Nicholas Decker 🏳️‍🌈🌐🇺🇦 Profile picture
GMU econ PhD student, liberal, aspie, bi. I post interesting papers. Michael Kremer stan. I ❤️ optimal auction design. Spend more on drugs. Open borders now!
Sep 2 5 tweets 2 min read
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/ Image 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. Image
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Aug 31 9 tweets 3 min read
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/ Image 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. Image
Aug 18 14 tweets 5 min read
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/ Image 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. Image
Aug 16 14 tweets 4 min read
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/ Image 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.
Aug 13 11 tweets 3 min read
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/ Image 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.
Jul 24 8 tweets 3 min read
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/ Image 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. Image
Jul 22 9 tweets 1 min read
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.
Jul 17 10 tweets 2 min read
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/ Image 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.
Jun 29 7 tweets 2 min read
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/ 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. Image
Jun 17 8 tweets 2 min read
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/ Image 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)
Jun 16 12 tweets 3 min read
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/ Image 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.
May 23 12 tweets 2 min read
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/ Image 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.
May 17 9 tweets 3 min read
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/ Image 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.
May 14 13 tweets 3 min read
Robert Solow’s 1956 paper “A Contribution to the Theory of Economic Growth” is the fundamental paper in economic growth theory. Everything which has come since is built upon it. With that said, let’s explore it and Solow (1957) too! 1/ Image Its predecessor is the Harrod-Domar model, which is essentially a port of short-run Keynesian economics into long run growth. It assumes that factors of production are not substitutable, which gives it an unpleasant “knife-edge” characteristic.
May 13 19 tweets 5 min read
Autor, Dorn, and Hanson is the canonical shift-share paper, and something you should absolutely have read and understood if you want to do serious work in economics today. 1/ Image I am not discussing it so much for the empirical results as for the methods, but it follows in the footsteps of Krugman (1981) and Brander and Krugman. If you allow for frictions, trade will create winners and losers. How big are these?
May 12 6 tweets 2 min read
This is a really good paper, but I’m concerned that their method cannot detect the effects that they are looking for? We don’t really know the labor market effects from this. Short thread. Image They are able to find the productivity effects easily, because that’s input/output, and they have sufficiently detailed data to measure that. They then turn to whether this is passed through to wages, and estimate a very precise null.
May 11 9 tweets 2 min read
The Trump administration is trying to impose sweeping price controls on medication. So what will the effects be? Let’s look at the actual evidence. Spoilers: this will kill millions of people. 1/ But first, theory. Ideas are just different from other goods! You need to pay to find it, but once you have an idea, you can replicate it at a low cost. Since competition drives down price to marginal cost, we end finding too few ideas.
May 7 16 tweets 7 min read
Let’s learn together! This tweet will be a thread of threads — lecture notes, essentially, on some of the formative papers in economics. I hope this is a helpful guide to being an economist. Krugman (1980) “Scale Economies, Product Differentiation, and the Pattern of Trade” princeton.edu/~pkrugman/scal…

x.com/captgouda24/st…
May 4 7 tweets 3 min read
What Aella is discussing is a form of non-wage compensation. But why do firms offer non-wage compensation at all? Why don’t they pay in money? After all, not everyone would value this highly. There are a few reasons why. 1/ The first and obvious reason is the favorable tax treatment granted to non-wage compensation. Health insurance is tax deductible, so most health insurance is purchased through an employer. Perks might be treated as an investment, if spent by the company.
Nov 9, 2024 4 tweets 1 min read
A tariff is doing to ourselves in times of peace, what our enemies do to us in times of war. Anti-free trade sentiment is *profoundly* stupid, btw. First, there is absolutely no reason to believe tariffs are optimal — Dasgupta/Stiglitz 1988 is clear that even in the presence of increasing returns, subsidizing imports may be the optimal policy.
Mar 27, 2024 8 tweets 3 min read
Is horizontal pay transparency good? By any reasonable standard, no. It does indeed reduce the gender pay gap, but only through reducing total wages! Everyone is worse off! A small thread: Image People in the same role differ in productivity. Pay transparency makes it much harder to pay more productive workers more, because you will need to give a formal promotion. Image