This paper is one of the most astonishing feats of sustained data wizardry I have ever seen. Using data from Uber, they are able to estimate the roughness of every road in America and precisely estimate the value people place on it, and so much more. 1/ First, what makes this all possible — acceleration data. Uber wants to know if people are suddenly braking. Their measurements along a horizontal axis incidentally allows them to measure up and down motion.

Fantastic job market paper from @vincent_rollet. Highlights key problem for upzoning — what can be built is shaped by the past. You need to demolish the small before you can build the large. This revises down the gains from upzoning, which accrue mainly to movers. 1/ First things first, he has *extremely* impressive datawork. If you doing research on New York, you may find this of use.

What the media shows really does matter. The introduction of Fox News substantially aided Republicans, and could plausibly have swung the 2000 election. When Trump interferes with who’s on television — yes, that really does matter. 1/ The concern, of course, is that the entry of Fox News is endogenous. Simply comparing before and after would not suffice, as there may be time varying trends. It might also be the case that Fox News targeted either more persuadable, or places they expected to change more.

Privatization raises profitability, but does this come at the expense of workers? Privatization leads to layoffs of unproductive workers, but pay raises for those that remain. Most of the gains in profits are due to increasing productivity. 1/ They have the universe of privatized firms in Mexico from the 80s. Their method for finding causation is to match to a set of similar companies.

When measuring inflation, we have to adjust for the quality of goods. This is really hard, though — how do we plausibly say how much more utility a vacuum gives as a function of suckage? Bils and Klenow have a clever solution. 1/ They exploit the fact that rich and poor households spend different amounts on the same kinds of goods. They interpret this as buying higher quality goods.

Why do banks fail? There are two basic stories: bank runs, and insolvency, which call for different policy responses. The authors find that bank runs are common in theory, but rare in practice. This substantially undermines the case for deposit insurance. 1/ Theory first. The bank gets deposits and lends them out to be paid back later. The bank promises to allow you to withdraw at will, but lacks the cash to pay everyone. If people believe it will fail, it will fail as everyone rushes to be first to withdraw their savings.

In 1945, George Stigler turned his attention to the question of a minimum diet. What is the absolute cheapest one could live off of for year? The answer: 370 lbs flour, 57 cans of evaporated milk, 111 lbs cabbage, 23 lbs spinach, and 285 lbs of dried navy beans. 1/ What makes it interesting was that there was, at that time, no methods of linear programming available. George Dantzig had not yet invented the simplex method.

The quality of management was, for years, a black box to economists. Everyone believed it had to matter. Nobody had the data to study it seriously until Bloom and Van Reenen (2007). 1/ The only way to elicit information on management is to ask people. Their RAs interviewed 732 firms in 45 minute long phone interviews, asking about basic good management practices, like recording inventories and promotions for good performance.

We finally have really credible evidence that cousin marriage is bad for your children. While not perfect, I think their identification strategy is believable, and lets us say that marrying your cousin wipes at least two years off of their life. 1/ Their empirical strategy is to only compare cousin marriage children to their cousins who were born from out of the family marriages. They check that the marrying cousins aren’t different either by showing that they live just as long as their siblings.

Much of economic growth comes not in the form of falling prices, per se, but from the introduction of new goods. Not including them will lead to us substantially understating welfare, and overstating inflation. But how do find the value of goods which didn’t exist? 1/ We can calculate it by figuring out the price of a good which would set demand to 0, and then presume that this shadow price fell when it came into being. To know this, we must estimate the demand curve.

This is the job market paper of the year, and the best paper on industrial policy I have ever seen. Industrial policy can affect outcomes either directly by changing an area’s fundamentals, or by coordinating simultaneous investment. How important is each? Let’s find out. 1/ Tishara Garg is studying the effects of industrial parks in India. These are plots of land set aside for industrialization, with substantial government promotion. These are not, to be clear, special economic zones like Shenzhen, but simply local initiatives.

How costly are poorly written laws? A team of Italian researchers argue that the drafting of Italy’s laws alone costs them 5% of GDP — or $120 billion a year! 1/ Readers will note that the structure of the paper is rather similar to Gentzkow and Shapiro (2010), who studied media bias. In both cases, the first challenge is you need a treatment variable with cardinality.

Why do I support capitalism? It is easiest to show by example. Feeding America is a network of food banks. In 2005, they switched from central planning to a price system. Sam Altmann (not that one) finds that this is equivalent to increasing donations by 32.7%. 1/

https://twitter.com/captgouda24/status/1955514714982846730

The previous system worked like this: all the food banks would be in a queue. Whenever Feeding America got a donation of a truckload of food, they would go to the first bank in line. They would then have 4-6 hours to accept or decline the shipment.

Good managers substantially increase production. What matters most is intelligence and economic reasoning, and people who want to be managers are worse at it because they are worse at understanding people’s emotions. 1/ Measuring the effects of management is quite difficult, which is why they do this in the lab. Managers aren’t randomly assigned, which may — especially if managers are promoted for reasons only somewhat correlated with skill — flip the sign on the true effect.

The fundamental problem with Israel-Palestine is that the Israelis are too scared to take civilian casualties. Israel can be completely secure without the war, if they accept casualties. The only way to have no civilian casualties is to eradicate the Palestinians as a people. Israel, again and again, gets sentimental. The exchange of 1027 prisoners for one man was an act of abominable cowardice, and served only to enable Hamas’s future actions.

Is GDP accurate? Barro argues that our measures of GDP are systematically biased because they include investment both when it occurs, and when we get higher output as a result. Thus, higher capital/output places will have spuriously higher GDP. 1/ First, though, we should know what GDP is trying to measure. It is not measuring welfare — for that would take knowledge of how pleasant work is — but simply trying to give a sense of the resources available for consumption.

Whether we should have rich people depends crucially on whether they have positive or negative externalities. Are they job-creators, or rent-seekers? Let’s see what the evidence has to say 1/

https://twitter.com/Osint613/status/1939351985079394555

The case for them having positive externalities is best summarized by Jones (2021). The rich are overwhelmingly responsible for ideas, which, once made, cannot be fully captured by their creators. Taxes reduce the number of ideas found, harming everyone.

This is an incredibly subtle, yet provocative paper. If you think we should treat future humans the same as present humans, then it implies that we should have massive transfers from old to young, even if wasteful! Let me show you why 1/ I should be clear about the terms. The interest rate is simply what the rate we need to be paid in order to defer consumption. If interest rates are 6%, then I am indifferent between $100 and $106 in a year. (We will abstract away from risk-aversion here)

Why does the state emerge? Is it beneficial? Why are some states stronger than other states? It is rare that we can see a state emerge, but Raul Sanchez de la Sierra has 18 years of data collection efforts to answer the questions. 1/ The “stationary bandit” view of the state derives from Mancur Olson. In the state of anarchy, some people are bandits who profit by stealing from others. This theft prevents people from increasing output, though. It is profitable for the bandit to settle down and impose taxes.

How important was the railroad, and why did it raise incomes? Dave Donaldson’s classic paper “Railroads of the Raj” found that access to the railroad raised real income by 16%, and trade accounted for half. Let’s understand how he got this! 1/ India’s infrastructure, before the railroad construction campaigns began, was extremely poor. Transport was main through putting packs on the back of cattle, and driving them through fields, which was incredibly expensive. Railroads were both much cheaper, and much faster.

Why did the theory of endogenous growth develop? What problems is it solving? Before we go into the details of how the models work, I want to provide the intellectual context. 1/ Recall that, in the Solow model, output is a function of labor and capital, with it converging to a steady state. Technological progress is represented by an A multiplying the function. Capital has decreasing marginal returns.