Category Archives: Allmänt

Presidents and growth: Timing is everything

The first of my two articles in this week’s print edition discusses the empirical evidence on whether Democratic presidents or Republican presidents are better at making the American economy grow:

Why the economy has grown faster under Democratic presidents

Aug 9th 2014 | From the print edition

“SINCE 1961…the Republicans have held the White House 28 years, the Democrats 24,” said Bill Clinton in 2012. “In those 52 years, our private economy has produced 66m private-sector jobs. So what’s the jobs score? Republicans 24m, Democrats 42[m].” In the two years since, Barack Obama has increased the Democrats’ lead by close to 5m.

Since the second world war the economy has done better under Democratic presidents, who have overseen more job creation and higher stockmarket returns than Republican leaders. During this time the economy has grown about 1.8 percentage points faster when a Democrat occupies the White House (see chart). Messrs Clinton and Obama credit their economic policies. But new research suggests it has more to do with luck.

Alan Blinder and Mark Watson, economists at Princeton University, studied the last 16 presidential terms—from Harry Truman’s second to Mr Obama’s first—to find out why the economy has grown faster under Democrats. They were quickly able to rule out some possible explanations, like a president’s age and experience, or which party controlled Congress. Though one might surmise that Democratic presidents inherited hardier economies than Republican ones, they actually tended to take over when times were more difficult.

Read the full article here.

Simon Hedlin

Female genital mutilation and child marriage: Progress, but too slow

This week I am writing about the horrors that are female genital mutilation and child marriage:

Too many girls’ lives are still being destroyed

FIRST the good news: according to a report published on July 22nd by UNICEF, the share of the world’s girls who are subjected to female genital mutilation (FGM) is around a third lower today than it was three decades ago. Now the tragedy: seven girls still have their genitals cut or mutilated per minute. And the rate at which the practice is declining is not enough to counter population growth. Unless the pace picks up, the number of victims will grow from 3.6m a year now to 4.1m in 2035.

At its worst, FGM involves cutting off the clitoris and labia and stitching the vagina almost closed. In the African countries where it is a traditional rite of passage, as many as nine girls in ten are subjected to the barbarous practice (see map), which causes excruciating pain and can lead to infection, infertility and sometimes death.

Child marriage, another custom that destroys girls’ lives, is also common in Africa, and in parts of Asia too. The future life of a child bride is likely to be poor and socially isolated. Schooling will probably fall by the wayside. Early childbearing may destroy her health or kill her. UNICEF reports that more than 700m women alive today were married before turning 18—and 250m of those before turning 15.

In some countries most women aged between 20 and 49 were married when they were children (see chart). And though, like FGM, the tradition is slowly fading, high fertility where it is most common means absolute numbers are barely falling. Without further progress the number of former child brides will still be over 700m in 2050.

Read the full article here.

Simon Hedlin

Economics and ethics: Lying commies

My contribution to this week’s issue discusses an experiment that finds that socialism causes unethical behavior:

Lying commies: The more people are exposed to socialism, the worse they behave

Jul 19th 2014 | From the print edition

“UNDER capitalism”, ran the old Soviet-era joke, “man exploits man. Under communism it is just the opposite.” In fact new research suggests that the Soviet system inspired not just sarcasm but cheating too: in East Germany, at least, communism appears to have inculcated moral laxity.

Lars Hornuf of the University of Munich and Dan Ariely, Ximena García-Rada and Heather Mann of Duke University ran an experiment last year to test Germans’ willingness to lie for personal gain. Some 250 Berliners were randomly selected to take part in a game where they could win up to €6 ($8).

The game was simple enough. Each participant was asked to throw a die 40 times and record each roll on a piece of paper. A higher overall tally earned a bigger payoff. Before each roll, players had to commit themselves to write down the number that was on either the top or the bottom side of the die. However, they did not have to tell anyone which side they had chosen, which made it easy to cheat by rolling the die first and then pretending that they had selected the side with the highest number. If they picked the top and then rolled a two, for example, they would have an incentive to claim—falsely—that they had chosen the bottom, which would be a five.

Honest participants would be expected to roll ones, twos and threes as often as fours, fives and sixes. But that did not happen: the sheets handed in had a suspiciously large share of high numbers, suggesting many players had cheated.

Read the rest here.

Simon Hedlin

The economics of behaviour: Time and punishment

This week, I write in print edition of The Economist about discounting and crime. An excerpt:

Impatient children are more likely to become lawbreakers

Jul 12th 2014 | From the print edition

IN HIS “Odyssey”, Homer immortalised the idea of resisting temptation by having the protagonist tied to the mast of his ship, to hear yet not succumb to the beautiful, dangerous songs of the Sirens. Researchers have long been intrigued as to whether this ability to avoid, or defer, gratification is related to outcomes in life. The best-known test is the “marshmallow” experiment, in which children who could refrain from eating the confection for 15 minutes were given a second one. Children who could not wait tended to have lower incomes and poorer health as adults. New research suggests that kids who are unable to delay rewards are also more likely to become criminals later.

David Akerlund, Hans Gronqvist and Lena Lindahl of Stockholm University and Bart Golsteyn of Maastricht University used data from a Swedish survey in which more than 13,000 children aged 13 were asked whether they would prefer to receive $140 now or $1,400 in five years’ time. About four-fifths of them said they were prepared to wait.

Unlike previous researchers, the authors were able to track all the children and account for their parental background and cognitive ability. They found that the 13-year-olds who wanted the smaller sum of money at once were 32% more likely to be convicted of a crime during the next 18 years than those children who said they would rather wait for the bigger reward. Individuals who are impatient, they believe, prefer instant benefits and are therefore less likely to be deterred by potential punishments.

Read the rest of my story here.

Simon Hedlin

Race-blind affirmative action: Identifying the disadvantaged

My latest blog post for The Economist’s American-politics blog concerns affirmative action and a recent study of a race-blind affirmative-action scheme in Israel. An excerpt:

Jun 18th 2014, 1:04 by S.H. | LONDON

AFTER the Supreme Court in April upheld Michigan’s ban on race-based affirmative action in university admissions, some have begun wondering what alternatives are available to institutions seeking diversity. Indeed, affirmative action as we know it is probably doomed: voters have banned it at universities in at least eight states, and four more look likely to follow suit.

This newspaper has argued against race-based admissions policies. Instead, we encourage selection procedures that offer modest preferences to economically disadvantaged students. This is the plan set out in “Place, Not Race”, a new book from Sheryll Cashin of Georgetown Law School. She proposes a race-blind, class-based type of affirmative action whereby students who have thrived in poor schools or rough neighbourhoods are given special consideration. Some worry that this may lead colleges to accept ill-prepared applicants, who may then drop out (a problem that has plagued some universities with race-based preferences). But new research suggests that these concerns may be unjustified.

In an article published in the latest issue of the Economics of Education Review, Sigal Alon of Tel Aviv University and Ofer Malamud of University of Chicago write about the promising results of a colour-blind, class-based affirmative-action programme in Israel. In the early 2000s, four of Israel’s most selective universities began giving preferential treatment to poorer students, as indicated by an applicant’s neighbourhood and high school. Based largely on these two factors, an applicant is scored on an index of socioeconomic disadvantage; those who meet a pre-determined threshold are eligible for special consideration, but not guaranteed admission. After analysing the academic outcomes of more than 5,000 students, the authors found three particularly noteworthy results.

First, those who met the threshold were more likely than average students to have come from deprived neighbourhoods, to be of Asian, African or Arabic origin, to have immigrated and to be poor. Second, the policy had a significant impact on admissions; applicants who met the threshold were 13% more likely to have been accepted to one of the four elite institutions than those who fell just short of the required number of points. Third, the students who were likely to have been admitted in part because of their disadvantaged backgrounds did not fall behind; they had the same average GPA and graduation rate as their peers who were ineligible for the programme.

Read the full post here.

Simon Hedlin

Debt repayment and small victories: When size matters

My first contribution to The Economist’s Free exchange blog is about helping people to pay back their debt:

BENJAMIN Franklin said he would rather go to bed without dinner than to rise in debt. Most of us, however, are in debt at some stage of our lives. If we expect to earn a higher income in the future, we can smooth our consumption over time by borrowing when we are younger. Taking loans to invest in a college education, for example, thus makes sense. Nonetheless, many of those who are at the end of their earning years still have not paid what they owe; more than 65 percent of American families with heads aged 65-74 are in debt. Similarly, estimates by Britain’s Treasury show that up to 40 percent of university graduates may never repay their loans.

So what can be done to reduce the level of personal debt? Standard economic theory suggests that paying back loans based on their interest rates, from highest to lowest, should be preferable since this approach minimizes the total interest paid. However, empirical evidence suggests that this may not always be the case; a study of 6,000 debtors found that, while controlling for debt size, individuals who paid off their debts from smallest to largest were more likely to succeed than those who used other repayment strategies. The authors hypothesize that “[c]onsumers seem to believe that closing off debt accounts, regardless of balance size, is important in motivating them to persist in the goal of eliminating their debts”, which implies that an individual may have a higher probability of repaying loans by focusing on the size of the debts rather than that of the interest rates. The support for this theory is now reinforced in a new behavioural study by Alexander Brown and Joanna Lahey of Texas A&M University.

Read the whole story here.

Simon Hedlin

Gender-equal parents are happier

Regrettably, gender equality is often seen as a women’s issue. The dominant notion seems to be that we should embrace equality for the sake of women, and that gender equality is a zero-sum game where women gain at men’s expense. In economic terms this is of course bogus; the labor market, for instance, is not a zero-sum game, and just as immigrants can fare well on the labor market without hurting natives so can women without making men worse off. The notion does not hold up in non-economic terms either. The following graph is an evaluation of about 5,000 Swedish parents’ level of happiness from 1990 to 2000 based on how they chose to divide the paid parental leave days that every parent is entitled to.

 

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What the inverted-U relationship in the chart shows is that parents who share paid parental leave days unequally (mothers take all the 480 paid parental leave days and fathers take 0 days, just to play by the stereotype), have on average lower levels of subjective well-being than parents who embrace gender equality. Gender equality is not only associated with higher wealth and economic growth (while controlling for other factors), but also with higher levels of happiness.

Simon Hedlin

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