Tyler Cowen's Blog, page 52

How much did cutting unemployment benefits help the labor market?

Quite a bit.  There is a new NBER Working Paper on this topic by Hagedorn, Manovskii, and Mitman, showing (once again) that most supply curves slope upward, here is one key part from the abstract:

In levels, 1.8 million additional jobs were created in 2014 due to the benefit cut. Almost 1 million of these jobs were filled by workers from out of the labor force who would not have participated in the labor market had benefit extensions been reauthorized.

There is an ungated copy here (pdf).  Like the sequester, this is another area where the Keynesian analysts simply have not proven a good guide to understanding recent macroeconomic events.

The evolution of northern Virginia

When I visited Santa Monica in January it struck me how much it reminded me of…Arlington.  Arlington is now essentially a part of Northwest, at least Arlington above Route 50 or so.  Arlington and Santa Monica have never been more alike, or less distinctive.

Parts of east Falls Church will meld into Arlington, and south Arlington will become more like north Arlington.  Real estate prices east/north of a particular line are rising and west of that line are falling.  Fairfax is definitely west of that line.

The Tysons Corner remake will fail, Vienna is not the new Clarendon, and the Silver Line and the monstrously wide Rt.7 will form a new dividing line between parts of Virginia which resemble Santa Monica and parts which do not.

Incumbents aside, no one lives in Fairfax any more to commute into D.C.  Why would you?  The alternatives are getting better and Metro parking became too difficult some time ago.  Fairfax is not being transformed, although some parts are morphing into “the new Shirlington.”  Most of it will stay dumpy on the retail side.  Annandale will stay with Fairfax, whether it likes it or not.

For ten years now I have been predicting various Fairfax restaurants will close — casualties of too-high rents — and mostly I have been wrong.  The good Annandale restaurants are running strong too.  Annandale won’t look much better anytime soon, thank goodness for that.

“Northern Virginia” is becoming two different places, albeit slowly.

Tabarrok on Econ Talk on Private Cities

Based on my paper, Lessons from Gurgaon, India’s Private City (with Shruti Rajagopalan) I discuss private cities with Russ Roberts over at EconTalk this week.

I think the conversation went well but I haven’t heard it yet so let me also take the time to point you to my favorite recent EconTalk, Russ interviewing Greg Page, the former CEO of Cargill, the largest privately-held company in America. Their discussion covers the global food supply, false definitions of national food security, the role of prices, comparative advantage and more. It’s a great discussion.

The economics of ancient Tibetan monasteries

Each monastery had its own estates, and all the people farming on these estates paid taxes in money and goods.  One of the main tasks of the stewards was to increase this income; for instance, by lending grain back to the peasants at high interest rates, or selling goods at market.  Before the destruction of the monasteries in the 1960s, they owned as much as half of Tibet’s farmland.

The description however is referring to the 15th century.  Another interesting part of the book concerns how, during Tibet’s “Golden Age,” the Tibetans tried to impose their language and culture on the neighboring regions of China, and with some success.

That is all from Sam Van Schaik, Tibet: A History.

Assorted links

1. “A small number of humans have virtually no constraints on their decision-making, and Reid is one of them.”  The post includes sixteen lessons learned, mostly I agree.

2. Why labor force participation is still so low.

3. Have we reached peak economist?  Here is a pouty (but interesting) response from a sociologist.

4. Naipaul and Theroux bury the hatchet.  Sir Vidia’s Shadow is another of my all-time favorite books.

5. Why is India so crazy for world records?

6. Infrastructure quality and the subsidy trap (pdf), important piece, gated AER version here.  Central Park now and then, photos.

7. “Some of them are Sufi mystics.”  Are we back to having two Yemens?

Does economic freedom lead to greater tolerance?

Mostly, yes, although with some caveats (the headline of the piece doesn’t exactly capture this).  That is the topic of my latest column for The Upshot.  Here is one excerpt:

Niclas Berggren…and Therese Nilsson…have produced a fascinating series of papers on these questions, sometimes writing singly, sometimes together or with the collaboration of a variety of co-authors. Their most notable study is perhaps a paper they wrote together, “Does Economic Freedom Foster Tolerance?”

…One of their most striking findings is that societies characterized by greater economic freedom and greater wealth do indeed exhibit greater tolerance toward gay people, a tendency suggesting that gay rights, including gay marriage, will spread globally as national economies liberalize and develop.

Some metrics of economic freedom count more than others:

This greater tolerance is strongly associated only with certain features of what has often been defined as economic freedom. For example, a smaller government, measured as a share of gross domestic product, is often included in so-called economic freedom indexes as an objective measure of freedom. But the data show that smaller government has a slight negative correlation with tolerance of gay people by heterosexuals. One implication is that many conservatives may be overly preoccupied with the size of government as a measure of how free societies actually are.

On the other hand, the data shows that when a society has impressive scores on property rights security and low inflation — two other components of economic freedom indexes — these characteristics are strongly and positively correlated with tolerance of gays. It’s possible that low inflation, and the behavior of a central bank, are stand-ins for the general trustworthiness of a nation’s government and broader institutions, and such trustworthiness helps foster tolerance.

The results for race are not nearly as strong, namely both freedom and prosperity are less clearly associated with higher levels of racial tolerance, although the correlation is still a positive one.

And there is this:

We are often told that education is an important remedy, yet it does not register as a meaningful factor in the cross-country data in this paper. Higher levels of education simply have not correlated significantly with higher levels of tolerance across countries.

Do read the whole thing.

Is Greece already seeing some fiscal collapse?

Kerin Hope from the FT reports:

A reluctance to pay taxes was much criticised by Greece’s creditors as one reason why the country needed a big international bailout. Now many Greeks are again avoiding the taxman as they bet the radical left Syriza party will quickly loosen fiscal policy if it comes to power in Sunday’s general election.

A finance ministry official confirmed on Friday that state revenues had collapsed this month. “It’s normal for the tax take to decline during an election campaign but this time it’s more noticeable,” the official said, avoiding any specific figures on the projected shortfall.

However, two private sector economists forecast the shortfall could exceed €1.5bn, or more than 40 per cent of projected revenues for January.

File under “In case you had not been paying attention…”  And here is Antonio Fatás with a Grexit scenario.  That is still not what most people expect, however.

Assorted links

1. .  And kippa made out of hair.  For Europe.

2. Will the Coase theorem apply to Greece?  And prominent economists send the FT a letter on Greece.

3. The strangest, yet still credible ranking of the greatest albums ever, except it is not credible.  Or is it?

4. How scalable is the block chain?

5. Some of the Borjas results are maybe not so robust.  And “After a deal, British chocolates won’t cross the pond.”

6. Memoirs of a germaphobe: “Why do I have to touch the screen to choose a payment method?”  This short article is also a lesson in behavioral economics and nudge.

The Peltzman Effect on the Golden Gate

A safety barrier on the median was just installed on the Golden Gate Bridge; unintended consequences follow.

…in the days since the more secure movable median barrier was installed, the average speed of drivers on the approach from the north has jumped even though the speed limit was lowered from 55 to 45 miles per hour.

“We’re really seeing unreasonable speeds on the bridge, much faster than before,” said Priya David Clemens, a representative for the Golden Gate Bridge District. For whatever reason, including the possibility that drivers feel safer knowing a car won’t come barreling at them from the opposite direction, “we’ve noticed speeds going up,” Clemens said. “That’s why we asked the CHP to help us.”

More on the Peltzman effect.

Hat tip: Carl Danner.

“Let’s Play Two”

Very sadly Ernie Banks — the baseball player for you foreigners out there — has passed away.

Oddly, I have taken to quoting him lately.  If you are going out to eat with a small group, I recommend two stops.  No, don’t eat any more food than usual, but distribute your meal across two restaurants.  Have a few appetizers in one, and then leave and move on to another.  (This is easiest to do in Eden Center, with its wide selection of small-dish Vietnamese eateries, but other methods will work.)  Of course you must sequence your meals properly, the Greek eggplant must become before the Sichuan noodles, not vice versa.

This approach will improve the conversation at your table, if only by breaking up the original seating plan.  It also makes you more aware and more appreciative of what you are eating.

If you are going out to a movie, see two.  There is a fixed cost of attending, whether in terms of the traffic, the babysitter, or simply the will to spend time away from Facebook.  “Let’s Play Two.”

I have the impression that consumers “do fewer doubleheaders” than when I was growing up, I am not sure why.  Perhaps we have grown too impatient.

Banks’s obituary described him as “an unconquerable optimist whose sunny disposition never dimmed in 19 seasons with the perennially stumbling Chicago Cubs…”

Here are other quotations from Ernie Banks.  He said “The only way to prove you are a good sport is to lose.”