Tyler Cowen's Blog, page 363

Further results on hypergamy

This paper, by Marianne Bertrand, Jessica Pan, and Emir Kamenica, was pointed out by Matt Yglesias on Twitter, the abstract is this:

We examine causes and consequences of relative income within households. We establish that gender identity – in particular, an aversion to the wife earning more than the husband – impacts marriage formation, the wife’s labor force participation, the wife’s income conditional on working, marriage satisfaction, likelihood of divorce, and the division of home production. The distribution of the share of household income earned by the wife exhibits a sharp cliff at 0.5, which suggests that a couple is less willing to match if her income exceeds his. Within marriage markets, when a randomly chosen woman becomes more likely to earn more than a randomly chosen man, marriage rates decline. Within couples, if the wife’s potential income (based on her demographics) is likely to exceed the husband’s, the wife is less likely to be in the labor force and earns less than her potential if she does work. Couples where the wife earns more than the husband are less satisfied with their marriage and are more likely to divorce. Finally, based on time use surveys, the gender gap in non-market work is larger if the wife earns more than the husband.

Their title is “Gender Identity and Relative Income within Households.”  There is a non-gated copy here.

Assorted links

1. Actual weekly number of hours worked in the UK, the data series.  Not your grandfather’s AD problem.

2. Ross Douthat on conservatives and health care costs.

3. Publisher threatens blogger with $1 billion lawsuit, in India too.

4. Markets in everything, Bea Arthur edition.

5. Europe’s problem is the banks.

6. The new smart rifle, which hardly ever misses.

7. In the world of theater, is this vigilante justice or not?

U.S. clothing chains do not support pact on Bangladesh reforms

From Brad Plumer:

Nearly all U.S. clothing chains, citing the fear of litigation, declined to sign an international pact ahead of a Wednesday deadline, potentially weakening what had been hailed as the best hope for bringing about major reforms in low-wage factories in Bangladesh.

Companies including Wal-Mart, Gap, Target and J.C. Penney had been pressed by labor groups to sign the document in the wake of last month’s factory collapse in Bangladesh that killed at least 1,127 people. More than a dozen European retailers did so. But U.S. companies feared the agreement would give labor groups and others the basis to sue them in court.

…Wal-Mart reiterated Wednesday that it would not sign the accord at this time, because it “introduces requirements, including governance and dispute resolution mechanisms, on supply chain matters that are appropriately left to retailers, suppliers and government, and are unnecessary to achieve fire and safety goals.”

…Most U.S. companies, however, balked at the language in the accord. Some said it would would expose them to excessive legal liability — particularly in America’s litigious courts. Written by labor groups, the agreement would require retailers who source clothing from Bangladesh to commit to pay for inspections, building upgrades and training — all enforced by binding arbitration.

Here is more.  Most likely, the damage done to Bangladesh will continue.  Note that the prospect of successful litigation was not what drove FDI into the 19th century United States, or twentieth century Singapore, to the point where wages rose significantly.

Claims about pastries

Which raises a delicate question: Having already eclipsed Paris in Michelin stars, could Tokyo chefs one day eclipse the French at their own cuisine?

I put the question to pastry chef Sugino, who trained in France and is one of only four Japanese members of the prestigious Relais Desserts, an association of the world’s top pastry makers who meet regularly to exchange ideas.

Choosing his words carefully, he notes that pastry shops in France are having difficulty finding young people willing to put in the time and effort required to learn the craft. He also says that even top French patisseries are now taking shortcuts — by using stabilizers in their desserts, for instance.

“They are losing the basics,” Sugino says. “It is possible that, 10 or 20 years from now, the French will have lost the art of pastry but that it will live on in Tokyo, in Japan.”

Here is more.

Have we seen self-defeating austerity in the United States?

Everyone has been talking about the revised CBO deficit forecast, which suggests the short-term U.S. fiscal picture is more favorable than had been realized.  It can be said that in the short- to medium-term, the deficit is no longer an issue (in my view that was the case anyway, but that is a different story.)

But I am puzzled as to how the whole story is supposed to fit together, at least from an Old Keynesian perspective.

For instance, we have been told that the United States has been engaged in a good deal of fiscal austerity in the last few years.

We also were told that fiscal self-austerity was quite possibly self-defeating (or here, pdf) or at the very least fairly close to self-defeating.  That is, it would make budget balance harder rather than easier.

The amount of attention, and the fervor of the rhetoric, also suggest that this was seen as a major issue, not one minor to moderate factor with seven other significant confounding factors operating on top of it.  Admittedly this latter point is more of a subjective impression, but I believe many people have shared it.

OK, now here goes the potential story.  We did fiscal austerity, it was self-defeating, that was a major factor, and we ended up in…a better budget situation than we had been expecting?

It is fine to say “our budget situation could have been better yet,” but then the fiscal austerity story then seems to collapse into one factor among many confounding factors.  Which is fine by me, but it is not the story we seem to have been receiving.

I am myself comfortable arguing something like “when underlying fundamentals are sound, and/or there is monetary accommodation, an economy can withstand fiscal consolidation just fine.”  That is simply a more specific variant of the above.

Another “way out” is to question whether “austerity” is always to easy to measure, given the associated modalities and baselines involved in its current definitions, and given the multiple dimensions of fiscal policy, and so perhaps the degree of austerity has not been nearly as high as we were told.  I can buy that too, but still it would be news to the Old Keynesian accounts we have been reading.

So what’s up?

Matt Yglesias appreciates *Star Trek*

You will find his essay here, and I have many points of agreement with him, but I think he undervalues the first series.  Characters and script were excellent in about sixty percent of the original episodes.  It is also noteworthy that the original characters have entered popular culture for an enduring period of time and we are still making movies about them forty-five years later.  It’s not absurd to think of someone saying “Beam me up, Scotty” fifty years from now.  I don’t see Data or any other later character receiving the same treatment, nor do I think that any of the later installments would have, on their own, generated an entire franchise of installments, spin-offs, sequels, and the like, where Matt can tweet something like “Animated series is non-canon, people. Get with the program.”  If you’d like a treat, watch some of the D.C. Fontana-scripted Star Trek episodes, noting that “Tomorrow is Yesterday” is one of the funniest and most profound takes on “the great stagnation” to be found in popular culture or anywhere else for that matter.  And it was written before the great stagnation even started, and by Roddenberry’s office assistant at that.  Magic was in the air.  As for “Spock’s Brain,” well, that is another matter.

How to eat well in Genoa [Genova]

Genoa is one of the best food venues in Italy, as is Liguria more generally.  It is also one of the best places in Europe for vegetarian dining.  Maximize the number of tarts and vegetable tarts you eat, skip hotel breakfast and look for small places with morning snacks, preferably baked goods, and treat them as the equal of cooked dishes.  Forget about meat altogether.

1. Antica Sciamadda, 14-16 Via San Giorgio, arrive at the 11:30 opening and keep on buying the tarts and farinata as they are freshly baked and put out on the counter.  There is a vaguely Arabic feel to the dishes, and there is an excellent video of the place here.  There are many excellent “sciamadda” in Genoa and they lie somewhere between a food stall and a very small restaurant, so do not count on them being open for dinner.

2. Trattoria alle Due Torri, Salita del Prione 53, near the Columbus house.  Order pasta and focaccia, this is some of the best spaghetti I’ve had, and the pansotti (ravioli in walnut sauce) is notable.

3. La Rina, superb seafood restaurant, don’t focus on the main courses.

There are relatively few tourists in town, although the most common group — by far — is Russians.  From Bologna, here is a post about flunking out of Gelato University.

Our improving short-term budget picture

You will find summaries here from Annie Lowrey and also Ezra Klein.  I like Ross Douthat’s remarks:

…almost nobody is willing to break out the champagne on these estimates. The Keynesians think our shrinking deficit is a sign of the White House’s foolish surrender to austerity at a time when the economy still needs more government spending, not less, to achieve real lift-off. The deficit hawks think a dropping deficit will only encourage Washington’s fatal short-term thinking, by persuading policymakers to ignore the still-yawning gap between our long-term commitments and our revenues. Conservatives don’t like the extent to which we’re taxing our way to temporary fiscal stability (some of the unexpected deficit reduction reflected high-income tax filers paying extra for 2012 to avoid higher rates for 2013), while liberals have reason to fret that the White House’s “fiscal cliff” strategy squandered an important opportunity to raise upper-income taxes even more. And anyone who worries about the American political system’s ability to do structural reform can’t be that encouraged by the path we’ve taken to this point – the crude cuts to discretionary spending that leave entitlements untouched, the higher marginal tax rates rather than a rate-lowering, deduction-capping tax reform, and of course the general inability to compromise in the absence of artificial deadlines and self-created crises.

I don’t drink champagne but I’ll break out the dark chocolate instead.  One way to put it is that “yapping” — on all sides of the political spectrum — is overrated, most of all by the yappers themselves.

A slightly different take would be this.  Voters are getting more or less what they want, which is some spending restraint, mostly holding the line on taxes, not too much trust in government as a way of moving forward, and a love of entitlements.  One can find that objectionable, and indeed I do across a number of fronts, but there you go.  We are not going to elect a new people anytime soon, and in this odd sense you can see all the recent political gridlock as reasonably democratic, more so than its critics would like to admit (I know I’ll generate a bunch of criticisms citing poll data about how Americans really want this, that, or the other but I’ll hold my ground on this one).  Relative to the quality of the preference inputs, we are getting a better outcome than one might otherwise have expected.  After all, isn’t that what this country is really all about?  We may not have the world’s best farinata, but let’s raise a toast to America once again.

Assorted links

1. Peter Chang has opened a new restaurant in Fredericksburg.

2. “If only the government would apply the same level of thoroughness to their supervision of food and milk in China.”

3. What is the real IRS scandal?

4. Is the real estate market crashing in Canada?

5. Robin Hanson on robot economics.

6. Ashok Rao reviews our MRU course on the economics of the media.

7. D.H. Lawrence on Edgar Allen Poe (excellent short essay).

The future is here

The Georgia Institute of Technology plans to offer a $7,000 online master’s degree to 10,000 new students over the next three years without hiring much more than a handful of new instructors.

Georgia Tech will work with AT&T and Udacity, the 15-month-old Silicon Valley-based company, to offer a new online master’s degree in computer science to students across the world at a sixth of the price of its current degree. The deal, announced Tuesday, is portrayed as a revolutionary attempt by a respected university, an education technology startup and a major corporate employer to drive down costs and expand higher education capacity.

Georgia Tech expects to hire only eight or so new instructors even as it takes its master’s program from 300 students to as many as 10,000 within three years, said Zvi Galil, the dean of computing at Georgia Tech.

…The deal started to come together eight months ago in a meeting between Galil and Udacity CEO Sebastian Thrun.

“Sebastian suggested to do a master’s degree for $1,000 and I immediately told him it’s not possible,” Galil said.

Eventually, the program came together for about $6,600 per degree. In a blog post, Thrun compared the day of the announcement to the day he proposed to his wife.

There is more here.  Hi future.