Economics & Marginalia: February 9, 2024

Hi all,

An update to last week’s intro: after a solid week of negotiation with my 3-year-old (whom the FBI should hire to conduct hostage negotiations, so good is he at getting his way and wearing down his opponent), we have agreed that the new bed I ill-advisedly constructed for him just before bedtime does not need to be ‘thrown in the bin’. He has, however, secured a promise from me to saw off all four legs so the bed sits on the floor, with only the narrowest gap for air to pass through. This may prove to be a Pyrrhic victory for him: my woodworking skills fall some way short of Ron Swanson’s, and there is every possibility he’s going to wind up with a bed that looks like Picasso drew it, but less valuable. Parenthood: a sequence of small defeats to a tiny but powerful opponent.

1. How many times have you heard the statistic that “half of the world’s poor live in fragile states”? Probably enough times that it has essentially become true simply through repetition. Fortunately, we have people like Lee Crawfurd in the world, who question almost everything. He dug into the data on where the poor live, and—unsurprisingly—it’s a little bit more complicated than that. A lot of poor people do live in the most fragile, conflict-ridden places; but many, and indeed still more, don’t. And when you start to relax your definition of poverty a little the picture changes dramatically (which is almost mechanically true, because the world has coordinated on such a low-bar definition of poverty and there are more not-fragile places than there are fragile ones). What’s striking about Lee’s analysis, though, is the trajectories of fragile and not-fragile places. On almost every metric, not-fragile places, even when they have started in very bad conditions indeed, are making steady progress. The fragile places? Stagnant or worsening. Perhaps the key point to make is not where the poor are, but where their prospects are the worst.
2. As a birdwatcher who also cares rather a lot that we don’t fry the planet, I have instinctively mixed feelings about wind turbines, having heard the horror stories of raptor death from the chopping arms of the windmills (I have a similar tension about high rises; the Hong Konger in me loves them, but the birder thinks they are murderous cement-and-glass bird destroyers). But Lee’s blog shows how important it is to put things in perspective with data, and Hannah Ritchie has done exactly that by tallying up the best estimates of bird deaths from windmills and comparing them to other causes. The good news: windmills are not a particularly large source of bird deaths and we can reduce them even further. The bad news: cats are absolute monsters. My wife wants a cat (two, in fact). I am a birder. We may need to compromise on a cat with a Bane mask.
3. Let’s keep on the theme of counting for a moment, shall we? I had this discussion with a friend recently, but there is basically no evidence that the world is suffering from an incompatibility of its economic growth and its planetary bounds. The maths seems simple: exponential growth mean ever-increasing resource use, right? But no: Tim Harford, drawing on Hannah’s new book, makes the counterargument, including this vivid metaphor: “if you won £1,000 on the lottery, you might turn up the heating in your home. That does not mean that if you won £1mn, you would boil yourself alive”. Tim does say that it’s not all peaches and cream (air-flown stone fruit and dairy are bad for the environment, after all): we do move and lift and use and burn a great deal of stuff. But there is nothing inevitable about it; and reversing that (which has already started in many areas) does not require we stop growing.
4. I designed a matching algorithm for a very simple two-sided matching problem last week, which was enormous fun. That (plus a paper I’m working on) sent me down a rabbit hole of matching theory papers, and lo and behold, Alvin Roth popped up on Planet Money this week, too (transcript). Roth, the guru of matching, argues that we shouldn’t have to rely on it so much, and wishes that we just paid for all sorts of stuff that we don’t feel comfortable buying and selling, like kidneys or children. His argument is essentially the direct opposite of Michael Sandel’s in What Money Can’t Buy, which makes it even more surprising that Planet Money didn’t think to ask a single moral philosopher about what could go wrong with these proposals (or indeed Sam Bowles, who has already written about it.)
5. More on algorithms: Berk Ozler on a new paper which argues that algorithms are neither universally to be feared, not universally to be embraced, but to be evaluated carefully. Which is too sensible to argue with, and there is a great deal of value here, so please read.
6. I work on innovation a lot, and Alex Tabarrok has thought carefully about innovation more than most people (he has also, very kindly, commented on a couple of things I’ve written, greatly improving them in the process). Here he argues that innovation may not be a true public good, and it may be the case therefore that government funding of science and innovation reduces, rather than increases the pace of innovation. It’s very interesting, but I offer a counterpoint: in many cases, socially valuable innovation is not rewarded by the market, even if the innovation is not a true public good. In such cases, there is underprovision even in the presence of rivalry and excludability of the good (the innovation). So the case for state intervention is more robust than it may first seem; it just need not come in the form of supporting researchers so much as research impacts.
7. I normally end with pop culture, but the NBA trade deadline has made me so depressed that I’m not sure I can handle linking to anything happy. How did the Lakers do… nothing? They’re wasting old man Bron and I’m not happy about it. I have been attempting to calm my annoyance by diving into Parks and Rec reruns (hence the Ron Swanson memes), but I’m running out of episodes. What other happy TV shows have aged well? The Good Place? I don’t think it’s been long enough since I watched it… Any others? I can’t get through more than 10 minutes of Friends. There must be something for a grumpy old man like me to watch!

Have a great weekend, everyone!

R