Roger Backhouse, Beatrice Cherrier, University of Birmingham: 'It's Computerization, Stupid!' The Spread of Computers and the Changing Roles of Theoretical and Applied Economics. This paper challenges the widely held notion that the developments in computing are sufficient to explain the recent turn to applied economics. Developments in computer hardware were undoubtedly important. Yet, economists' appropriation of the new techniques allowed by computerization were highly selective, and influenced by the development of software and ties with other scientific communities, by the availability of business and governmental data, by salesmanship to policy-makers, and by how epistemologically acceptable these approaches were made to other economists. In particular, theoretical work was not be transformed by computers the way it was in physics or biology. We conjecture that the most profound effect of the increased availability of computers may have been to challenge the demarcation between theory and applied work.
Tomi Kyyrä, Juha Tuomala, IZA: Does Experience Rating Reduce Disability Inflow? This study explores whether the experience rating of employers’ disability insurance premiums affects the inflow of older employees to disability benefits in Finland. To identify the causal effect of experience rating, we exploit a pension reform that extended the coverage of the experience-rated premiums. The results show that a new disability benefit claim can cause substantial cost to the former employer through an increased premium. Nonetheless, we find no evidence of the significant effects of experience rating on the disability inflow. The lack of the behavioral effects may be due to the complexity of experience rating calculations and/or limited employer awareness.
Scott E. Carrell, Mark Hoekstra, Elira Kuka, NBER: The Long-Run Effects of Disruptive Peers. A large and growing literature has documented the importance of peer effects in education. However, there is relatively little evidence on the long-run educational and labor market consequences of childhood peers. We examine this question by linking administrative data on elementary school students to subsequent test scores, college attendance and completion, and earnings. To distinguish the effect of peers from confounding factors, we exploit the population variation in the proportion of children from families linked to domestic violence, who were shown by Carrell and Hoekstra (2010, 2012) to disrupt contemporaneous behavior and learning. Results show that exposure to a disruptive peer in classes of 25 during elementary school reduces earnings at age 26 by 3 to 4 percent. We estimate that differential exposure to children linked to domestic violence explains 5 to 6 percent of the rich-poor earnings gap in our data, and that removing one disruptive peer from a classroom for one year would raise the present discounted value of classmates' future earnings by $100,000.
Mark Leonard, Project Syndicate: Last Man Standing. Much of modern geopolitics seems to be following the plot from Game of Thrones, with many countries under so much political and economic stress that their only hope is that their rivals collapse before they do. So their governments cling to power while exploiting rivals’ internal weaknesses. Russian President Vladimir Putin is the prime example. His recent campaigns in Syria and Ukraine may look like the actions of a geopolitical buccaneer. But the root of his adventurism is domestic weakness. Russia’s annexation of Crimea, for example, was in large part an attempt to provide Putin’s regime with renewed legitimacy following a winter of discontent, during which demonstrators took to the streets to protest his return to the presidency.
Greg Ip WSJ: It’s Not the Economy, Stupid. Social disarray or cohesion are not always driven by economic ups and downs, as the 1960s attest. Economics cannot really explain why rapid growth in living standards coincided with so much political upheaval, just as it cannot explain why long periods of stagnation, as Japan has endured since the 1990s, are met with relative equanimity. Economics can’t explain why Britons may leave the European Union when the preponderance of evidence is that membership has made them richer. There is no way to predict the effect of so many different forces on the political choices that voters make. And even if there were, you would probably still not predict the rise of Mr. Trump, who got where he is by breaking every rule of conventional political and economic wisdom. Ultimately, the best explanation may be that he isn’t the product of larger economic forces: he’s the product of Donald Trump.
Eileen Moery, Robert J. Calin-Jageman, Social Psychological and Personality Science (2016): Direct and Conceptual Replications of Eskine (2013). Organic Food Exposure Has Little to No Effect on Moral Judgments and Prosocial Behavior. Is there a dark side to organic food? Eskine reported that participants exposed to organic food became much more morally judgmental and much less prosocial relative to participants exposed to neutral or comfort foods. This research sparked tremendous media interest, but was based on one experiment with a small sample size. We report three attempts to replicate Eskine using samples conferring high power, preregistered analysis plans, and original materials. Across two direct replications and an online conceptual replication, we found that organic food exposure has little to no effect on moral. Mere exposure to organic food is probably not sufficient to substantially change moral behavior.
Barry Ritholtz, The Bic Picture: 10 Cognitive Biases That Affect Your Everyday Decisions. Bandwagon effect, Availability Heuristic….
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