniel Klein’s essay. And also enough folks finally got the memo about protecting people in nursing homes.

3. The treatments people get now are helpful, whereas six months ago they were ineffective/harmful.

4. Testing protocols are finding more of the milder and asymptomatic cases that they were missing before.

5. The long and variable lag between cases and deaths has become longer and more variable.

And note that the average daily death rate still stands above 700, which is outside of the range for a normal flu, at least on an annual basis.

Violence and revolutionary outcomes

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Tyler Cowen links to a paper that says

regimes founded in violent social revolution are especially durable

This reminded me of a paper published in 1963, which said that

possible links between varieties of violence and revolutionary outcomes are left unexplored

The latter paper examined Latin America, and its author had considerable influence on my intellectual outlook. Its thesis is that limited, narrow violence, as in a coup, produces less dramatic overall change than broader violence, as in the Cuban revolution.

Macroeconomics I can approve

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Raj Chetty and others write,

we study the mechanisms through which COVID-19 affected the economy by analyzing heterogeneity in its impacts. We first show that high-income individuals reduced spending sharply in mid-March 2020, particularly in areas with high rates of COVID-19 infection and in sectors that require in-person interaction. This reduction in spending greatly reduced the revenues of businesses that cater to high-income households in person, notably small businesses in affluent ZIP codes. These businesses laid off many of their employees, leading to widespread job losses especially among low-wage workers in affluent areas. High-wage workers experienced a “V-shaped” recession that lasted a few weeks in terms of employment loss, whereas low-wage workers experienced much larger job losses that persisted for several months. Building on this diagnostic analysis, we use event study designs to estimate the causal effects of policies aimed at mitigating the adverse impacts of COVID-19. State-ordered reopenings of economies have small impacts on spending and employment. Stimulus payments to low-income households increased consumer spending sharply, but little of this increased spending flowed to businesses most affected by the COVID-19 shock, dampening its impacts on employment. Paycheck Protection Program loans increased employment at small businesses by only 2%, implying a cost of $300,000 per job saved. These results suggest that traditional macroeconomic tools – stimulating aggregate demand or providing liquidity to businesses – have diminished capacity to restore employment when consumer spending is constrained by health concerns

Pointer from Tyler Cowen.