JANUARY 13 2017

Le Blog de Thomas Piketty, Le Monde: Of productivity in France and in Germany. At the start of 2017, with the elections in France in the Spring and then in Germany in the Autumn, it may prove useful to return to one of the fundamental issues which plagues discussion at European level, that is the alleged economic asymmetry between Germany with its reputation as prosperous and France which is described as on the decline. I use the term ‘alleged’ because, as we shall see, the level of productivity of the German and French economies – as measured in terms of GDP per hour worked, which is by far most relevant indicator of economic performance – is almost identical. Furthermore it is at the highest world level, demonstrating incidentally that the European social model has a bright future, despite what the Brexiters and Trumpers of every hue might think.

Jorge Luis García, James J. Heckman, Duncan Ermini Leaf, María José Prados, NBER: The Life-cycle Benefits of an Influential Early Childhood Program. This paper estimates the long-term benefits from an influential early childhood program targeting disadvantaged families. The program was evaluated by random assignment and followed participants through their mid-30s. It has substantial beneficial impacts on health, children's future labor incomes, crime, education, and mothers' labor incomes, with greater monetized benefits for males. Lifetime returns are estimated by pooling multiple data sets using testable economic models. The overall rate of return is 13.7% per annum, and the benefit/cost ratio is 7.3. These estimates are robust to numerous sensitivity analyses.

Max Roser, Institute for New Economic Thinking: The link between health spending and life expectancy: The US is an outlier. The graph shows the relationship between what a country spends on health per person and life expectancy in that country between 1970 and 2014 for a number of rich countries. If we look at the time trend for each country we first notice that all countries have followed an upward trajectory – the population lives increasingly longer as health expenditure increased. But again the US stands out as the country is following a much flatter trajectory; gains in life expectancy from additional health spending in the U.S. were much smaller than in the other high-income countries, particularly since the mid-1980s.

Maria Konnikova, The New Yorker: America’s Surprising Views on Income Inequality. In 1970, the top ten per cent of the population earned a third of the total national income. By 2012, it earned half. So one might expect to see a rising wave of discontent during the past several years, as inequality has increased sharply. But here’s the strange thing: in polls that have sought to capture that rise directly, not much has changed. That is, people say they’d be happier if there were a more equitable distribution of wealth, but they’ve actually remained just about as happy, even as inequality has gone up. A huge sense of national frustration did, of course, contribute deeply to the election of Donald Trump; but, as has been widely noted, his tax policy, for example, seems highly likely to make the problem of inequality worse. What’s going on?

Mike Brewer et al., IFS: 30 hours of free childcare likely to boost parental employment only slightly.  New research published today by researchers from the Institute for Fiscal Studies, the University of Essex and the University of Warwick suggests that the government’s plan to extend parents’ entitlement to free childcare from 15 to 30 hours a week for 3- and 4-year-olds in England is only likely to have a small impact on parents’ working patterns. This conclusion arises from looking at how working patterns change when children start primary school. One can think of this as a moment when entitlement to childcare provided free of charge from the state increases from 15 hours a week to 30–35 hours a week.

Giovanni Facchini, Yotam Margalit, Hiroyuki Nakata, VOX: Countering public opposition to immigration with information campaigns. Far-right parties have made considerable electoral gains around the world lately, fuelled in part by strong anti-immigration rhetoric. This column presents the results of an experiment conducted in Japan to assess whether exposure to positive information about immigration can decrease this public hostility. Such information exposure is found to increase an individual’s likelihood of supporting immigration by between 43% and 72%. This suggests that information campaigns are a very promising avenue for policymakers aiming to redress hostility to immigration.

Chris Giles, Sarah O’Connor, FT: Sir Tony Atkinson, economist and campaigner, 1944-2017. When academic economics was obsessed by free markets and a ruthless search for efficiency, while simply seeing societies as populated by multiple copies of one representative individual, the study and measurement of inequality was deeply unfashionable. Sir Tony Atkinson, who died aged 72 on New Year’s Day, was the British economist who kept that flame alive through the 1980s and 1990s, surviving to see it return to the centre of economic concerns on both the political left and right.

Maria Cubel, VOX: Women in competitive environments: Evidence from chess. Recent explanations for the persistence of both the gender wage gap and the under-representation of women in top jobs have focused on behavioural aspects, in particular on differences in the responses of men and women to competition. This column suggests that it may not be competition itself that affects women, but the gender of their opponent. Analysis of data from thousands of expert chess games shows that women are less likely to win compared with men of the same ability, and that this is driven by women making more errors specifically when playing against men.

Hugh Eakin, The New York Review of Books: The Swedish Kings of Cyberwar. Significantly, while WINTERLIGHT was a joint effort between the NSA, the Swedish FRA, and the British GCHQ, the hacking attacks on computers and computer networks seem to have been initiated by the Swedes. The FRA was setting up the implants on targeted computers—known in NSA parlance as “tipping”—to redirect their signals to the surveillance servers, thus allowing the GCHQ and the NSA to access their data, in what are called “shots.” At the time of the April 2013 meeting, the NSA reported that “last month, we received a message from our Swedish partner that GCHQ received FRA QUANTUM tips that led to 100 shots.”