Unwilling entrepreneurs

A common sensical but useful new paper by Nagler and Naude, on how many if not most African households make their money. Descriptive analysis is underrated.

Although non-farm enterprises are ubiquitous in rural Sub-Saharan Africa, little is yet known about them. The motivation for households to operate enterprises, how productive they are, and why they exit the market are neglected questions. Drawing on the Living Standards Measurement Study — Integrated Surveys on Agriculture and using discrete choice, selection model and panel data estimators, this paper provide answers using data from Ethiopia, Niger, Nigeria, Malawi, Tanzania, and Uganda.

The necessity to cope following shocks, seasonality in agriculture, and household size can push rural households into operating a non-farm enterprise. Households are also pulled into entrepreneurship to exploit opportunities.

Access to credit and markets, household wealth, and the education and age of the household head are positively associated with the likelihood of operating an enterprise. The characteristics are also associated with the type of business activity a household operates. Rural and female-headed enterprises and enterprises with young enterprise owners are less productive than urban and male-owned enterprises and enterprises with older owners. Shocks have a negative association with enterprise operation and productivity and a large share of rural enterprises does not operate continuously over a year.

Enterprises cease operations because of low profits, a lack of finance, or the effects of idiosyncratic shocks. Overall the findings are indicative that rural enterprises are”small businesses in a big continent”where large distances, rural isolation, low population density, and farming risks limit productivity and growth.

Hat tip to Logan Cochrane.

The dangers of Google idealism

Julian Assange tells a fascinating tale about Schmidt and Google in Newsweek:

Schmidt’s emergence as Google’s “foreign minister”—making pomp and ceremony state visits across geopolitical fault lines—had not come out of nowhere; it had been presaged by years of assimilation within U.S. establishment networks of reputation and influence.

…By all appearances, Google’s bosses genuinely believe in the civilizing power of enlightened multinational corporations, and they see this mission as continuous with the shaping of the world according to the better judgment of the “benevolent superpower.” They will tell you that open-mindedness is a virtue, but all perspectives that challenge the exceptionalist drive at the heart of American foreign policy will remain invisible to them.

This is the impenetrable banality of “don’t be evil.” They believe that they are doing good. And that is a problem.

It is interesting reading, if only to hear a skeptical outsider’s perspective of the web of Washington intrigue.

I am reminded of Dave Eggers’ new book, The Circle. It’s the story of a technology behemoth that gradually eliminates privacy from the Internet and daily life. Again, the ideals of Google-y executives drive the world down a darkening path.

It is not a subtle book. As Ayn Rand was to free markets, Eggers is to privacy. But it was entertaining and, for someone who lives a degree of his life online, it was thought provoking and kept me reading to the vaguely clumsy end.

The common thread is that good intentions can blind us more than bad ones. An insight easy to forget when you’re in the service of country or humanity.

Should you donate to efforts to contain the Ebola outbreak in west Africa?

The GiveWell people describe their ongoing investigation and the challenges:

  • One fundamental issue is that we know too little about the relationship between “how much money is raised” and “what sort of response is possible”: it might be that the activities most crucial to containing the epidemic can already be funded at current levels, and that additional donations would do relatively little.
  • Another major issue turned out to be that the CDC model already appears to be out of date (and specifically, overly pessimistic). The model incorporates data on cases through late August; reported Ebola cases since then are lower than the model predicted even in the maximal “strong response effort” scenario. It is possible that the recent reports of Ebola cases reflect issues with data collection (for example, perhaps people with Ebola are now avoiding care or healthcare workers are too overwhelmed to report data); but based purely on the numbers, we don’t feel we can use the CDC model to make good forecasts for cost-effectiveness analysis.
  • Even if we resolved the above two issues, there would be major questions remaining. The CDC model covers only two countries, and only through January 20; it does not address cases in Guinea, the possibility that Ebola becomes endemic, or the possibility that Ebola spreads to other countries. We know little about the organizations involved in the response effort and how well they’re performing, and it’s unlikely that we’ll be able to find out much about this question while the epidemic is ongoing.

The full post is interesting and the questions they are asking are the important ones. Possibly the most level-headed thing I have read on Ebola.

I love these guys. I only subscribe by email to four blogs and GiveWell’s is one of them.

Link I liked

  1. A simulation of births and deaths in the world in real time
  2. Quartz covers our statistical prediction of violence in Liberia paper
  3. Lant Pritchett reacts to yesterday’s SNL 39 cents a day video to make a bigger point about the problem with the SDGs
  4. Are you a Comic Sans criminal?
  5. America, the equal opportunity jailer: The US has more women in prison than China, India & Russia combined
  6. Indications my kids will not learn their algebra:

Disenfranchisement kills babies?

It’s not a *huge* stretch.

This paper studies the introduction of electronic voting technology in Brazilian elections.

Estimates exploiting a regression discontinuity design indicate that electronic voting reduced residual (error-ridden and uncounted) votes and promoted a large de facto enfranchisement of mainly less educated citizens.

Estimates exploiting the unique pattern of the technology’s phase-in across states over time suggest that, as predicted by political economy models, it shifted government spending towards health care, which is particularly beneficial to the poor.

Positive effects on both the utilization of health services (prenatal visits) and newborn health (low-weight births) are also found for less educated mothers, but not for the more educated.

From Thomas Fujiwara, who cannot seem to write a bad paper. (Now with a link!)

We cannot reasonably generalize his result to insidious voter ID laws in the US, but oh, I will.

The big data is under the mountain

The [Granity Mountain Records Vault] now holds parish records and old English manuscripts dating from the 1500s, including records from London, when civil registration began in 1837, and copies of jai pu, Chinese family records, which date back before AD 1. Overall the data the Mormons have gathered is equivalent to thirty-two times the amount of information contained in the Library of Congressand the church adds a new Library of Congress’s worth of new data every year.

…Trying to determine and then store everyone’s name and existence for perpetuity is also an insanely costly process. Today the Church has 220 data-gathering teams in forty-five countries that are making digital copies of new records. They are also converting 2.4 million microfilm records into a digital format.

…LDS photographers have produced more than 115 million images of the files, which recorded the lives of over five hundred million Italians from the nineteenth and early twentieth centuries.

Story.

Right now I imagine an MIT econ grad student in the 18th basement, writing a genius job market paper, and I am jealous.

 

Links I liked

  1. “I’m still writing to you, maybe because I want you to give me a little hope. You can lie, if you feel like. Please, Etgar, tell me a short story with a happy ending, please.” Letters between Israeli-Palestinian writer Sayed Kashua and Jewish-Israeli writer and filmmaker Etgar Keret.
  2. I will give them credit for this: The GOP 404 error page (h/t to Dan Drezner)
  3. “The perfect response to people who say all Muslims are violent, in one tweet”
  4. This is getting worse and worse: Mexican activist slain during on-air radio broadcast
  5. And, from @seenfromafar, how Ebola reminds us of the true meaning of Columbus Day:

Bz39tYNCMAAV8H- (1)

China’s growth: When something seems too good to be true, it usually is

Consensus forecasts for the global economy over the medium and long term predict the world’s economic gravity will substantially shift towards Asia and especially towards the Asian Giants, China and India. While such forecasts may pan out, there are substantial reasons that China and India may grow much less rapidly than is currently anticipated.

Most importantly, history teaches that abnormally rapid growth is rarely persistent, even though economic forecasts invariably extrapolate recent growth. Indeed, regression to the mean is the empirically most salient feature of economic growth.

…Furthermore, statistical analysis of growth reveals that in developing countries, episodes of rapid growth are frequently punctuated by discontinuous drop-offs in growth. Such discontinuities account for a large fraction of the variation in growth rates.

We suggest that salient characteristics of China—high levels of state control and corruption along with high measures of authoritarian rule—make a discontinuous decline in growth even more likely than general experience would suggest.

…our analysis suggests that forecasters and planners looking at China would do well to contemplate a much wider range of outcomes than are typically considered.

That is Lant Pritchett and Larry Summers in a new NBER paper. This appears to be an older ungated copy.

Without ever having actually analyzed any data, my hunch is that an awful lot of growth halts in authoritarian countries comes from badly managed transitions of power. Whether this is true, and what makes transitions more or less stable, is not something I’ve seen a lot of work on.

My second hunch is that institutionalized rather than personalized systems of rule are one reason for stable transitions. You could say the strength of the party over any one person in China is a reassuring sign. You even see the same in places like Ethiopia. There are not many African countries where the autocrat dies suddenly and the world barely notices because the country keeps chugging along.

Even so, I agree with the basic point: things could turn upside down in China and the world is not really prepared for what follows.

I would be grateful for pointers to any work on my political transitions hunches.

What happens when you try to bring your Nobel Prize through airport security?

“They’re like, ‘Sir, there’s something in your bag.’
I said, ‘Yes, I think it’s this box.’
They said, ‘What’s in the box?’
I said, ‘a large gold medal,’ as one does.
So they opened it up and they said, ‘What’s it made out of?’
I said, ‘gold.’
And they’re like, ‘Uhhhh. Who gave this to you?’
‘The King of Sweden.’
‘Why did he give this to you?’
‘Because I helped discover the expansion rate of the universe was accelerating.’
At which point, they were beginning to lose their sense of humor. I explained to them it was a Nobel Prize, and their main question was, ‘Why were you in Fargo?’”

That is Brian Schmidt as quoted by Scientific American.

If you want to learn about Tirole, the Economics Nobel winner today, you can do no better than to read Marginal Revolution.

Links I liked

  1. Coffitivity “recreates the ambient sounds of a cafe to boost your creativity and help you work better.”
  2. What the location of your capital city has to do with conflict risk
  3. A Christian woman rewrites Harry Potter, swapping wizards and magic for the faithful and miracles. Either Ann Coulter-like reality or Stephen Colbert-like spoof. I can’t tell. “Career woman” is used as evidence of the villainess of Aunt Petunia.
  4. How to buy a mattress
  5. As NSF (and similar) deadlines approach for PhD students, I point you to my advice for PhD grant writing. Comments and dissent welcome.

Evidence that ethnic divisions are counterproductive. Literally.

Ray Fisman gets credit for the title, Jonas Hjort gets credit for his paper on how ethnic divisions on productivity:

In team production at a plant in Kenya, an upstream worker supplies and distributes flowers to two downstream workers who assemble them into bunches.

The plant uses an essentially random rotation process to assign workers to positions, leading to three types of teams: (a) ethnically homogeneous teams, and teams in which (b) one or (c) both downstream workers belong to a tribe in rivalry with the upstream worker’s tribe.

I find strong evidence that upstream workers undersupply non-coethnic downstream workers (vertical discrimination) and shift flowers from non-coethnic to coethnic downstream workers (horizontal discrimination), at the cost of lower own pay and total output.

A period of ethnic conflict following Kenya’s 2007 election led to a sharp increase in discrimination. In response, the plant began paying the two downstream workers for their combined output (team pay). This led to a modest output reduction in (a) and (c) teams – as predicted by standard incentive models – but an increase in output in (b) teams, and overall. Workers’ behavior before conflict, during conflict, and under team pay is predicted by a model of taste-based discrimination.

Humans depress me yet again.

And a footnote to the academics who worry that field experiments are taking over the discipline, or the grad students who think they need to do an experiment (a hear this a lot, especially in political science): I think this paper is a great example how observational work (when well done) can be better, more interesting, and harder. And I think these papers get rewarded more.

Here’s my advice post on why grad students should think twice about field experiments for their dissertations.

How to overcome writer’s block, by David Sedaris

Sometimes when I’m stuck, I’ll open an English textbook, and do the homework.

There are a lot of college writing textbooks that will include essays and short stories, and after reading the story or essay, there will be questions such as “Have YOU Had any experience with a pedophile in YOUR family?” or “When was the last time you saw YOUR mother drunk?” and they’re just really good at prompting stories. You answer the question, and sometimes that can spring into a story.

You know, this is really good advice: I mean, I don’t have advice to offer on many things, but THAT is good advice, and you’re NOT gonna hear it from a lot of other places.

Sedaris did an Ask Me Anything on Reddit.

Another bit I liked was his response to “What’s one thing you wished you knew about writing when you first started out?” I basically feel the same way about my blogging.

I wish I’d understood that people were actually going to read what I wrote.

For some reason, that came as the biggest surprise to me!

I got that they would buy the books, I would see them at the cash register, handing over their money. That I understood. But i never occurred to me that they would actually read them.

That’s terrifying.

Well, I think especially when you get older as a writer and you look back at things that you wrote 30 years ago, it’s so embarrassing for you, and the thought that somebody in Lincoln, Nebraska, is reading that right now… makes me want to cry BLOOD.

What does (European) schooling do to religious belief and practice?

A new paper from Pogorelova and Mocan:

We exploit information on compulsory schooling reforms in 11 European countries, implemented in the 1960s and 70s, to identify the impact of education on religious
adherence and religious practices. Using micro data from the European Social Survey, conducted in various years between 2002 and 2013, we find consistently large negative
effects of schooling on self-reported religiosity, social religious acts (attending religious services), as well as solitary religious acts (the frequency of praying). We also use data from European Values Survey to apply the same empirical design to analyze the impact of schooling on superstitious beliefs. We find that more education, due to increased mandatory years of schooling, reduces individuals’ tendency to believe in the power of lucky charms and the tendency to take into account horoscopes in daily life.

I’d be interested to see the effects on attitudes to modernization, nationalism, and political systems as well. What ideologies and identities displace religion?

Before people run off an extrapolate too much, it’s also worth noting that when you get a causal estimate from compulsory schooling laws, it doesn’t necessarily apply to the population. It’s estimated off of the people who would not have gone to school without the law, but do once the law gets introduced.