MAY 12 2017

Dan Nixon, BoE: Mind over matter: is scarcity as much about psychology as it is economics? Scarcity – and hence the very core of “the economic problem” – at root relates to the question of whether or not we feel we have “enough”. My focus here is on what scarcity means in the context of people who have already achieved a certain level of affluence and whose basic needs have been met (and not, therefore, cases of poverty). Scarcity construed as a subjective sense of “not having enough” opens the door to an interesting possibility: that, at a psychological level, scarcity could be absent entirely.  We could call this condition an “abundance” mindset.

Johannes Moenius, ISEA: Future job automation to hit hardest in low wage metropolitan areas like Las Vegas, Orlando and Riverside-San Bernardino. New research finds that job automation will hit certain metropolitan areas significantly harder than others. Low-wage cities like Las Vegas, NV, Orlando, FL, and Riverside-San Bernardino, CA are expected to be among the hardest-hit metros in terms of total job losses. The impact of automation on jobs is likely to be more severe than previously anticipated. Based on recent advances in machine learning and mobile robotics, even non-routine jobs like truck driving, healthcare diagnostics, or even education can be affected. “The replacement of jobs by machines has been happening continuously since the Industrial Revolution, but it’s expected to significantly accelerate in the coming 10 or 20 years,” according to Professor Johannes Moenius, founding director of ISEA. “Pretty much everyone will be affected, but some metropolitan areas will see a lot more jobs vanish than others.”

Bruno Caprettini, Joachim Voth, VOX: Rage against the machines: New technology and violent unrest in industrialising Britain. Over the last 200 years, new machines have increasingly replaced humans, and even advanced tasks like speech recognition and translation can now be performed by relatively cheap computers and smartphones. This column describes how labour-saving technology appeared to play a key role in one of the most dramatic cases of labour unrest in recent history – the Swing riots in England during the 1830s – serving as a reminder of how disruptive new, labour-saving technologies can be in economic, social, and political terms.

William Emmons, Lowell Ricketts, FED St. Louis: The Link between Family Structure and Wealth Is Weaker Than You Might Think. The bottom line is that links between family structure and wealth are weak, inconsistent and mostly spurious. We conclude that the deeper causes of differences in both family structure and wealth are structural or systemic or due to other unobservable factors related to race or ethnicity in complicated ways. These underlying causes of different opportunities, choices and peer-group norms facing individuals and families are undoubtedly difficult or impossible to change. But it is important to recognize what our symposium research found: only by addressing these deep causes can we hope to meaningfully affect racial and ethnic wealth gaps.

Benjamin U. Friedrich, Martin B. Hackmann, NBER: The Returns to Nursing: Evidence from a Parental Leave Program. Nurses comprise the largest health profession. In this paper, we measure the effect of nurses on health care delivery and patient health outcomes across sectors. Our empirical strategy takes advantage of a parental leave program, which led to a sudden, unintended, and persistent 12% reduction in nurse employment. Our findings indicate detrimental effects on hospital care delivery as indicated by an increase in 30-day readmission rates and a distortion of technology utilization. The effects for nursing home care are more drastic. We estimate a persistent 13% increase in nursing home mortality among the elderly aged 85 and older. Our results also highlight an unintended negative consequence of parental leave programs borne by providers and patients.

Antonio Cabrales et a., VOX: Trust me, even against your instinct, I have reflected upon my decision. Trust in our partners is important for economic transactions, but time pressure might affect the level of trust we place in others. This column reports the results of an experimental game in which individuals choose how much trust to place in partners who either must respond instinctively, or have time to reflect. Less-reflective personality types incorrectly trusted their partners least when those partners had time to think. This has implications for policies which, for example, impose cooling-off periods on negotiations.