Child sex preference and development

Back in December, the New York Times reported on the evolution of child sex preference in South Korea. The view advanced was that increased female labor force participation, a necessity of industrial progress, had raised the economic value and social status of girls.

Fiscal stimulus and macro impacts

Events have moved quickly over the past two weeks, and chances of a fiscal stimulus package passing Congress and getting signed by the President look surprisingly good.

Policymakers and their advisors are struggling to settle on the optimal design of the package, and as reported by the NY Times, it's because we don't know exactly what happened in July and August of 2001 when the tax rebate checks were sent out. The events of 9/11 produced basically a coincident shock, and it is tough to disentangle the responses.

Schumpeter, innovation, and growth

David Brooks mentions Brad DeLong's review of a new 2007 book on Joseph Schumpeter. Brooks doesn't write much about it, but it's a good, quick read for those interested in economic growth.

I don't teach anything about entrepreneurship and competition to undergraduates in my intermediate macroeconomics class at Queens. But as Schumpeter and many others after him pointed out, the process of innovation produces losers as well as winners.

As reviewed by DeLong, Schumpeter thought democracies were ill-equipped to manage innovation by compensating the losers while rewarding the winners, and he apparently made many predictions about politics that were flat-out wrong. From an aggregate perspective, it appears that the American political system is successful at either compensating losers or minimizing their numbers.

The Value of Life in Developing Countries

The recent Congressional hearings about the role of Blackwater security agents in Iraq revealed this tidbit, as written about by Maureen Dowd:

To compensate the family of an Iraqi guard accidentally shot to death by a Blackwater agent, an office in the State Department countenanced against awarding $250,000 lest other Iraqis decide to try and be accidentally killed. Rather, the department suggested a sum of $15,000.

Can the value of human life be measured in dollars? If so, is it a constant, or does it depend on other circumstances? If the latter, what do those circumstances include? Income? The level of background risk? Health economists seek to answer these difficult questions.

City-provided Health Insurance in San Francisco

San Francisco has passed legislation that provides for city-funded health care for uninsured residents, regardless of immigration status. The city is counting on successful preventive care being cheaper than the acute care it already dispenses for free to this population, which is surely something of a risk.

Saving from developing countries and the trade imbalance

Fed chairman Ben Bernanke expressed concern about the sustainability of the U.S. trade deficit and the imported foreign saving it represents. Why are developing countries supporting higher consumption in industrialized countries by exporting their saving?

One explanation is the Demographic Dividend: the resources freed up by the reduction in dependency owing to declining fertility and family size during the demographic transition. As development proceeds, mortality typically falls first. As babies and infants begin to survive in greater numbers, while labor market opportunities for women typically expand, fertility falls. Declining fertility and reduced family sizes allows households to save more resources, fueling investment either domestically or abroad.

For how long will investment opportunities in the U.S. continue to appeal to foreign savers? Presumably for as long as U.S. productivity remains the highest in the world (or among the highest, depending on how you measure it), and as long as political stability continues.

September 11 and economics

We seek to find meaning in everything, and it is tempting as a policymaker or economist to attribute the terrorist attacks of September 11, 2001, to some particular motivation. An obvious candidate is the economic status and opportunity of groups that produce terrorists, but economists believe any connection between poverty and terrorism is probably weak at best.

As summarized here, researchers at the National Bureau of Economic Research have examined this question, whether development and terrorism are inversely related, and they have determined that the evidence of such a connection is weak. As Alberto Abadie remarks, political freedom is more closely related to terrorism.